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Robert Kiyosaki - Rich Dad's Guide To Investing What The Rich Invest In , pdf | ||||
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books about online stock trading, forex, futures, stock investing, market, trading systems What You Will Learn from Reading this Book The Securities and Exchange Commission (SEC) of the United States defines an individual as an Accredited Investor if the individual has: 2. $300,000 or more in annual income as a couple, or 3. $1 million or more in net worth. This book begins with me returning from Vietnam in 1973. I had less than a year to go before I was going to be discharged from the Marine Corps . That meant that in less than a year , I was going to have no job, no money, and no assets. So this book begins at a point that many of you may recognize and that is a point of starting with nothing. Writing this book has been a challenge. I have written and rewritten it four times. The first draft began at the SEC's Accredited Investor Level, the level that begins with a $200, 000 minimum annual income. After the book was completed the first time, it was Sharon Lechter , my co-author, who reminded me of rich dad's 90/10 rule of money. She said, “While this book is about the investments that the rich invest in, the reality is less than 10% of the population in America earn more than $200, 000 a year . In fact, I believe it is less than 3% that earns enough to qualify as an Accredited Investor. ” So the challenge of this book was to write about the investments the rich invest in, investments that begin at the minimum requirement of $200,000 in earnings and still include all readers regardless if they have money to invest or not. That was quite a challenge and why it required writing and rewriting the book four times. It now begins at the most basic of investor levels and goes to the most sophisticated investor level. Instead of beginning at the Accredited Investor level, the book now begins in 1973 because that is when I had no job, no money, and no assets. A point in life many of us have shared. All I had in 1973 was the dream of someday being very rich and becoming an investor who qualified to invest in the investments of the rich. Investments that few people ever hear about, or that are written about in the financial newspapers, or sold over the counter by investments brokers. This book begins when I had nothing but a dream and my rich dad's guidance to become an investor who could invest in the investments of the rich. So regardless if you have very little money to invest or have a lot to invest today, and regardless if you know very little about investing or you know a lot about investing, this book should be of interest to you. It is written as simply as possible about a very complex subject. It is written to include anyone interested in becoming a better informed investor regardless of how much money they have. If this is your first book on investing, and you are concerned that it might be too complicated, please do not be concerned. All Sharon and I ask is that you have a willingness to learn and read this book from the beginning to the end with an open mind. If there are parts of the book that you do not understand, then just read the words but continue on to the end. Even if you do not understand everything, just by reading all the way through to the conclusion of this book, you will know more about the subject of investing than many people who are currently investing in the market. In fact, by reading the entire book, you will know a lot more about investing than many people who are giving investment advice and being paid to give their investment advice. This book begins with the simple and goes into the sophisticated without getting too bogged down in detail and complexity. In many ways, this book starts simple and remains simple although covering some very sophisticated investor strategies. This is a story of a rich man guiding a young man, with pictures and diagrams to help explain the often confusing subject of investing. The 90/10 Rule of Money My rich dad appreciated Italian economist, Vilfredo Pareto's discovery of the 80/20 rule, also known as the Principle of Least Effort. Yet when it came to money, rich dad was more aware of the 90/10 rule which meant that 10% of the people always made 90% of the money. The September 13, 1999 , issue of The Wall Street Journal ran an article supporting my rich dad's point of view on the 90/10 rule of money. A section of the article read: How Not to Be Average I became very aware of the subject of investing when I was just 12 years old. Up until that age, the concept of investing was not really in my head. Baseball and football were on my mind but not investing. I had heard the word, but I had not really paid much attention to the word until I saw what the power of investing could do. I remember walking along a small beach with the man I call my rich dad and his son Mike, my best friend. Rich dad was showing his son and me this piece of real estate he had just purchased. Although only 12 years old, I did realize that my rich dad had just purchased one of the most valuable pieces of property in our town. Even though I was young I knew that oceanfront property with a sandy beach in front of it was more valuable than property without a beach on it. My first thought was, “How can Mike's dad afford such an expensive piece of property?” I stood there with the waves washing over my bare feet looking at a man the same age as my real dad, who was making one of the biggest financial investments in his life. I was in awe of how he could afford such a piece of land. I knew that my dad made much more money because he was a highly paid government official with a bigger salary. But I also knew that my real dad could never afford to buy land right on the ocean. So how could Mike's dad afford this land when my dad couldn't? Little did I know that my career as a professional investor had begun the moment I realized the power built into the word “investing. ” Some 40 years after that walk on the beach with my rich dad and his son Mike, I now have people asking me many of the same questions I began asking that day. In the investment classes I teach, people are now asking me similar questions. I began asking my rich dad questions such as: 1. “How can I invest when I don't have any money?” 2. “I have $10,000 to invest. What would you recommend I invest in?” 3. “Do you recommend investing in real estate, mutual funds, or stocks?” 4. “Can I buy real estate or stocks without any money?” 5. “Doesn't it take money to make money?” 6. “Isn't investing risky?” 7. “How do you get such high returns with low risk?” 8. “Can I invest with you?” Today more and more people are beginning to realize the power hidden in the word investing. Many want to find out how to acquire that power for themselves. After reading this book, it is my intention that many of these questions will be answered for you and if not answered, it should inspire you to dig further to find the answers that work for you. Over 40 years ago, the most important thing my rich dad did for me was spark my curiosity on this subject of investing. My curiosity was aroused when I realized that my best friend's dad, a man who made less money than my real dad, at least when comparing paycheck to paycheck, could afford to acquire investments that only rich people could afford. I realized that my rich dad had a power my real dad did not have and I wanted to have that power also. Many people are afraid of this power , stay away from it and many even fall victim to it. Instead of running from the power or condemning it by saying such things as, “The rich exploit the poor, ” or “Investing is risky,” or “I'm not interested in becoming rich,” I became curious. It is my curiosity and my desire to acquire this power , also known as knowledge and abilities, that set me off on a life long path of inquiry and learning. Investing Like a Rich Person While this book may not give you all the technical answers you may want, the intention is to offer you an insight into how many of the richest self-made individuals made their money and went on to acquire great wealth. Standing on the beach at the age of 12, looking at my rich dad's newly acquired piece of real estate, my mind was opened to a world of possibilities that did not exist in my home. I realized that it was not money that made my rich dad a rich investor. I realized that my rich dad had a thinking pattern that was almost exactly opposite and often contradicted the thinking of my real dad. I realized that I needed to understand the thinking pattern of my rich dad if I wanted to have the same financial power he had. I knew that if I thought like him I would be rich forever. I knew that if I did not think like him, I would never really be rich, regardless of how much money I had. Rich dad had just invested in one of the most expensive pieces of land in our town, and he had no money. I realized that wealth was a way of thinking and not a dollar amount in the bank. It is this thinking pattern of rich investors that Sharon and I want to deliver to you in this book, and why we rewrote the book four times . Rich Dad's Answer Standing on the beach 40 years ago, I finally worked up the courage to ask my rich dad, “How can you afford to buy these 10 acres of very expensive oceanfront land, when my dad can't afford it?” Rich dad then put his hand on my shoulder and gave me an answer I have never forgotten. With his arm draped over my shoulder, we turned and began walking down the beach at the water line and he began to warmly explain to me the fundamentals of the way he thought about money and investing. His answer began with, “I can't afford this land either. But my business can. ” We walked on the beach for an hour that day, rich dad with his son on one side and me on his other side. My investor lessons had begun. A few years ago, I was teaching a three-day investment course in Sydney , Australia . The first day and a half I spent discussing the ins and outs of building a business. Finally in frustration, a participant raised his hand and said, “I came to learn about investing. Why are you spending so much time on business?” My reply was, “There are two reasons. Reason number one is because what we ultimately invest in is a business. If you invest in stocks, you are investing in a business. If you buy a piece of real estate, such as an apartment building, that building is also a business. If you buy a bond, you are also investing in a business. In order to be a good investor , you first need to be good at business. Reason number two is the best way to invest is to have your business buy your investments for you. The worst way to invest is to invest as an individual. The average investor knows very little about business and often invests as an individual. That is why I spend so much time on the subject of business in an investment course.” And that is why this book will spend some time on how to build a business as well as how to analyze a business. I will also spend time on investing through a business because that is how rich dad taught me to invest. As he said to me 40 years ago, “I can't afford to buy this land either. But my business can.” In other words my rich dad's rule was “My business buys my investments. Most people are not rich because they invest as individuals and not as owners of businesses. ” In this book, you will see why most of the 10% who own 90% of the stocks are owners of businesses and invest through their businesses and how you can do the same. Later in the course the individual understood why I spent so much time on business. As the course progressed, that individual and the class began to realize that the richest investors in the world do not buy investments, most of the 90/10 investors created their own investments. The reason we have billionaires who are still in their twenties is not because they bought investments. They created investments, called businesses, that millions of people want to buy. Nearly every day I hear people say, “I have an idea for a new product that will make millions. ” Unfortunately most of those creative ideas will never be turned into fortunes. The second half of this book will focus on how the 10% turn their ideas into multi-million even multi-billion dollar businesses that other investors invest in. That is why rich dad spent so much time teaching me to build businesses as well as to analyze businesses to invest in. So if you have an idea that you think could make you rich, maybe even help you join the 90/10 club, the second half of this book is for you. Buy, Hold, and Pray Over the years rich dad pointed out that investing means different things to different people. Today I often hear people saying such things as: 1. “I just bought 500 shares of XYZ company for $5.00 a share, the price went up to $15.00 and I sold it. I made $5,000 in less than a week.” 2. “My husband and I buy old houses, we fix them up and sell them for a profit.” 3. “I trade commodity futures.” 4. “I have over a million dollars in my retirement account.” 5. “Safe as money in the bank.” 6. “I have a diversified portfolio.” 7. “I'm investing for the long term.” As rich dad said, “Investing means different things to different people.” While the above statements reflect different types of investment products and procedures, rich dad did not invest in the same way. He said instead, “Most people are not investors. Most people are speculators or gamblers. Most people have the ‘buy, hold, and pray the price goes up mentality.' Most investors live in hopes that the market stays up and live in fear of the market crashing. A true investor makes money regardless if the market is going up or crashing down; they make money regardless if they are winning or losing, and they go both long and short. The average investor does not know how to do that and that is why most investors are average investors who fall into the 90% that make only 10% of the money.” More than Buying, Holding and Praying Investing meant more to rich dad than buying, holding, and praying. This book will cover such subjects as: 1. The 10 Investor Controls: Many people say that investing is risky. Rich dad said, “Investing is not risky. Being out of control is risky. ” This book will go into rich dad's 10 investor controls that can reduce risk and increase profits. 2. The 5 phases of rich dad's plan to guide me from having no money to investing with a lot of money. Phase one of rich dad's plan was preparing my mind to become a rich investor. This is a simple yet very important phase for anyone who wants to invest with confidence. 3. The different tax laws for different investors. In book number two, CASHFLOW Quadrant, I cover the four different people found in the world of business. They are: The E stands for employee. The S stands for Self-employed or small business. The B stands for business owner . The I stands for investor. 5. The difference between Fundamental Investors and Technical Investors. 6. In CASHFLOW Quadrant, I went into the six levels of investors. This book starts at the last two levels of investors and further classifies them into the following types of investors: The Accredited Investor The Qualified Investor The Sophisticated Investor The Inside Investor The Ultimate Investor By the end of this book, you will know the different skill and education requirements between each different investor. 7. Many people say, “When I make a lot of money, my money problems will be over.” What they fail to realize is that having too much money is as big a problem as having not enough money. In this book you will learn the difference between the two kinds of money problems. One problem is the problem of not enough money. The other problem is the problem of too much money. Few people realize how big a problem having too much money can be. One of the most important aspects of this book is the mental differences between the average investor and the 90/10 investor. Rich dad often said, “If you want to be rich, just find out what everyone else is doing and do exactly the opposite. ” As you read this book you will find out that most of the differences between the 10% of investors who make 90% of the money and the 90% that make only 10% of the money is not what they invest in, but that their thinking is different. For example: 2. Most investors say “diversify.” The rich investor focuses. 3. The average investor tries to minimize debt. The rich investor increases debt in their favor. 4. The average investor tries to decrease expenses. The rich investor knows how to increase expenses to make themselves richer. 5. The average investor has a job. The rich investor creates jobs. 6. The average investor works hard. The rich investor works less and less to make more and more. The Other Side of the Coin So an important aspect of reading this book is to notice when your thoughts are often 180 degrees out from the guiding thoughts of my rich dad. Rich dad said, “One of the reasons so few people become rich is because they become set in one way of thinking. They think there is only one way to think or do something. While the average investor thinks ‘Play it safe and don't take risks,' the rich investor must also think about how to improve skills so he or she can take more risks. ” Rich dad called this kind of thinking, “Thinking on both sides of the coin. ” He went on to say “The rich investor must have more flexible thinking than the average investor . For example, while both the average investor and rich investor must think about safety, the rich investor must also think about how to take more risks. While the average investor thinks about cutting down debt, the rich investor is thinking about how to increase debt. While the average investor lives in fear of market crashes, the rich investor looks forward to market crashes. While this may sound like a contradiction to the average investor , it is this contradiction that makes the rich investor rich. ” As you read through this book, be aware of the contradictions in thinking between average investors and rich investors. As rich dad said, “The rich investor is very aware that there are two sides to every coin. The average investor sees only one side. And it is the side the average investor does not see that keeps the average investor average and the rich investor rich. ” The second part of this book is about the other side of the coin. This book is much more than just a book about investing, hot tips, and magic formulas. One of the main purposes for writing it is to offer you the opportunity to gain a different point of view on the subject of investing. It begins with me returning from Vietnam in 1973 and preparing myself to begin investing as a rich investor. In 1973, rich dad began teaching me how to acquire the same financial power he possessed, a power I first became aware of at the age of 12. While standing on the sandy beach in front of my rich dad's latest investment 40 years ago, I realized that when it came to the subject of investing, the difference between my rich dad and my poor dad went far deeper than merely how much money each man had to invest. The difference is first found in a person's deep desire to be much more than just an average investor. If you have such a desire, then read on. |
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