Rich Dad, Poor Dad

I recently finished reading a book called “Rich Dad, Poor Dad” by Robert Kiyosaki. Overall it was a fast read full of personal stories and interesting ideas.

If you haven’t guessed by the title, this book covers finances and how to generate passive income. The author dives right in with personal stories of his upbringing and funny ideas of how he thought he could make money as a child. Throughout his childhood he is mentored by his friend’s father (Rich Dad) who owns a few businesses and provides the author knowledge on how to make money work for him.

The book is an easy read. Clocking in at 207 pages, the book quickly covers different topics regarding money and includes information on taxes, personal growth, and the difference between an asset and a liability. The authors definition of an asset and liability are simple and easy to remember.

An asset puts money in your pocket. A liability takes money out of your pocket.

Robert Kiyosak

The author’s main premise is to build ones asset column while reducing the liability column. By building ones asset column, passive income will increase, thus providing an opportunity to quit ones day job and focus solely on business ventures and investment opportunities. Roberts primary way of earning passive income is through real estate and stock investments. He reminds the reader that “getting a good deal” happens when buying an investment, not when selling. For example, if someone is looking for an investment property they should be looking at prices that are lower than market value, etc…

Robert encourages the reader to always seek personal growth. He suggests that everyone check out seminars, workshops, networking events, and reading books about the subjects that we’re passionate about which can become potential income earners.

The author strongly advocates to get out of consumer debt (reducing your liability column) while investing in yourself (saving for retirement, or investing in your education). He also explains how working for yourself (starting your own business) creates tax breaks and provides other advantages.

As a Dave Ramsey fan, I found most of what Robert was advocating for as great financial advice. However, the author encourages the growth of ones asset column (creating passive income) primarily through real estate and taking out mortgages. I have a problem with this. I get it, most people can not afford to purchase a home with cash, however, it’s hard for me to think of myself as winning with money as my passive income is $100-200 each month while I’m in debt hundreds of thousands of dollars. I know, I know, the tenant is paying the mortgage while I’m making some money. It comes down to the level of risk that each individual is comfortable with while working towards growing the passive income stream. I’m not completely against taking out a second and third mortgage but it would have to be a compelling reason before you found me striking a deal. I would much rather be paying down my first mortgage to build equity than be half a million dollars in debt with multiple mortgages.

Speaking of assets, using the authors definition, a personal home is not an asset (since it does not generate passive income). This was something that I had not thought of before and still working through!

Overall, the book inspired me to continue seeking personal growth and to never stop learning (for example how taxes work, or different types of investment opportunities). After reading the book I had at least two or three ideas for potential side businesses. Now I need to talk to my tax guy about tax implications and setup fees. See, never stop learning! 🙂

2 thoughts on “Rich Dad, Poor Dad”

  1. Nice Man , Although I am not a reader myself but this blog kind of summarized it for me . After reading about author mentioning that personal house is not an asset , this is something which I never thought or you can say never thought of like this ,I always thought it was kind of an asset since it saves a lot of over head that comes with rented property at the same time gets the future secured .

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