Derek Sivers
Rich Dad Poor Dad - by Robert Kiyosaki

Rich Dad Poor Dad - by Robert Kiyosaki

ISBN: 1612681131
Date read: 2023-06-05
How strongly I recommend it: 4/10
(See my list of 360+ books, for more.)

Go to the Amazon page for details and reviews.

Not a great book, but communicates a very valuable mindset. I’m reading it to my son who wants to learn how to make money. Its simplistic and repeated message aims to get you out of the employee mindset, and to only spend your money on income-generating assets.

my notes

Life pushes all of us around. Some people give up and others fight. A few learn the lesson and move on. They welcome life pushing them around. To these few people, it means they need and want to learn something. If you don’t, you will spend your life blaming a job, low pay, or your boss for your problems. You’ll live life always hoping for that big break that will solve all your money problems.

Stop blaming me and thinking I’m the problem. If you think I’m the problem, then you have to change me. If you realize that you’re the problem, then you can change yourself, learn something, and grow wiser. Most people want everyone else in the world to change but themselves. It’s easier to change yourself than everyone else.

Don’t work for money. Have money work for you.
Buying or building assets that deliver cash flow is putting your money to work for you.

Most people go to college for four years, and their education ends. My study will continue over my lifetime.

Ask, “Is there something I’m missing here?”

By not getting paid for our work, we were forced to use our imagination to identify an opportunity to make money.

It’s not how much money you make. It’s how much money you keep.

Retirement means that we can work or not work, and our wealth grows automatically, staying ahead of inflation. Our assets are large enough to grow by themselves.

Money without financial intelligence is money soon gone.

An asset puts money in your pocket.
A liability takes money out of your pocket.
Most people acquire liabilities that they think are assets.
Rich people acquire assets.
Spend your life buying or building income-generating assets.

Read and understand numbers.
Be financially literate in words as well as numbers.
Without a financial statement you don’t really know where you are in life’s financial game.

A house is not a good investment.
Your house is not an asset. It is a liability.

You miss opportunities if all your money is tied up in your house.

If I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.

The asset column generates more than enough income to cover expenses, with the balance reinvested into the asset column.
The asset column continues to grow and, therefore, the income it produces grows with it.
The rich get richer.

Wealth measures how much money your money is making and, therefore, your financial survivability.
Wealth is the measure of the cash flow from the asset column compared with the expense column.

The rich buy assets.
The poor only have expenses.
The middle class buy liabilities they think are assets.

McDonald’s is not in the hamburger business. Its business is real estate.
The land and its location are the most significant factors in the success of each franchise.
McDonald’s is the largest single owner of real estate in the world, owning even more than the Catholic church.
My friend owns car washes, but his business is the real estate under those car washes.

They spend their lives minding someone else’s business and making that person rich.
To become financially secure, a person needs to mind their own business.
Your business revolves around your asset column, not your income column.

The rich focus on their asset columns, while everyone else focuses on their income statements.

What kind of assets should you acquire?
• Businesses, run by other people, that do not require your presence. If you have to work there, it’s a job not a business.
• Stocks
• Bonds
• Income-generating real estate
• Notes (IOUs)
• Royalties from intellectual property such as music, scripts, and patents
• Anything else that has value, produces income or appreciates, and has a ready market

Acquire assets you love. If you don’t love it, you won’t take care of it.
I collect real estate simply because I love buildings and land. I love shopping for them, and I could look at them all day long. When problems arise, the problems aren’t so bad that it changes my love for real estate.
For people who hate real estate, they shouldn’t buy it.

I like starting companies, not running them. So my stock buys are usually of small companies. Sometimes I even start the company and take it public. Fortunes are made in new stock issues, and I love the game.
Many people are afraid of small-cap companies. But that risk is diminished if you love what the investment is, understand it, and know the game.
With small companies, my investment strategy is to be out of the stock in a year.
My real estate strategy is to start small and keep trading up for bigger properties and, therefore, delay paying taxes on the gain. This allows the value to increase dramatically. I generally hold real estate less than seven years.

Financial literacy is the ability to read and understand financial statements which allows you to identify the strengths and weaknesses of any business.
The better you are at understanding the accounting and cash management, the better you will be at analyzing investments and eventually starting and building your own company.

Keep your asset column strong. Once a dollar goes into it, never let it come out.
Once a dollar goes into your asset column, it becomes your employee.
That money works for you 24 hours a day and can work for generations.

Most people buy luxuries first.
Rich people buy luxuries last.

Knowledge of the legal corporate structure gives the rich an advantage.

If you’re financially ignorant, it’s easy to be bullied.
If you know what you’re talking about, you have a fighting chance.
Pay for smart tax accountants and attorneys.
It’s less expensive to pay them than to pay the government.
Know the law because you are a law-abiding citizen and because it’s expensive to not know the law.
If you know you’re right, you’re not afraid of fighting back.

Working your way up the corporate ladder? Why not own the ladder?

Tax advantages of a corporation: pay expenses before paying taxes.
Employees earn and get taxed, and they try to live on what is left.
A corporation earns, spends everything it can, and is taxed on whatever is left.
By owning your own corporation, your board meetings can be in places you would like to vacation. Books, computers, courses, etc are company expenses.

The wealthy person controls everything, but owns nothing.
They use corporations and trusts to protect their assets.

Money is not real.
That’s why you can make money.

I began shopping at the bankruptcy attorney’s office or the courthouse steps. In these places, a $75,000 house could sometimes be bought for $20,000 or less. For $2,000, loaned to me from a friend for 90 days for $200, I gave an attorney a cashier’s check as a down payment. While the acquisition was being processed, I ran an ad advertising a $75,000 house for only $60,000 and no money down. The phone rang hard and heavy. Prospective buyers were screened and once the property was legally mine, all the prospective buyers were allowed to look at the house. It was a feeding frenzy. The house sold in a few minutes. I asked for a $2,500 processing fee, which they gladly handed over, and the escrow and title company took over from there. I returned the $2,000 to my friend with an additional $200. He was happy, the home buyer was happy, the attorney was happy, and I was happy. I had sold a house for $60,000 that cost me $20,000. The $40,000 was created from money in my asset column in the form of a promissory note from the buyer. Total working time: five hours.

“You can’t do that here.” “That is against the law.” “You’re lying.” I hear those comments much more often than “Can you show me how to do that?”

Investments come and go. The market goes up and comes down. Economies improve and crash.
The world is always handing you opportunities of a lifetime, every day of your life, but all too often we fail to see them.
The more the world changes and the more technology changes, the more opportunities there will be.
Find an opportunity that everyone else missed. You see with your mind what others miss with their eyes.

Seek work for what you will learn, more than what you will earn.
Invest more in your financial education than in stocks, real estate, or other markets.
The smarter you are, the better chance you have of beating the odds.

Most people never win because they’re more afraid of losing.

I am constantly shocked at how little talented people earn.
They are one skill away from great wealth.
Most people need only to learn and master one more skill and their income would jump exponentially.
Financial intelligence is a synergy of accounting, investing, marketing, and law. Combine those four technical skills and making money with money is easier than most people would believe.

Sit in on the meetings with his bankers, lawyers, accountants, and brokers. Know a little about every aspect of your empire.

Look at what skills you want to acquire to earn more money.
Take a long view of your life.
Instead of simply working for the money, take a second job that will teach you a second skill.

“How many of you can cook a better hamburger than McDonald’s?”
“So how come McDonald’s makes more money than you?”
McDonald’s is excellent at business systems.
The reason so many talented people are poor is because they focus on building a better hamburger instead of business systems.

Our financial genius lies asleep because our culture has educated us into believing that the love of money is the root of all evil.

My best friend had an asset column handed to him, but he still had to choose to learn to keep it.
Many rich families lose their assets in the next generation simply because there was no one trained to be a good steward over their assets.

I was listening to an investor say something I completely disagreed with. Instead of becoming arrogant and critical, I simply listened to that five-minute stretch at least 20 times, maybe more. But suddenly, by keeping my mind open, I understood why he said what he said. It was like magic.

Don’t listen to poor or frightened people.
They can always tell you why something won’t work.
Friends try to talk me out of a deal or an investment.
A friend told me he was excited because he found a 6 percent certificate of deposit. I told him I earn 16 percent from the state government. The next day he sent me an article about why my investment was dangerous. I have received 16 percent for years now, and he still receives 6 percent.

Have rich friends because that is where the money is made - on information. You want to hear about the next boom, get in, and get out before the next bust.
Forms of insider trading that are legal.
The sooner you know, the better your chances are for profits with minimal risk.

Master a formula and then learn a new one: the power of learning quickly.
You become what you put in your head.
I took a weekend class called “How to Buy Real Estate Foreclosures.” I learned a formula.
The next trick was to have the discipline to actually put into action what I had learned.
I spent my spare time learning to master the art of buying foreclosures.
I attended classes designed for derivative traders, commodity option traders.
Search for a faster formula.
Read the book, and do exactly what the book says.
Most people do not take action, or they let someone talk them out of whatever new formula they are studying.

Pay yourself first: the power of self-discipline.
Allocate money to your asset column before you pay your monthly expenses.
Rule number one in paying yourself first is: Don’t get into consumer debt in the first place.
Pay yourself first, invest the money, and let the creditors yell.
“Pay yourself first” comes from George Clason’s book, The Richest Man in Babylon.

Focus on developing management of: Cash flow, People, Personal time.

A common bad habit is innocently called “dipping into savings.”
Savings are only used to create more money, not to pay bills.

Pay your professionals well.
If the people are professionals, their services should make you money.

A broker is my eyes and ears in the market. They’re there every day so I do not have to be.
People who sell their house on their own must not value their time much. Why would I want to save a few bucks when I could use that time to make more money or spend it with those I love?

Companies have a board of directors. You should have one too. That is financial intelligence.

The sophisticated investor’s first question is: “How fast do I get my money back?”
They also want to know what they get for free, also called a “piece of the action.”
The ROI, or return on investment, is so important.

I will move my money in to a stock for a week while the stock moves up. Then I pull my initial dollar amount out, and stop worrying about the fluctuations of the market, because my initial money is back and ready to work on another asset. So my money goes in, and then it comes out, and I own an asset that was technically free.
I only play with money I can afford to lose.
On an average 10 investments, I hit home runs on two or three, while five or six do nothing, and I lose on two or three. But I limit my losses to only the money I have in at that time.

Make lots of offers.
When I want a piece of real estate, I look at many properties and generally write an offer.
I went and looked at six apartment houses. Four were dogs, but two were good. I wrote offers on all six, offering half of what the owners asked for.
You don’t know what the right price is until you have a second party who wants to deal.
Buying and selling is fun. Keep that in mind. It’s fun and only a game. Make offers. Someone might say yes.
Make offers with escape clauses “subject-to” contingencies, such as the approval of a business partner. Never specify who the business partner is. Most people don’t know that my partner is my cat. If they accept the offer, and I don’t want the deal, I call home and speak to my cat.
People make things too difficult and take it too seriously.

Profits are made in the buying, not in the selling.

Look for people who want to buy first. Then look for someone who wants to sell.
A friend was looking for a certain piece of land. He had the money but did not have the time. I found a large piece of land, larger than what my friend wanted to buy, tied it up with an option, called my friend, and he said he wanted a piece of it. So I sold the piece to him and then bought the land. I kept the remaining land as mine for free.
Moral of the story: Buy the pie, and cut it in pieces.
Most people look for what they can afford, so they look too small. They buy only a piece of the pie, so they end up paying more for less.
Small thinkers don’t get the big breaks. If you want to get richer, think big.

Even if you’re small, you can always think big.
When my company was in the market for computers, I called several friends and asked them if they were ready to buy also. We then went to different dealers and negotiated a great deal because we wanted to buy so many. I have done the same with stocks.
Small people remain small because they think small, act alone, or don’t act all.