Robert Kiyosaki: You'll never make more money than you know

Robert Kiyosaki, a Japanese-American, has written a fabulous book on money thinking, Poor Dad Rich Dad.

He came to Shanghai when the book was selling like crazy in the Western Hemisphere. Many people were willing to pay at least 30,000 RMB to hear him talk face to face about the logic of making money.

Many had questioned his unscrupulousness, his big insider speculation and his exploitation of legal gaps, but few denied that it was a practical manual for the world of money and that he himself was a practitioner of profit maximisation.

If you have the ability to think on your feet and understand his methodologies for wealth differently from the ivory tower, then this article will be very rewarding for you.

The full article is 3500+ words, pure dry goods, the logic of making money distilled from more than 100,000 words of information, it is worth you to spend 5 minutes to read carefully.

I. Why can't the talented poor get on the rich man's poker table?

Robert Kiyosaki once went to repair a car when a very young mechanic came out. He knew what was wrong just by listening to the sound of the engine and fixed the car in a few minutes. It took his breath away.

But at the same time, he knew in his heart of hearts that the chances of such a good mechanic becoming a rich man were extremely low.

Most of the traditional workers are too deep in the 'specialisation' mire to make it to the rich man's poker table.

The 'specialisation quagmire' is that we are limited by the 'employee mindset' that there is only one formula for earning money.

Money = time x value of skills

To get more material resources, people have to "work crazy overtime" and "increase the value of their skills".

But not only does this not solve the problem, it also increases the risk.

Because the value of your time already determines the 'wealth ceiling', and the high degree of specialisation leads to a homogenisation of jobs, it is difficult for employees with 'solidified skills' to earn a living with other skills once they have been laid off.

This means that the average person spends his or her life unconsciously following an endless 'rat race'.

The rich, on the other hand, are making their fortunes behind a different door, using a completely different set of rules.

Consolidating resources, getting smarter people to work for them, acquiring information to find value pockets, and using a lot of invisible leverage to leverage out high value resources.

"You'll never make money beyond your perception"

If you want to go beyond the rat race track, a necessary cognitive expansion is to understand the "rules of money making".

The poor man's path to reversal: the rules of money generation

1. Assets and liabilities

40% of professional players will be broke within 5 years after retiring from the game.

This is because most of them have no concept of "assets" and "liabilities".

New sports cars that depreciate by 25% when you drive them home, and luxury homes that have no room to grow in value but require a large tax bill are the worst offenders.

Money is not just a currency, it is the best tool to make money.

Every dollar is an employee who makes money for us. Put money into assets and they will work for you 24/7.

This is how the cash flow is described in the book

Here you can see one of the most important money strategies of the rich: buying as many assets as possible and reducing debt to keep the cash flow positive.

They patiently stockpile their pool of "money-generating" assets until the influx of cash fully covers their expenses and they begin a life of "luxury" that will last from then on. (The poor, on the other hand, are the first to spend their money and never have the sense to build an 'asset pool')

So what are good assets? To give you a rough list of Robert's "asset pools", also known as "income after bedtime".

(i) Businesses that can be run without my presence, which I own but are run and managed by others.

(ii) Stocks that have the potential to appreciate in value

③. Real estate that produces income

④. Patents such as music and manuscripts

⑤. Anything that has the potential to appreciate in value and has marketability

"Wealth is the ability to support how long one can survive, or how long I would live if I stopped working today"

By having your own pool of assets, you can truly free your time and have "freedom of wealth".

2. Be keen to capture information to find value pockets

Robert Kiyosaki is a very smart businessman, but unlike many homeowners, who are "agent free", he hires the most expensive real estate agents.

Because information is priceless, and having a professional as his "eyes" and "ears" on the market is the only way to be the first to catch the most valuable pockets of potential appreciation.

A good broker not only made me money, but also saved me time. That way, I can play a round of golf while I buy a vacant lot for $9,000 and sell it immediately for $25,000.

But it must also be pointed out that every broker is different, and unfortunately most economists are just salesmen, and you have to kiss a lot of frogs to get a prince.

In fact, not only brokers, but anyone who has anything to do with "information" is taken very seriously by him.

On a visit to a government department, he stumbled across an office worker who had made an investment in a "tax lien" and invited him to lunch at the first opportunity.

After learning about the whole investment process, he immediately turned the "information into cash" the next day and made two brown related trades, earning a profit of 16% per annum.

Money never sleeps, and the market never stops trading, but the only truly valuable assets fall into the hands of those who know how to grasp information.

3. A true capitalist uses "companies" to maximise his or her assets

"You have a skill or an asset that you can consider owning in a corporate form to enjoy more benefits and protection"

When we have a clear enough understanding of how society works, we understand that a corporation is not a real entity, but merely a document registered with the government that complies with the letter of the law.

In a sense, a company is just a form of asset portfolio that maximises the advantages of 'policy' and 'taxation' when necessary.

To take an extreme example from Robert himself.

On 13 October 2012, a company owned by the Japanese-American Robert Kiyosaki filed for bankruptcy, the most famous of his 11 companies, Wealthy Global Corporation, worth a staggering $4 million.

However, Robert's company was filing for bankruptcy because it had just been required by the court to pay nearly US$24 million to Xi-Tech, the company that had built the platform for Kiyosaki's early success in book publishing and speaking.

Between US$4 million and US$24 million, Robert chose to cut his losses through bankruptcy.

In the process of maximising his profits, Robert Kiyosaki did not hesitate to choose the "corporate bankruptcy" option.

But we need to be clear that the collateral damage was that his "personal reputation" was also bankrupted in the process, which may have been a worthwhile trade for Robert Kiyosaki at the age of 65.

But not for us, who are still young, because "credibility" is often a person's most important asset.

A final word of caution.

The most important investment is in fact your brain, otherwise you will not be able to "cash in on information" and you will not be able to "manage the company".

"Studying is the most important part of an average person's initial accumulation, followed by the experience that your first job gives you.

Robert Kiyosaki, who graduated in international trade and was well versed in financial and legal rules, went to work as a salesman for Xerox for four years to perfect his marketing system.

Even this man didn't really set up his own company until he was 30, and went into debt twice before becoming a real millionaire in 1985.

So even if you are determined to get out of the "rat race" and into the "fast lane", you will have to go through a "sleeper" journey.

Separate "assets" from "liabilities", stay informed, try to understand and use "capital tools - companies "These will not necessarily get you to the end of your wealth, but they are certainly an option worth trying.