Rich Dad, Poor Dad has been called the number one personal finance book of all time.Robert Kiyosaki is the author of the book "Rich Dad Poor Dad."
Robert Kiyosaki grew up with two father figures: "poor dad" - his real father who died with bills to pay - and "rich dad," who started with little before becoming one of the richest men in Hawaii.In this book he also illustrates the mindsets and beliefs that make the rich, rich and the poor, poor by contrasting the advice of his real dad with that of his financial mentor, who was the father of the author’s best friend.
This book is based on advices given by the ‘rich’ father to the author.
Few Secrets of Rich
1.Rich don’t work for Money.
Rich people take a job to learn and not for the money.After learning everything about the business.They start their own business.So it is always advisable to not just work for money.You must try to gain knowledge.Take a job only for the skills it will teach you, never for the money it pays you.
2.Learn financial literacy.
Financial literacy is really very simple but it is something that is not taught in schools. There is only one rule: know the difference between an asset and a liability.The main difference between assets and liabilities is that assets appreciate with time, while liabilities will depreciate with time.For example buying a car is a liability but buying stocks of that car company is an asset.Like I mentioned in one of my posts that If you had spent Rs 55,000 to buy a Royal Enfield motorcycle in 2001, you would now have an old, rugged bike. But if you had invested the same Rs 55,000 in shares (at Rs 17.50 per share) of Eicher Motors, the company that makes Enfield bikes, your investment will be worth Rs 5 crore now.
So it is always advisable to allocate your money buying assets rather than buying liabilities.
3.Mind your own business.
Even though you are doing a job you must focus on your asset column.It is advisable to start saving money. Don’t spend all your salary. Save some amount on a monthly basis and think about investment ideas which can turn profitable later.Invest in stocks, bonds, mutual funds, rental properties, etc.
4.The History of taxes and power of corporations.
The income which you get from job is taxable.You may have to pay up to 30% in tax but long term investments in stock markets are not taxable. Long term investments are the ones which are more than one year old.In India long term capital gain are not taxable.So you must try to avoid taxes using legal methods.It is a harsh truth that money earned through muscle power is taxable and money earned through investments is less taxable or not taxable at all(depends upon the type of investment). Another important thing is that an individual doing a job is taxed before expenses and a person doing a business is taxed after expenses. This simple rule means that if done properly, you can legally write off vacations, car expenses, health club memberships, restaurant meals, and so on. The poor earn, pay taxes, then spend; the rich earn, spend, then pay taxes.
Conclusion
I think people should definitely read this book.It will help to understand the basics of finance.It will also teach you the ways to become rich by making simple investments.This book also highlight the mistakes made by people which can avoided.
Robert Kiyosaki grew up with two father figures: "poor dad" - his real father who died with bills to pay - and "rich dad," who started with little before becoming one of the richest men in Hawaii.In this book he also illustrates the mindsets and beliefs that make the rich, rich and the poor, poor by contrasting the advice of his real dad with that of his financial mentor, who was the father of the author’s best friend.
This book is based on advices given by the ‘rich’ father to the author.
Few Secrets of Rich
1.Rich don’t work for Money.
Rich people take a job to learn and not for the money.After learning everything about the business.They start their own business.So it is always advisable to not just work for money.You must try to gain knowledge.Take a job only for the skills it will teach you, never for the money it pays you.
2.Learn financial literacy.
Financial literacy is really very simple but it is something that is not taught in schools. There is only one rule: know the difference between an asset and a liability.The main difference between assets and liabilities is that assets appreciate with time, while liabilities will depreciate with time.For example buying a car is a liability but buying stocks of that car company is an asset.Like I mentioned in one of my posts that If you had spent Rs 55,000 to buy a Royal Enfield motorcycle in 2001, you would now have an old, rugged bike. But if you had invested the same Rs 55,000 in shares (at Rs 17.50 per share) of Eicher Motors, the company that makes Enfield bikes, your investment will be worth Rs 5 crore now.
So it is always advisable to allocate your money buying assets rather than buying liabilities.
3.Mind your own business.
Even though you are doing a job you must focus on your asset column.It is advisable to start saving money. Don’t spend all your salary. Save some amount on a monthly basis and think about investment ideas which can turn profitable later.Invest in stocks, bonds, mutual funds, rental properties, etc.
The income which you get from job is taxable.You may have to pay up to 30% in tax but long term investments in stock markets are not taxable. Long term investments are the ones which are more than one year old.In India long term capital gain are not taxable.So you must try to avoid taxes using legal methods.It is a harsh truth that money earned through muscle power is taxable and money earned through investments is less taxable or not taxable at all(depends upon the type of investment). Another important thing is that an individual doing a job is taxed before expenses and a person doing a business is taxed after expenses. This simple rule means that if done properly, you can legally write off vacations, car expenses, health club memberships, restaurant meals, and so on. The poor earn, pay taxes, then spend; the rich earn, spend, then pay taxes.
Conclusion
I think people should definitely read this book.It will help to understand the basics of finance.It will also teach you the ways to become rich by making simple investments.This book also highlight the mistakes made by people which can avoided.
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