This book is influential
This is an highly influential financial book. When I read “Rich dad, poor dad” for the first time in 2002, I only felt that what the author of this book was talking about subverted my past financial concepts; but the concepts it was trying to convey did not trigger me much recall. The reason I think about it now is that I am too young and I am still exploring my own life. It is also difficult to understand why the main concept of the book is completely different from the concept of money that we have been instilled since childhood.
Main concept in this book
In 2014, I re-read this book again, and finally I can understand the main ideas the author wants to convey:
- The poor and middle class work for money, and the rich let money work for him.
- The poor and the middle class buy liabilities; the rich buy assets (as defined by the author, it is assets that can generate cash flow).
- The poor and middle class live on work, pay their bills all their lives, and take pride in paying taxes.
- The poor and the middle class borrowed money to buy a property and serve as a house slave. As a result, you have to work for the bank to repay the property, and let the bank decide the prime time of your life for the next 30 years. Lost the opportunity to have fixed cash flow funds as investment funds and assets to grow due to long-term compound interest.
Assets can increase in value
The author recommends assets that can increase in value (assets that can generate cash flow for you):
- A business that can be run without having to be there.
- Mutual fund.
- Real estate that generates income.
- Anything that has value that can generate income, or may increase in value, and has liquidity.
Most people have the wrong view of money
Most of the middle class must struggle with bills and debt throughout their lives. The main underlying reason is the concept of money. And most people’s concept of money comes from family, not school. But the concept of money that most parents have instilled in their children since childhood is exactly the so-called formula for success in life – go to a good university, find a good job, get married, buy a house, and give birth to the next generation. The author completely disagrees with this concept of money, and recommends that readers throw away this concept, otherwise they are destined to be a poor person who pays the bills in his life.
The causes of financial and poverty problems are ignorance and fear, not the economy, the government, or the rich. Education cannot solve all problems, and the biggest cause of ignorance is to stop learning, because most people stop learning after they leave school, and social life is the biggest place to learn the concept of money that will last a lifetime, not school. We cannot change society, we can only learn how to adapt to it. It is easier to change ourselves than to change others.
Financial intelligence need to improve
The author emphasizes the importance of continuously improving your financial IQ and updating your knowledge; because only in this way can you help you discover opportunities and find your own circle of competence. Typical financial IQ includes:
- Financial knowledge
- Investment strategy
- Market supply and demand
With these conditions, there is still no guarantee of your success. Just like stock investment or any career that can make you successful; persistence, enthusiasm, dedication, and early start are all indispensable elements.
The concept of this book has gradually been accepted
In Taiwanese society 20 years ago, I believe it was difficult for most people to accept such a concept for a while; but in today’s society, especially among the younger generation, this is almost a basic and mainstream financial knowledge. Because of the rapid flow of information nowadays, more than 20 years have proved that the author is correct; just as no one would agree to “study a good school and find a good job”, and you will be able to protect your life from financial worries.
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