Rich Dad Poor Dad

Even though the book has been out for years, I just got around to reading Robert Kiyosaki’s book “Rich Dad Poor Dad”.  Kiyosaki is a fairly controversial figure.  Some people love the guy and listen to his every word and others think he is a snake oil salesman.

After reading the book, I found that I actually agree with a few of Kiyosaki’s main ideas that deal with assets vs liabilities and the concept of cash flow.

Here are some of the most useful quotes from the book…

On Assets vs Liabilities…

“Rich people acquire assets.  The poor and middle class acquire liabilities, but they think they are assets.”

“An asset is something that puts money in my pocket.  A liability is something that takes money out of my pocket.  This is really all you need to know.  If you want to be rich, simply spend your life buying assets.  If you want to be poor or middle class, spend your life buying liabilities.  It’s not knowing the difference that causes most of the financial struggle in the world.”

“In my world, real assets fall into several different categories…

1.  Businesses that do not require my presence.  I own them, but they are managed or run by other people.  If I have to work there, it’s not a business.  It becomes my job.

2. Stocks

3. Bonds

4. Mutual Funds

5. Income-generating real estate

6. Notes (IOUs)

7. Royalties from intellectual property such as music, scripts, patents

8. And anything else that has value, produces income or appreciates and has a ready market”

On Cash Flow…

“Keep your daytime job, be a great hard-working employee, but keep building that asset column.  As your cash flow grows, you can buy some luxuries.  An important distinction is that rich people buy luxuries last, while the poor and middle class tend to buy luxuries first.  The poor and middle class often buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich.  They look rich, but in reality they just get deeper into debt on credit.  The old-money people, the long-term rich, build their asset column first.  Then, the income generated from the asset column bought their luxuries.”