Rich Dad Poor Dad

Just finished this book and found it interesting but mostly repetitive.  Oh so repetitive.  He was determined to hammer the ideas into my head.  Robert Kiyosaki grew up in Hawaii.  His father was a teacher who had a PhD.  His best friend Mike's dad had very little education but was a successful business man.  Contrary to expectations, his highly educated dad - 'Poor Dad' - paid bills but never accumulated wealth.  Mike's dad - 'Rich Dad' - lived frugally while making what money he earned grow into considerable wealth.  That he tells his tale by setting up scenes where rich dad says one thing and poor dad says another was engaging at first but eventually awkward.

The heart of Kiyosaki's differentiation between a rich dad and a poor dad is that a rich dad buys assets while a poor dad buys liabilities.  The definition of assets and liabilities is at odds with the popularly held view.  An asset is something that puts money in your pocket.  A liability is something that takes money out of your pocket.  Therefore, a car, a home mortgage, an iPhone, and the like are all liabilities.  Stocks, bonds, rental property, a business, or other money generating endeavors are assets.  The goal must be to put as much money as possible into buying assets which will eventually generate enough income to allow you to support your lifestyle.  The sooner you start, the better.

 

The biggest money-making endeavor he outlined was purchasing foreclosed houses at a bargain rate and selling them for something still below market value but well-above what he spent.  As described, he made nearly $200K with no risk and hardly any effort.

 

He spends a lot of time pushing the idea of being a salesman.  Clearly, a good salesman can achieve wealth, especially if he finds the right product to sell.  He referenced Ray Kroc as a salesman who found the right product which led him to... the real estate business (see The Founder).  Donald Trump, another real estate mogul and salesman, is also mentioned.  He doesn't say one needs to be in real estate but that is the field he knows so it often feels more like a get rich via this path rather than a get rich mindset.

 

The biggest takeaway for me was the asset vs. liability definition.  It is strange to think of a house with growing equity as a liability but it is a good point.  With a 30 year mortgage, it takes a long time to accumulate significant equity and there is a good chance you move before then.