بِسْمِ اللهِ الرَّحْمٰنِ الرَّحِيْمِ
I am writing summary about the book rich dad poor dad, a book that inspired hearts of many people around the globe.
A book which teaches many concepts such as How money works, how to handle money, creating wealth, managing risks, learning about investment, treat money the right way, generate money and increase its value overtime, how to improve your problem-solving skills and importance of assets.
The story’s narrator is Robert Kiyosaki and his two fathers, one is his real father whom he called his poor dad and the other is Mike’s his friend’s father whom he called Rich dad.
Rich dad is a rich businessman and his real father is a bureaucrat, there different mindset is discussed in this book. The
Chapter 1: The Rich Don’t Work for Money
The story starts when the author was 9 years. First Robert and his friend mike started a toothpaste business than his rich dad told him that this business was illegal after the failure he was eager to learn money lessons from his rich dad.
So his rich dad wanted him to learn a lesson about fear and greed and rat race, so it can become his short story with a moral lesson. He gave him and mike a job in his store, where they work for 10 cents per hour for three hours.
Soon Robert start hating his work and demanded more salary, Mike father offered him either a pay hike or money lesson even envying him with 5 dollar per hour a lot during the 1950s.
The lesson to get out of the “Rat Race” and instead of spending your whole life working to put a little money in your pocket and a bunch of money in someone else’s pocket, have people work hard to put money in your pocket. Out of all the lessons that were taught to the boys, this one was the most important. (Kiyosaki and Lechter)
Chapter 2: Why Teach Financial Literacy
The author tells his readers, “the only thing that life does is push you around.” The chapter tells about risk taking that opportunities in life come and go the rich strikes at right time and turn it to gold bullions and the poor play safe in security and does not take risk.
Poor and middle class works for money and for rich money works for them as poor and middle class earns salary and spent it in their expenses and fulfilling their debts whereas rich people have enough investments for creating wealth.
Chapter 3: Why Teach Financial Literacy
Now the story has gone to the future where Mike and Robert are now in the 1990s, both are now financially strong as they want to in the future.
“At a business meeting at the Edgewater Beach Hotel in Chicago, Charles Schwab, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Frazier, Richard Whitney, Arthur Cotton, Jesse Livermore and Albert Fall met to talk about different investments and money schemes”.
“Twenty-five years later, a report stated that a large majority of those extremely wealthy people that met in Chicago either ended up in jail, dead or penniless”.
“The major idea to take from the results of these unfortunate entrepreneurs is that you need financial literacy to be and stay safe”.
What we can learn from this is that foundation should always be strong and that can be only through enough assets as compared to liabilities, people should know the difference between assets and liabilities. Liabilities are responsibility, whereas assets are wealth generators.
Chapter 4: Mind Your Own Business
In this chapter the author introduces people to real estate investments taking the example of mac Donald’s that they are not only the best hamburger makers but also owners of “the most valuable intersections and streets in America.” Here importance of assets is explained to be financially independent.
The individuals should mind their own business rather than the employers.
To the author, real assets are anything with value – stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc. but the mind should be at realistic financial goals.
Chapter 5: The History of Taxes and the Power of Corporations
Here author has written that once taxes were hated in the U.S. and people usually protested against it, but then things started to change when government promised people that taxes are a way to punish the rich.
Later than government desire to earn more increases it was also levied on middle class and poor through indirect taxes, they are the ones who are more affected by taxes.
Rich people found different ways to be safe from taxes with the help of government schemes and lawyers who help them from taxes and reduce them for Rich people benefits.
Chapter 6: The Rich Invent Money
The author says that people create opportunity and luck, not waiting for opportunity and strike, and also rich people take opportunity whenever they get. They do not suppress themselves nor their talent.
People never get ahead in finance even if they have plenty of money because they have opportunities that they fail to tap, he stresses. Self fear and doubt should be taken out to achieve.
He also stresses on the importance of education and says “a trained mind is a rich mind.”
The author encourages people to hire people more intelligent than them because by capitalizing on the skills of others, an individual builds his own knowledge base and therefore has more power over those who don’t know.
Chapter 7: Work to Learn, Don’t Work for Money
In this chapter, the author emphasis on Salesman skills and communication for marketing. A woman came up to him who was a writer herself, she praised him and asked for tips to be a renowned publisher like him during an interview.
He said to her be a sales person, but she got angry at him as she thought lowly of this job. The main lesson we got from this is that people are talented and have products worthy of high achievements, but others don’t know about it.
With marketing one can take its business to a new level, we can learn it from past entrepreneurs.
Chapter 8: Overcoming Obstacles
The author believes that five personality traits hamper human beings: fear, cynicism, laziness, bad habits, arrogance. So fear is common trait in people when it comes to take risk.
Risk it like a Texan. Texans both win big and lose big. Their attitude is what a game-changer. They feel a sense of pride when they win, but they still brag even if they lose. They lack a fear of loss. Their loss inspires them.
The lesson in this chapter is to overcome the fears of loosing and take risk with braveness, although you do not risk more than you can bear.
Many a times fear kills a deal that can make one rich. Investor’s best time for investment is when there is all doom and gloom so when boom comes later in economy the value of their assets increases.
Chapter 9: Getting Started
A gold miner in Peru once said to Robert Kiyosaki, “There is gold everywhere. Most people are not trained to see it.” Robert replied, he faces the same thing in real estates.
Quoting from the original Book:-
- Find a reason greater than reality: the power of spirit
- Make daily choices: the power of choice
- Choose friends carefully: the power of association
- Master a formula and then learn a new one: the power of learning quickly
- Pay yourself first: the power of self-discipline
- Pay your brokers well: the power of good advice
- Be an Indian giver: the power of getting something for nothing When the first European settlers came to America, they were taken aback by a cultural practice some American Indians had. For example, if a settler was cold, the Indian would give the person a blanket. Mistaking it for a gift, the settler was often offended when the Indian asked for it back. The Indians also got upset when they realized the settlers did not want to give it back. That is where the term “Indian giver” came from, a simple cultural misunderstanding.
- Use assets to buy luxuries: the power of focus
- Choose heroes: the power of myth
- Teach and you shall receive: the power of giving
Chapter 10: Still Want More? Here are Some To Do’s
Some more citations from the original book-
• Stop doing what you’re doing. In other words, take a break and assess what is working and what is not working.
• Look for new ideas. For new investing ideas, I go to bookstores and search for books on different and unique subjects. I call them formulas. I buy how-to books on formulas I know nothing about.
• Find someone who has done what you want to do.
• Take classes, read, and attend seminars.
• Make lots of offers.
• Finding a good deal, the right business, the right people, the right investors, or whatever is just like dating.
• Jog, walk, or drive a certain area once a month for 10 minutes.
• Shop for bargains in all markets.
• Look in the right places.
• Look for people who want to buy first.
• Think big.
• Learn from history.
• Action always beats inaction.
In my view, this book is great for motivation purposes rather than financial. Motivation for business is greatly written in it. It is a best-selling book, good consideration in your reading hobby. A lot is written in this book cant be covered even in the 1700 words approx. summary.
The three income described in this book, important to be noticed are :-
1. Ordinary earned- Example salary, wages etc.
2. Portfolio income- Portfolio income is money received from investments, dividends, interest, and capital gains.
3. Passive income- Passive income is earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.
I thought it is necessary for the viewers to know about it, so I have put it in the end.
If you like my blog, please subscribe. WordPress’ subscription verification E-mail would come.