Book Review - Rich Dad Poor Dad – Oct 3, 2012

Author: Robert T. Kiyosaki

As everybody knows, Rich Dad Poor Dad is an international blockbuster of personal finance book. The author strikes me with his insightful thoughts on personal finance. In the book, the author talks about the difference between the concept of money of his rich dad, who is little educated (eighth grade), and his poor dad, who is highly educated, for example, the rich dad said,”Learn to manage risk.”, but his poor dad said “When it comes to money, play it safe. Don’t take risks.”; his rich dad paid his bills last, his poor dad paid his bills first; his rich dad said, “How can I afford it?”, but the poor dad said, “I can’t afford it.” “How can I afford it?” put his brain to work, but “I can’t afford it.” stopped his brain. The author believes that one’s thoughts are very important, as they shape a person.

The author or his rich dad really has a knack of teaching. He is able to talk about personal finance in a way that even laymen are able to understand, as the author believes in KISS (Keep it super simple.). The author points out the difference between assets and liabilities, and believes that becoming rich is to gain assets. He defines assets as things that put money in our pocket, and liability as things takes money out of our pocket. According to the book, assets are the following: businesses that do not require our presence, stocks, bonds, income-generating real estate, Note (IOUS), royalties from intellectual property such as music, scripts, and patents, and anything else that has value, produces income or appreciates, and has a ready market.

Robert also believes that our brain is our biggest asset, so he encourages us to invest in our brain by enhancing our financial intelligence, which compose of four things, Accounting; financial literacy, which uses left brain, the ability to read and understand financial statements which allows one to identify the strengths and weaknesses of any businesses (The more money you’re responsible for, the more accuracy is required.), investing; the science of “making money”, strategies, formulas, which requires creativity, understanding market; the science of supply and demand, including technical aspect of the market, the law; tax advantages, and protection from lawsuit, which includes the knowledge to use corporation to protect and enhance assets, which can be used by anyone, but the poor don’t know how.

At the end of the book, the author also provides action list. Overall, it’s a very insightful, understandable, practical, and complete book on personal finance. It’s a book worth reading again and again to fully absorb it.