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Rich Dad Poor Dad Book Synopsis

November 6, 2019

Rich Dad Poor Dad is about Robert Kiyosaki and his two dads—his real father (poor dad) and the father of his best friend (rich dad)—and the ways in which both men shaped his thoughts about money and investing. He says that his poor dad went to Stanford and earned a Ph.D., and his rich dad never finished the eighth grade. The book consists of 8 chapters, lessons that everyone must learn. The central message conveyed by Kiyosaki is that you don’t need to earn a high income to be rich.

rich dad poor dad - Rich Dad Poor Dad Book Synopsis

He says that many are too afraid of being branded as a weirdo, in order to exit the rat race. People let the two main emotions everyone has around money dominate our decisions which are fear and greed. He says this is the reason people should not just look for a job as no job is safe anymore. Example- If you get a raise in a job you should invest the extra money in stocks or fund that increases your income but because of the fear that we may lose some money by investing in these assets, many people resist investing.

The other opinion is when greed takes you over, a person might take the extra money that he/she receives from a raise and spend it on stuff that he doesn’t need like buying a fancy car and the payments for that car will eat up your money. These lessons tell us how important it is for us to be educated financially, the burden of this lies on the person itself as no school teaches us this.

The Book also mentions that we should start now to avoid falling into a debt trap and develop responsible financial habits. We should take a careful look at what we can and cannot afford so that we are able to set realistic financial goals for ourselves. The author recommends that we keep our job and build our asset column, meaning we keep investing and building assets and think of our dollars as employees who work for us. Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets.

The author emphasizes the fact that knowledge is power and we should work to learn, not to earn. Money should work for you, not the other way around and do jobs that we do not know much about to learn different skills. “Money comes and goes, but if you have the education about how money works, you gain power over it and can begin building wealth”

He emphasizes that fear often suppresses genius in people and that the first step to building wealth is to manage risks, instead of avoiding them and learning about investments will teach you that it’s better to not play it safe because that always means missing out on big potential rewards. Don’t start big, just set aside a small amount every month or so to invest in asset building like stocks, bonds, etc.

He emphasizes that we should use our money to acquire assets instead of liabilities. Assets are stocks, bonds, real estate that you rent out, royalties and anything that generates money and increases in value over time. Liabilities can be cars or electronics with maintenance costs and monthly payments, a house with a mortgage, debt, anything that takes money out of your pocket each month

The author wants us to be patient and keep our job and to build our business over time and use it to invest in assets until your assets eventually become the main source of your income

The most important thing is that you start today. You are your own biggest asset, so the first thing you should do is put some money into yourself to develop your own financial knowledge. As the author says in the book, “Financial aptitude is what you do with the money once you make it, how you keep people from taking it from you, how to keep it longer, and how you make money work hard for you”

Yash Saksena
MBA (FA) 2017-2019

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