Robert Kiyosaki's Rich Dad Poor Dad (financial literacy condensed, recommended for collection) (2)

Lesson 5: Investment for the Rich

Today, I find many people working hard and struggling, largely because they remain entrenched in stereotypes. They want things to remain as they were before and they resist any change. Those who have lost their jobs or houses are always complaining about technological advances, about the poor state of the economy and about their bosses. Unfortunately, they don't realise that the problem is actually their own. Old-fashioned thinking is their biggest debt. The reason for this is simple: they don't realise that an existing idea or method that was an asset yesterday has become a liability today.

If you know exactly what you are doing, you are not gambling; you are only gambling if you put money into a deal and then just pray. In any investment, the way to succeed is to use your technical knowledge, your wisdom and your love of the game to minimise surprises and reduce risk. Of course, there is always risk, but your financial intelligence can improve your ability to deal with the unexpected. It is often the case that what is a high risk for one person may be a low risk for another. This is why I keep encouraging people to focus more on financial education rather than just investing in stocks, real estate or other markets. The more savvy you are, the better you can handle the unexpected.

What you know is more important than what you buy.

Discuss the learning sessions

In real life, people often rely on courage rather than wisdom to get ahead.

As a teacher, I have realised that excessive fear and self-doubt are the biggest factors in destroying our talents. It saddens me to see students who know exactly what to do, but lack the courage to put it into practice.

Stereotypical thinking is the biggest debt carried by those who are struggling at the poverty line. The reason is simple: they don't realise that an existing idea or method that was an asset yesterday has become a liability today.

Rich people tend to be more creative and willing to take risks after careful planning.

Why do you want to improve your financial intelligence? Because you want to be the person who can create your own opportunities.

Our only, and most important, asset is our mind. If it is made well-trained, it can create a lot of wealth in a flash. An untrained mind, on the other hand, has the potential to create countless millions of dollars of poverty to bring down a family, or even generations.

If an investment opportunity is too complex and I can't figure it out, I won't invest. Simple mathematical calculations and general common sense are all you need to manage your money effectively.

Often, investments that are labelled "safe" have been risk-treated by others. They are so safe that the rewards are minimal.

If you know what you're doing, you're not gambling; if you put money into a deal and just pray, you're gambling.

Good opportunities are seen with your head and not with your eyes.

Knowing the importance of financial intelligence is your greatest asset. Not knowing this will be the biggest risk you face.

Lesson 6: Learn not to work for money

Many talented people are poor because they focus on the product and know little about the business system.

Discuss the learning session

The management skills necessary for success include (1) cash flow management, (2) systems management and (3) people management. The most important professional skills are sales skills and marketing skills. Communication skills such as written presentation, verbal presentation and negotiation skills are even more vital to one's success.

For well-educated dads, job stability is everything; while for rich dads, constant learning is everything. I am often amazed at how some people are so talented but earn such a low salary. As the adage goes, "The word job is 'just over broke'." Unfortunately, this applies to millions of people. I would advise young people to look at what they can learn from a job, not just how much money they can make. Life is like going to the gym, the most painful thing is making the decision to work out, once you get past that, things will be better later. The world is full of talented poor people. In many cases they are poor, struggling financially or only earning less than they deserve, not because they are not educated enough, but because they lack another skill. Expertise is both a strength and a weakness. Paying for it is the secret to keeping the very rich families rich.

Lesson 7: Overcoming difficulties

"Fail because you are too afraid to fail."

If you have very little money and want to get rich, you must first concentrate on one point rather than aiming for balance. Those investors who are successful are certainly not chasing balance at first; those who do will just stay where they are. To progress, you must first be unbalanced and pay attention to how you can keep progressing.

A smart investor knows that the times that seem the worst are actually the best times to make money. While everyone else is too scared to act, they are pre-emptive and reap the rewards.

"The cynic will never succeed." Rich Dad said. "Unproven doubts and fears can make cynics. Cynics complain about reality, while successful people analyse it." This is another of Rich Dad's favourite sayings. Rich Dad explains that complaining clouds one's mind, while analysis brings clarity to one's heart and eyes. Analysis enables the successful person to see what the cynic cannot see, to spot opportunities that everyone else overlooks, and the ability to spot opportunities is the key to success.

"'I don't want it' is the key to success." So says Rich Dad.

Busy people are often the laziest of people.

Discuss the learning session

The main difference between the rich and the poor is the way they handle fear differently.

I have never met a golfer who has never lost a ball, a lover who has never been sad, or a rich person who has never lost money.

For most people, they are not financially successful because for them the pain of losing money is far greater than the pleasure of getting rich.

Rich Dad knew that failure would only make him stronger and more astute. He didn't want to lose money, but he knew exactly what kind of person he was and knew how to deal with loss. He accepted the loss and then turned it into a win.

Texans don't hide their failures, they rise to the occasion, they accept them and turn them into motivation.

Getting out of the rat race is technically easy and does not require much education, but it is the doubts that keep most people from moving forward.

The cynic is like a "chicken" who worries like a "chicken" whenever there is fear or doubt.

The sadness and helplessness that comes with "I can't afford it" can lead to disappointment, retardation and even demotivation. "How can I afford it?" opens the door to joy and dreams of possibility.

If I also learn to pay myself first, then I will be financially "stronger". I should be "stronger" both spiritually and financially.

In the world of money, finances and investments, there are many people who have no idea what they are talking about.