Thursday, December 6, 2007

Rich Dad Poor Dad

Today I was browsing through some few blogs find interesting article about Rich Dad Poor Dad By Robert T Kiyosaki. Hope you will find below summary of the book and start explore on this.

"Know the difference between assets and liabilities"; "Buy Assets"

"Rich people acquire assets; The poor and middle class acquire liabilities, but they think they are assets."

An asset is something that puts money in my pocket.

A liability is something that takes money out of my pocket.

This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities.

Robert T. Kiyosaki, Rich Dad, Poor Dad says, 3 type of Income they are Earned income ("work for owner"), Passive income, and portfolio income.

In the bottom of the income statement are taxes ("work for government"), ownership-related expenses, and other expenses. Subsequent diagrams expand on portfolio income (dividends, interest, rental income, royalties), ownership-related expenses (mortgage payments, real property taxes, insurance, maintenance, utilities), and other expenses (fixed expenses, food, clothing, fun).



In the left side of the balance sheet are assets which create income--your business, stocks, bonds, mutual funds, income-generating real estate, notes, and intellectual property. In the right side of the balance sheet are liabilities ("work for bank") which create expenses--consumer loans, credit cards, and mortgages.

Poor Dad says, "Go to school, get good grades, and find a safe secure job." In other words, concentrate on earned income in the top of the income sheet.

Rich Dad says, "The rich don't work for money, they have their money work for them." In other words, concentrate on passive and portfolio income in the top of the income sheet--with passive income being faster. In the bottom of the income sheet, the government taxes earned income the most, and passive income the least.

Poor Dad: "The love of money is the root of all evil."
Rich Dad: " The lack of money is the root of the evil."

Poor Dad: "Study hard so you can find a good company to work for."
Rich Dad: " Study hard so you can find a good company to BUY."

Poor Dad: "The reason I'm not rich is because I have you kids."
Rich Dad: " The reason I MUST BE rich is because I have you kids."

Poor Dad: "When it comes to money don't take risks."
Rich Dad: "Learn to manage risks."

Poor Dad: "Work for benefits."
Rich Dad: "Be totally self reliant financially."

Poor Dad: "Save."
Rich Dad: "Invest."

Poor Dad: "Write a good resume to find a good job."
Rich Dad: "Write a strong business and financial plan to create a good company."

1 comment:

Darren said...

Yes I understand all of this, But give me a list of income generating assets, he always talks about assets, what are these assets, I know peoperty is one as long as your rental exceeds your instalments, stocks, bonds etc. but what are the real assets that he talks about!