Rich Dad’s Guide To Investing
By: Robert Kiyosaki
Rich Dad’s Guide to Investing is more of philosophical book on how the author views money, business, and investing more than a how to book. The book is divided into 5 phases.
Phase 1: Are you mentally prepared to be an investor? The key advice in this phase is to decide what you want to be financially; secure, comfortable, or rich? There is no right answer. Most of us want to be a little bit of each of these things, but prioritizing them in the order that fits our way of life is the first step to developing a plan of action to get there.
Phase 2: What type of investor do you want to be? I liked learning about different ways to view different kinds of people and how they invest. The key according to Mr. Kiyosaki, is to become the Ultimate Investor. This is someone who creates a business, and eventually takes it public to become the selling shareholder. This is no easy task, few companies ever reach the size necessary to become public. One thing I discovered in this phase is that in order to become an accredited investor in the US, you need an income of at least $200K per year, or a net worth of $1 million. The SEC limits certain opportunities only to accredited investors. This is to protect the middle class from speculative investments. While it may be necessary, the SEC not only limits the worst investment opportunities, but the best ones as well. The author made it voiced his opinion many times about how he believes the laws are written for the rich. I don’t know what to think about this new information yet, but it’s something t dwell on.
Phase 3: How to build a Strong Business. The foundation that all strong business are based on is a solid mission statement. Cash-flow, communication, systems, legal, and product management are also important factors to developing a strong business. The author does a great job of discussing each in his book. What stuck out the most to me was his emphasis on creativity and the mission statement. Over and over he repeats the mantra that investing in your own business, and creating something new will net you more returns in the long term.
Phase 4: Who is a sophisticated investor? A sophisticated investor is someone who first and foremost, understands his or her self. Warren Buffet is known for having a box labeled on his desk as “Too Hard”, the majority the opportunities he reviews wind up in this box. It’s not the fact that Warren Buffet understands everything and anything there is to know about every company that has made him rich, it’s because he understands his limitations and only invest in what he understands. Bill Gates runs the biggest tech company in the world, Warren Buffet has never invested in a tech company, both are billionaires because they stick to what they understand.
Phase 5: Giving Back. Giving back is something Mr. Kiyosaki strongly supports. He thinks it’s wrong to view rich people as greedy. It’s true that Scrouges are out there, trust fund babies exist, and a few people have obtained there wealth dishonest means… for the most part the rich class is made up of entrepreneurs, people who had value to a lot of peoples lives with there products and services. Being rich gives you the power to give back to organizations and charities you believe in, instead of leaving it up to someone else.
Favorite Quote: In today’s ever-changing world, the most important investment you can make is an investment in ongoing education and searching for new ideas. So keep searching, and keep challenging your old ideas.