Chapter 4: the History of taxes and the power of Corporations
- Rich Dad did not see Robin Hood as a hero. He called Robin Hood a crook for robbing from the rich and give to the poor.
- How did the rich outsmart the intellectuals? Once the “take-from-the-rich” tax was passed, cash started flowing into government coffers. Initially, people were happy. Money was handed out to government workers and the rich. It went to government workers in the form of jobs and pensions, and it went to the rich via their factories receiving government contracts. The government received a large pool of money, but the problem was the fiscal management of that money. The government ideal is to avoid having excess money. If you fail to spend your allotted funds, you risk losing it in the next budget. You would certainly not be recognized for being efficient. Business people, on the other hand, are rewarded for having excess money and are applauded for their efficiency. As the cycle of growing government spending continued, the demand for money increased, and the “tax-the-rich” idea was adjusted to include lower-income levels, down to the very people who voted it in, the poor and the middle class.
- The financial IQ (the synergy of many skills and talents) is made up of knowledge from four broad areas of expertise:
· Accounting : is a financial literacy or the ability to read numbers which allows you to identify the strengths and weakness of any business. The more money you are responsible for, the more accuracy is required.
· Investing : is the science of “money making money”.
· Understanding Markets : is the science of supply and demand.
· The Law : the awareness of accounting, corporate, state, and federal regulations.
- In summary, business owners with corporations: earn, spend, pay taxes; Employees who work for corporation: earn, pay taxes, spend.
Chapter 5 : the Rich invent money
- “Often in the real world, it’s not the smart who get ahead, but the bold.”
- “The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth seemingly instantaneously. An untrained mind can also create extreme poverty that can crush a family for generations.”
- Which one sounds harder to you? 1. Work hard. Pay 50% in taxes. Save what is left. Your savings then earn 5%, which is also taxed. OR 2.Take the time to develop your financial intelligence Harness the power of your brain and the asset column.
- The problem with “secure” investments is that they are often sanitized, that is, made so safe that the gains are less.
- “It is not gambling if you know what you’re doing. It is gambling if you’re just throwing money into a deal and praying.”
- “Great opportunities are not seen with your eyes. They are seen with your mind.”
- These skills are in addition to those required to become financially intelligent:
· Find an opportunity that everyone else missed
· Raise Money
· Organize smart people
- There is always risk, so learn to manage risk instead of avoiding it.
Chapter 6: Work to learn – don’t work for money
- The main management skills needed for success are:
1. Management of cash flow
2. Management of system
3. Management of people
- “When I speak to adults who want to earn more money, I always recommend the same thing. I suggest taking a long view of their life. Instead of simply working for the money and security, which I admit are important, I suggest they take a second job that will teach them a second skill. Often I recommend joining a network-marketing company, also called MLM, if they want to learn sales skills. Some of these companies have excellent training programs that help people get over their fear of failure and rejection, which are the main reasons people are unsuccessful. Education is more valuable than money, in the long run.”
- “The world is filled with talented poor people. All too often, they’re poor or struggle financially or earn less than they are capable of, not because of what they know, but because of what they do not know. They focus on perfecting their skills at building a better hamburger rather than the skills of selling and delivering the hamburger. Maybe McDonald’s doesn’t make the best hamburger, but they are the best at selling and delivering a basic average burger.”
Poor yet educated Dad
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Rich Dad
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- Work harder and harder, become more competent, salary went up but like a professional athlete who suddenly are injured or are too old to play then the position is gone.
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- “When I have some extra money, I’ll give it.” The problem was there was never any extra money.
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- Always encourage to work with people smarter than we were and to bring people together to work as a team. (synergy of professional specialties)
- “Give and you shall receive.”
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- “To be truly rich, we need to be able to give as well as to receive.”
- “To receive money, you had to give money. Giving money is the secret to most great wealthy families.”
- “The better you are at communicating, negotiating, and handling your fear of rejection, the easier life is.”
Chapter 7: Overcoming Obstacles
- The primary difference between a rich person and a poor person is how they manage fear.”
- There are five main reasons why financially literate people may still not develop abundant asset columns that could produce a large cash flow. Those are:
1. Fear
2. Cynicism
3. Laziness
4. Bad Habits
5. Arrogance
- “ I have never met anyone who really likes losing money. And in all my years, I have never met a rich person who has never lost money. But I have met a lot of poor people who have never lost a dime -- investing, that is.”
- “For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.”
- “If you hate risk and worry, start early.”
- “What I like best is the Texas attitude. They’re proud when they win, and they brag when they lose. Texans have a saying ‘If you’re going to go broke, go big. You don’t want to admit you went broke over a duplex.’ ” – Rich Dad
- “Failure inspires winners. Failure defeats losers.”
- Winning means being unafraid to lose.” – Fran Tarkenston
- “I always tried to turn every disaster into an opportunity.” – John D Rockefeller
- “We’re all heroes at something, and coward at something else.”
- Cynics criticize, Winners analyze.
- Often in life, there are people who are too busy to take care of their wealth and there are people too busy to take care of their health. The cause is the same. They are busy and they stay busy as a way of avoiding something they do not want to face. If they aren’t busy at work or with the kids, they’re often busy watching TV, fishing, or shopping. Yet deep down they know they are avoiding something important. That’s the most common form of laziness: laziness by staying busy.
- How do you beat laziness? The answer is a little greed. So whenever you find yourself avoiding something you know you should be doing, then the only thing to ask yourself is, WII-FM (What’s in it for me?). Be a little greedy. It’s the best cure for laziness. Too much greed, however, as anything in excess can be, is not good.
- “Guilt is worse than greed, for guilt robs the body of its soul.” – Rich Dad
- “Do what you feel in your heart to be right – for you’ll be criticized anyway. You’ll be damned if you do, and damned if you don’t.” – Eleanor Roosevelt
Chapter 8: Getting Started
- “There is gold everywhere. Most people are not trained to see it.”
- 10 steps as a process to develop your God-given powers, powers over which only you have control:
1. Find a reason greater than reality: the power of spirit
2. Make daily choices: the power of choice
3. Choose friends carefully: the power of association
4. Master a formula and then learn a new one: the power of learning quickly
5. Pay yourself first: the power of self-discipline
6. Pay your brokers well: the power of good advice
7. Be an Indian giver: the power of getting something for nothing
8. Use assets to buy luxuries: the power of focus
9. Choose heroes: the power of myths
10. Teach and you shall receive: the power of giving
For more lesson, visit: richdad.com
