Rich dad Poor Dad

Recently i got the opportunity to read one of the best book of the world, Rich dad Poor Dad.The writer of the book has written the difference between the mindset and the mistakes of the poor what they do and the positive things about the rich. This was the book which was recommended to me by one of the closest friend of mine. Right now i was not having the time so i am trying to copy the few lines from the book , what i liked the most.

The Road Not Taken

Two roads diverged in a yellow wood, And sorry I could not travel both And be one traveler, long I stood And looked down one as far as I could To where it bent in the undergrowth; Then took the other, as just as fair, And having perhaps the better claim, Because it was grassy and wanted wear Though as for that the passing there Had worn them really about the same, And both that morning equally lay In leaves no step had trodden black. Oh, I kept the first for another day! Yet knowing how way leads onto way, I doubted if I should ever come back. I shall be telling this with a sigh Somewhere ages and ages hence; Two roads diverged in a wood, and I took the one less traveled by, And that has made all the difference. Robert Frost(1916)



"The poor and the middle class work for money." "The rich have money work for them."

As I said at the start of this section, the most important rule is to know the difference between an asset and a liability.  Once you understand the difference, concentrate your efforts on only buying income-generating assets.  That's the best way to get started on a path to becoming rich.  Keep doing that, and your asset column will grow. Focus on keeping liabilities and expenses down. This will make more money available to continue pouring into the asset column.

1. You work for someone else.  Most people, working for a paycheck, are making the owner, or the shareholders richer. Your efforts and success will help provide for the owner's success and retirement. 2. You work for the government. The government takes its share from your paycheck before you even see it.  By working harder, you simply increase the amount of taxes taken by the government - most people work from January to May just for the government. 3. You work for the bank. After taxes, your next largest expense is usually your mortgage and credit card debt. The problem with simply working harder is that each of these three levels takes a greater share of your increased efforts. You need to learn how to have your increased efforts benefit you and your family directly.

Just remember this simple observation: The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets.
 "Mind your own business/' Financial struggle is often directly the result of people working all their life for someone else. Many people will have nothing at the end of their working days.

Most people 
Your Profession -> Your Income
The Rich 
Your Assets -> Your Income

There is a big difference between your profession and your business. Often I ask people, "What is your business?" And they will say, "Oh I'm a banker." Then I ask them if they own the bank? And they usually respond.  "No, I work there."

A problem with school is that you often become what you study.  So if you study, say, cooking, you become a chef.  If you study the law, you become an attorney, and a study of auto mechanics makes you a mechanic. The mistake in becoming what you study is that too many people forget to mind their own business. 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, as opposed to your income column. As stated earlier, the No. 1 rule is to know the difference between an asset and a liability, and to buy assets. The rich focus on their asset columns while everyone else focuses on their income statements.
The primary reason the majority of the poor and middle class are fiscally conservative-which means. "I can't afford to take risks"-is that they have no financial foundation.  They have to cling to their jobs. They have to play it safe.


So what kind of assets am I suggesting that you or your children acquire? In my world, real assets fall into several different categories: 1. Businesses that do not require my presence. I own them, but they are managed or run by other people.  If I have to work there, it's not a business.  It becomes my job. 2. Stocks. 3. Bonds. 4. Mutual funds. 5. Income-generating real estate. 6. Notes (lOUs). 7. Royalties from intellectual property such as music, scripts, patents. 8. And anything else that has value, produces income or appreciates and has a ready market.

For years, even while I was with the Marine Corps and Xerox, I did what my rich dad recommended.  I kept my daytime job, but I still minded my own business. I was active in my asset column.  I traded real estate and small stocks.  Rich dad always stressed the importance of financial literacy. The better I was at understanding the accounting and cash management, the better I would be at analyzing investments and eventually starting and building my own company.


I would not encourage anyone to start a company unless they really want to. Knowing what I know about running a company, I would not wish that task on anyone. There are times when people cannot find employment, where starting a company is a solution for them.  The odds are against success: Nine out of 10 companies fail in five years.  Of those that survive the first five years, nine out of every 10 of those eventually fail, as well.   So only if you really have the desire to own your own company do I recommend it. Otherwise, keep your daytime job and mind your own business. When I say mind your own business, 1 mean to build and keep your asset column strong. Once a dollar goes into it, never let it come out. Think of it this way, once a dollar goes into your asset column, it becomes your employee. The best thing about money is that it works 24 hours a day and can work for generations.  Keep your daytime job, be a great hard-working employee, but keep building that asset column.


As your cash flow grows, you can buy some luxuries. An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first. The poor and the middle class often buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old-money people, the long-term rich, built their asset column first.  Then, the income generated from the asset column bought their luxuries. The poor and middle class buy luxuries with their own sweat, blood and children's inheritance. A true luxury is a reward for investing in and developing a real asset. For example, when my wife and I had extra money coming from our apartment houses, she went out and bought her Mercedes. It did not take any extra work or risk on her part because the apartment house bought the car.  She did, however, have to
 who controls the past controls the future, who controls the present controls the past. wait for it for four years while the real estate investment portfolio grew and finally began throwing off enough extra cash flow to pay for the car.  But the luxury, the Mercedes, was a true reward because she had proved she knew how to grow her asset column. That car now means a lot more to her than simply another pretty car.  It means she used her financial intelligence to afford it. What most people do is they impulsively go out and buy a new car, or some other luxury, on credit. They may feel bored and just want a new toy.  Buying a luxury on credit often causes a person to sooner or later actually resent that luxury because the debt on the luxury becomes a financial burden. After you've taken the time and invested in and built your own business, you are now ready to add the magic touch-the biggest secret of the rich. The secret that puts the rich way ahead of the pack. The reward at the end of the road for diligently taking the time to mind your own business.


 People who do not take advantage of these tax savings offered legally are missing a great opportunity to build their asset columns.
Never be availabe to each and everyone. make them wait for you. Let them wait. show you are not an ordinary one,, you are hard to reach. When you will be able to put these things in their mind only then they will value you.
 financial IQ is made up of knowledge from four broad areas of expertise.


No. 1 is accounting. What I call financial literacy. A vital skill if you want to build an empire. The more money you are responsible for, the more accuracy is required, or the house comes tumbling down. This is the left brain side, or the details. Financial literacy is the ability to read and understand financial statements. This ability allows you to identify the strengths and weaknesses of any business.

No. 2 is investing. What I call the science of money making money. This involves strategies and formulas. This is the right brain side, or the creative side.

No. 3 is understanding markets. The science of supply and demand. There is a need to know the "technical" aspects of the market, which is emotion driven; the Tickle Me Elmo doll during Christmas 1996 is a case of a technical or emotion-driven market. The other market factor is the "fundamental" or the economic sense of an investment. Does an investment make sense or does it not make sense based on the current market conditions. Many people think the concepts of investing and understanding the market are too complex for kids. They fail to see that kids know those subjects intuitively. For those not familiar with the Elmo doll, it was a Sesame Street character that was highly touted to the kids just before Christmas. Most all kids wanted one, and put it at the top of their Christmas list. Many parents wondered if the company intentionally held the product off the market, while continuing to advertise it for Christmas. A panic set in due to high demand and lack of supply. Having no dolls to buy in the stores, scalpers saw an opportunity to make a small fortune from desperate parents. The unlucky parents who did not find a doll were forced to buy another toy for Christmas. The incredible popularity of the Tickle Me Elmo doll made no sense to me, but it serves as an excellent example of supply and demand economics. The same thing goes on in the stock, bond, real estate and baseball-card markets.

No. 4 is the law. For instance, utilizing a corporation wrapped around the technical skills of accounting, investing and markets can aid explosive growth. An individual with the knowledge of the tax advantages and protection provided by a corporation can get rich so much faster than someone who is an employee or a small-business sole proprietor. It's like the difference between someone walking and someone flying. The difference is profound when it comes to longterm wealth.

I have been teaching professionally since 1984.  It has been a great experience and rewarding. It is also a disturbing profession, for I have taught thousands of individuals and I see one thing in common in all of us, myself included. We all have tremendous potential, and we all are blessed with gifts. Yet, the one thing that holds all of us back is some degree of self-doubt. It is not so much the lack of technical information that holds us back, but more the lack of self-confidence. Some are more affected than others.

Once we leave school, most of us know that it is not as much a matter of college degrees or good grades that count. In the real world outside of academics, something more than just grades is required. I have heard it called "guts," "chutzpah," "balls," "audacity," "bravado," "cunning," "daring," "tenacity" and "brilliance." This factor, whatever it is labeled, ultimately decides one's future much more than school grades.

as a teacher, I recognized that it was excessive fear and self-doubt that were the greatest detractors of personal genius.  It broke my heart to see students know the answers, yet lack the courage to act on the answer. Often in the real world, it's not the smart that get ahead but the bold.
So why bother developing your financial IQ? Because if you do, you will prosper greatly. And if you don't, this period of time will be a frightening one. It will be a time of watching people move boldly forward while others cling to decaying life rings.

Today, I find so many people struggling, often working harder, simply because they cling to old ideas. They want things to be the way they were; they resist change.  I know people who are losing their jobs or their houses, and they blame technology or the economy or their boss. Sadly they fail to realize that they might be the problem. Old ideas are their biggest liability.  It is a liability simply because they fail to realize that while that idea or way of doing something was an asset yesterday, yesterday is gone.

Work to Learn -  Don't Work for Money


Returning from Vietnam in 1973,1 resigned my commission, even though I loved flying. I found a job with Xerox Corp. I joined it for one reason, and it was not for the benefits. I was a shy person, and the thought of selling was the most frightening subject in the world. Xerox has one of the best sales-training programs in America. Rich dad was proud of me. My educated dad was ashamed. Being an intellectual, he thought that salespeople were below him.  I worked with Xerox for four years until I overcame my fear of knocking on doors and being rejected.  Once I could consistently be in the top five in sales, I again resigned and moved on, leaving behind another great career with an excellent company.
The net result is that most workers never get ahead. They do what they've been taught to do: "Get a secure job." Most workers focus on working for pay and benefits that reward them in the short term, but is often disastrous in the long. Instead I recommend to young people to seek work for what they will learn, more than what they will earn. Look down the road at what ; skills they want to acquire before choosing a specific profession and before getting trapped in the "Rat Race."
Once people are trapped in the lifelong process of bill paying, they 1 become like those little hamsters running around in those little metal wheels. Their little furry legs are spinning furiously, the wheel is turning furiously, but come tomorrow morning, they'll still be in the same cage: great job.

When I ask the classes I teach, "How many of you can cook a better hamburger than McDonald's?" almost all the students raise their hands. I then ask, "So if most of you can cook a better hamburger, how come McDonald's makes more money than you?" The answer is obvious: McDonald's is excellent at business systems. The reason so many talented people are poor is because they focus on building a better hamburger and know little to nothing about business systems.
The world is filled with talented poor people. All too often, they're • poor or struggle financially or earn less than they are capable of, not      f because of what they know but because of what they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger. Maybe McDonald's does not make the best hamburger, but they are the best at  f selling and delivering a basic average burger.
The main management skills needed for success are:
 1. The management of cash flow 2. The management of systems (including yourself and time with family). 3. The management of people.



The most important specialized skills are sales and understanding marketing. It is the ability to sell--therefore, to communicate to another human being, be it a customer, employee, boss, spouse or child-that is the base skill of personal success. It is communication skills such as writing, speaking and negotiating that are crucial to a life of success. It is a skill that I work on constantly, attending courses or buying educational tapes to expand my knowledge.
work with the smartest people, you know and build a team of the smartest people to grow. If you are doing so you can increase the potential of the company that you own. This is  called a synergy of professional specialities.



Most of the people earn that much because they have specialized skills in their field as well as other skills. They can do their own job  as well as sell and market. I know of no other skills to be more important than selling as well as marketing. The skills of selling and marketing are difficult for most people primarily due to their fear of rejection. The better you are at communicating, negotiating and handling your fear of rejection, the easier life is.
  I have friends who are geniuses, but they cannot communicate effectively with other human beings and, as a result, their earnings are pitiful.  I advise them to just spend a year learning to sell. Even if they earn nothing, their communication skills will improve. And that is priceless.
Both of my dads were generous men. Both made it a practice to give first. Teaching was one of their ways of giving. The more they gave, the more they received. One glaring difference was in the giving of money. My rich dad gave lots of money away. He gave to his church, to charities, to his foundation. He knew that to receive money, you had to give money. Giving money is the secret to most great wealthy families. That is why there are organizations like the Rockefeller Foundation and the Ford Foundation. These are organizations designed to take their wealth and increase it, as well as give it away in perpetuity. My educated dad always said, "When I have some extra money, I'll give it." The problem was, there was never any extra. So he worked harder to draw more money in rather than focus on the most important law of money: "Give and you shall receive." Instead, he believed in "Receive and then you give."

If you're going to go broke, go big.
Winning means being unafraid to lose.
So for most people, the reason they don't win financially is because the pain of losing money is far greater than the joy of being rich.

 "Everyone wants to go to Heaven, but no one wants to die."

Quoting John D. Rockefeller, "I always tried to turn every disaster ' into an opportunity."

Failure inspires winners. And failure defeats losers. It is the biggest secret of winners.

Don't play to not loose, play to win.
My point is that it's those doubts and cynicism that keep most people? poor and playing it safe. The real world is simply waiting for you to get rich.  Only a person's doubts keep them poor. As I said, getting out of the rat race is technically easy. It doesn't take much education, but those doubts are cripplers for most people.

 Cynics criticize, and winners analyze.
 So whenever you find yourself avoiding something you know you should be doing, then the only thing to ask yourself is "What's in it for me?" Be a little greedy. It's the best cure for laziness.
 Michael Douglas said in the movie Wall Street. "Greed is good." Rich dad said it differently: "Guilt is worse than greed.

 Eleanor Roosevelt said it best: "Do what you feel in your heart to be right-for you'll be criticized anyway. You'll be damned if you do, and damned if you don't."
 Arrogance is ego plus ignorance."What I know makes me money. What I don't know loses me money. Every time I have been arrogant, I have lost money. Because when I'm arrogant, I truly believe that what I don't know is not important,"


When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or find a book on the subject.without a strong reason or purpose, anything in life is hard.

I offer you the following ten steps as a process to develop your God-given powers. Powers only you have control over.
1.  I NEED A REASON GREATER THAN REALITY2. I CHOOSE DAILYthink such thoughts of two things: one is time, which is your most precious asset, and two is learning. Just because you have no money, should not be an excuse to not learn. But that is a choice we all make daily, the choice of what we do with our time, our money and what we put in our heads. That is the power of choice. All of us have choice. I just choose to be rich, and I make that choice every day.

3.INVEST FIRST IN EDUCATION..
Rest will be updated soon.