Rich Dad’s Guide To Investing Book Summary

Many have been inspired by the Rich Dad series. It’s because this book offers us a new way of looking at money. This Rich Dad series of books will open your eyes if you were born into a middle class home. The summary of “Rich Dad’s Guide to Investing: What the Wealthy Invest in, That the Poor and the Middle Class Do Not” will be presented today.

Robert Kiyosaki was 9 years old when he and his wealthy father were conversing on a beach. when he was shown a large bungalow by his wealthy father and informed that “I just bought it.” Robert wondered how he could afford to buy such a large house. Because of this, his wealthy father’s wealth at the time was not as great. So he enquired as to how they could manage to purchase such a pricey home from his wealthy father. He received the following response: “I cannot afford it, but my business can.” We learn our first lesson right here.

Reduce your income and raise your expenses, according to the rich Dad’s Investment Handbook.
What? How in the world can someone advise this, you must be thinking. We are constantly told to cut costs and boost income, but the reality is quite different. That’s accurate. Let me go into more depth about what this sentence means, though.

In the closing chapters of Rich Dad’s Guide to Investing, Robert presented the idea of “raising expense and lowering income.” He added that this lesson is the most crucial one in the entire book. If you comprehend this issue effectively, you will have a good understanding of the concept behind the book “Rich Dad’s Guide to Investing,” which was published about it.

Robert used to be a child employee for his wealthy father. His hourly wage was 10 cents. Robert made the decision to request a raise one day. His wealthy father, however, cancelled his entire income rather than giving him a raise. How come he did that?

The wealthy father’s response was, “Paying children a wage means teaching them to think like an employee.” Also, Robert’s wealthy father did not want Robert to have an employee mindset.

How do workers think?

Work hard at your 9 to 5 job, strive for a promotion, negotiate a raise in pay, and cut back on spending. for increased savings. But Robert’s wealthy father always told him to spend more and make less money.

This is due to the fact that if you are running a business, your goal should be to extract the least amount of money as income and re-invest the remainder into your company. or purchase assets for your company, which is an expense on your tax return.

Those in the middle class and those employed receive salaries that are post-tax, meaning that taxes have already been taken out of their earnings before they are paid. The majority of folks don’t even invest their money properly. They simply keep it in their 8% or lower-yielding savings or fixed deposit account. They are deluding themselves if they believe their investment will provide “revenue.” For the past 40 years, India has had average inflation of around 7%. Savings accounts always offer interest rates that are equal to or lower than the inflation rate in any given nation.

Profitable companies reinvest their earnings either in expanding their own operations or buying rival companies. From Berkshire Hathaway to Amazon, these businesses have scarcely distributed any dividends to their stockholders, yet their stock prices have skyrocketed over the past few decades.

So, the easiest method for employees to reduce their income is to invest as much as possible in their 401(k) or, in India, PF/PPF accounts. The moral of the story is that you pay less in taxes and have more money working for you to develop when you remove less money from your income.

Table of Contents

What about a rise in costs?

We always associate spending money with being evil. We always consider how to entirely eliminate it. If you’re thinking about cutting costs and leading a modest lifestyle, this is how our minds are designed. Only undesirable expenses should be avoided, though. And you must understand the difference between a good and poor expense.

But what constitutes a bad expense?

“All the billionaires who go poor and become bankrupt committed any of these 3 (mistakes) costs,” Robert’s tax advisor once informed him. They either start by purchasing a jet, a large yacht, or an expensive car. Second, they put their business on hold and embark on a costly world tour. Third, they separated from their faithful spouse and wed a younger person. All of these costs are reasonably manageable.

Not all expenses, though, are designed to be cut.

Investments, not expenses, include money spent on books, education, seminars, and courses. It is best to invest in these areas as soon as possible. As time, the information accumulates and grows. But more significantly, it’s best if you realise this as soon as possible.

It is far preferable to purchase a book for Rs. 500 ($10) as opposed to attempting to read the online PDF for free. Wealthy individuals have big libraries and modest TVs. People in poverty typically own huge TVs on EMIs and lack access to libraries.

When asked what the best investment advice he could give, Warren Buffet replied, “Invest in yourself.”

Yet in practice, a lot of people won’t. because they lack sufficient bravery. There is no greater act of courage than placing a bet on oneself.

Get the 3 E’s
Robert claims that if you truly want to become and remain wealthy, you must acquire these 3 E’s. In fact, across several chapters of Rich Dad’s Guide to Investing, the author discusses these three topics extensively. Even yet, not every topic has been covered in depth by the author. yet gave the readers enough information. The three E’s are:

Educated, experienced, and wealthy.

You’ll be able to seize the possibilities that are presented to you everywhere with the aid of these three E’s. Yet because you need that eye, you can’t see it. Developing these three skills will give you a fresh perspective.

Education
Here, we’re not referring to a college degree. We’re discussing financial expertise.

Individuals frequently remark that when they have enough money in the future, they will invest or learn how to invest. Nevertheless, the truth is that you won’t be able to learn it when you have more money. Because most people handle new money with their old habits when they receive additional money. The mentality doesn’t shift in an instant. Even then, learning doesn’t happen over night. You must begin it right away because it comes gradually.

Examples of the biggest lottery winners that lose everything and go bankrupt within ten years are available. Why? Having more money won’t make the issue go away. If it fixes one issue, it creates two new ones. That increases the list of issues you have.

Rich dad is referring to the education and knowledge needed to launch, manage, and run a business. Recognize how to generate cash flow from a business and reinvest that money in the appropriate areas. the skills and education needed to read and comprehend a business’s financial statements.

“For me personally, learning how to read financial accounts of firms was a significant life event. Because investing without knowing the outcome is considered gambling.

Experience
Robert’s wealthy father used to provide blank financial statements for him to complete on his own. He was instructed to complete the balance sheet’s asset side and then take notes. He said those things, showed his wealthy father, learned from it, and repeated himself several times. This is due to Robert’s wealthy father’s desire for him to gain practical experience as soon as feasible.

You can utilize one of the many games we have on the Play Store or App Store to make your own balance sheet. If so, you can still invest a relatively little sum of your savings to gain expertise before making a significant investment. Any publicly traded company’s annual general meeting (AGM) is open to anyone who purchases just one share.

You can be a shareholder in any firm, whether it is Marico Industries for Rs. 350 or 3M Industries for Rs. 18,000, and you can go to the AGM just like other affluent business founders who possess lakhs of shares.

Extra Cash
If you concentrated more on the first two, you probably wouldn’t have to worry about this E as much. If you have enough knowledge and expertise, extra money will come naturally. You’ll already be aware of where and when to invest for the best returns and how to protect your money from losses when you actually start making money based on your own knowledge and experience.

When we finish our education, we typically look for “jobs” rather than “opportunities.” Instead of “financial security,” we prioritise “employment security.” The issues then start to mount.

Because of this, 10% of the world’s population possesses more than 90% of the wealth. due to the fact that the amount of knowledge, experience, and extra money keeps growing at a compound rate.

Guide to investing Book Review

Robert Kiyosaki’s “Guide to Investment” is a thorough book that offers useful guidance on investing in the modern economy. Three sections, each concentrating on a different facet of investment, make up the book.

In the first section, Kiyosaki covers the fundamentals of investing, emphasising the value of financial literacy, the distinction between assets and liabilities, and the range of potential investment possibilities. He also highlights how important it is for investors to identify their objectives and risk tolerance.

The book’s second section focuses on the many investment options, such as stocks, properties, and companies. Kiyosaki offers thorough guidance on how to assess these many investment options and choose the ones that are best suited to your needs.

The necessity of assembling a team of experts to assist you in managing your investments is covered in detail in the third section of the book by Kiyosaki. He emphasises the importance of working with experts in fields like accounting, law, and tax planning.

Overall, “Guide to Investment” is a helpful tool for anyone wishing to develop their financial expertise and long-term riches. The book offers helpful suggestions and tactics that can be used for a range of investing opportunities. Although some of the ideas could be more complex, Kiyosaki makes the material understandable and accessible, making it a helpful resource for both inexperienced and seasoned investors.

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