Tuesday 21 June 2016

Review and lessons from Rich Dad Poor Dad

Through this book, Robert Kiyosaki has explained the different actions and thought patterns that separate the poor and the middle class from the rich.
He begins by telling his childhood story (which is fake) in which he receives contrasting advices from his two fathers, one rich and one poor. The poor one is his real father, a well-educated man who works for the government and earns a fixed salary. The rich dad is his friend’s father, who is not highly educated but is financially literate; he is not yet rich but is working to be there. 


The book is a short and interesting read. Though I was reading it for the first time, it felt like I had read everything before (mostly on Quora). If you even remotely follow any personal finance related site on the Internet, chances are that you already know its core teachings (your home is not an asset, save first etc.). After the initial definition of an asset and a liability, most pages contain random babble about the same definition and the author’s prowess in making money from real estate. But there was still some valuable information for me to learn. It was overall an okay read. Here are some things I learned from this book. Things poor people say:    “The love of money is the root of all evil.” This is the strongest belief that binds most of them together. I have heard it multiple times, mostly from incompetent clowns whose inability to earn money has grown into hatred for the rich and successful. “I can’t afford this”. Kiyosaki explains that saying these words makes you mentally lazy. Your brain believes these words and stops working. His rich dad forbade these words. He instead recommended to ask yourself this simple question: “How can I afford this?” This slight change puts your brain to work. Just like your body needs proper physical exercise to remain in a healthy state, you need to regularly exercise your brain (similar to James Altucher’s mental muscle/10 ideas a day). “Don’t take risks”. The strongest reason why the poor remain poor is their aversion to risk. The fear of losing money eternally keeps people in poverty. Kiyosaki puts it in a better way: “I have never met someone who really likes losing money … 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. “Taxes should punish the rich.” … “Take from the rich, give to the poor”. The jealousy and the Robinhood attitude of the middle class has been the most destructive for them. To study the fatality of this dangerous attitude, read Atlas Shrugged and Animal Farm. In short, suppose a person who is earning ₹ 5 lakh wonders why are some people earning in billions when he is working day and night with all his might; he starts a revolution against this, gathers a large number of people and overthrows this supposedly corrupt and unfair system. Their property is distributed among the society. The greedy rich bastards are rotting in jail. Everyone seems happy. Any guesses what happens after some time? People who earn ₹ 50000 now want to punish the rich and bring income parity. People who earn ₹ 5 lakh, the same people who sowed the seeds of this poisonous idea, wonder who is the rich now; aren’t they all rotting in jail? Suppose the people with ₹ 50000 income have their way and bring down the rich. Everything is fine again. This time you know what will happen after a year or two. Those who earn ₹ 5000 will want their own revolution. This is the exact way how communism works. Everything starts from simple envy that transforms into hatred and destroys everything. But there is more to communism than the financial breakdown of the society. It destroys the mind, soul and the competitive spirit which is the strongest pillar of societal development. I highly recommend Atlas Shrugged, 1984 and Animal Farm to know about its evils in detail. “I am not rich because *any clichéd reason*” This is another habit of eternally poor people; blaming everything and everyone under the sun except themselves. “I am not interested in money / Money doesn’t matter” – A statement mostly used to deceive their own minds. Closely related to the first point. If someone says this to you, inquire what that person does in their everyday life. Unless he is a top-class artist or a researcher or someone who derives happiness from his profession, chances are that he is a miserably unhappy person using this statement to deceive himself. ·       What separates the rich and the poor? The rich don’t work for money. Instead, they learn how to make money work for them. While the poor and middle class believes in studying well, getting good grades and getting a decent job, the rich believe in learning how the money works so they can have power over it. Fear and greed control our lives. Most people, when offered more money, can’t utilize the opportunity as they waste it all by increasing their spending. Therefore,

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