Review of Rich Dad Poor Dad Part 2

This is my second part of a two part review of “Rich Dad Poor Dad”. In my prior post, I wrote about certain aspects that I did not like about the book. While that post may have sounded a bit critical, there were a number of things that I absolutely loved about the book.

The first thing that I really like was how simple he made investing by using accounting terminology. Basically every person has their assets and liabilities. Assets being things that you buy that will benefit you over the long run and liabilities being things that you buy that will cost you in the long run. He describes how many Americans don’t have any true assets. Assets will be things like those stocks and bonds and rental properties etc. On the flipside, many Americans have liabilities which they think are assets, the biggest one being a mortgage. Many people believe owning their own house is an asset but the truth is, many people can’t afford owning a house. As a result, they are forced to work in jobs they don’t enjoy to make money to pay for something they can’t afford. It may seem like a quirky concept, but I agree that owning your home can be a huge burden, especially if you are not adequately prepared.

Another thing that I enjoyed was the idea that you should mind you own business. When you receive you paycheck every week or two weeks, you really should be investing as much of it as you can. Don’t go out and spend every last dime you earned on a new TV or a car or other things that you don’t need. Invest in something that will generate long term cash flow for you so that you can get the most out of every dollar you earn.

I also agree with the idea that financial literacy  should be discussed in schools. High school kids really need at least one (or more) classes that teaches them about personal finance and how to invest their money. So many people these days are completely inept when it comes to saving money (a topic I will discuss in a later post). If people better understood how to save money and invest in themselves, we may not be in this financial crisis that we face today.

In addition, Kiyosaki says that they world is full of chicken little’s who believe that everything is going to crash down and the financial markets will collapse and never recover. I have encountered a number of people who have this belief and all I can do is shake my head. It is embarrassing that people are so naïve and really believe that putting cash under their mattress is better than investing it in the stock market. If you ever have any doubt about the stock market just remember, the average market return of stocks over the past two centuries has been 6.6%. Over those two centuries we have had two world wars, the civil war, a great depression and many other recessions to boot.

Overall I really enjoyed this book and would recommend it as a great book for those looking to learn about investing and personal finance. Robert Kiyosaki makes it seem very easy for anyone save up money, which it really is. It is not that hard to learn about investing. It is not that hard to save up a little bit here and there and invest it in assets.

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