Book Review: Rich Dad, Poor Dad

This one was lying around the house from the personal collection of Mr. Goodies.  Good read!  It’s personal anecdotes and guidance about getting rich from an early-retired rich guy (who happened to help invent the nylon-and-velcro surfer wallet of the ’90s).

So in my preferred style, here’s what I got out of it:

  1. Wealth starts with discipline.  You have to save your money, but you also have to have the discipline, and boldness, to do more than blow it utterly or just sock it away in savings.
  2. Buy assets, not liabilities.  Related to #1, but the author also discusses how many people confuse assets with liabilities.  He defines an asset as an entity which earns you money without your doing any work.  And anything that depreciates, is illiquid, or costs you money to maintain seems to be disqualified.  So primary houses, cars, boats, motorcycles, fur coats are generally all out (unless they should appreciate dramatically and earn you realized income through your sale of it).  But the only real examples of “assets” I noticed were stocks, other investments, and real estate…
  3. Only buy fancy things with passively earned income.  He had this interesting point that people are making a mistake by earning money and going out and spending it.  He gives an example that he earned some money, invested it, and then bought a Porsche with the (massive) passive returns.  So it’s ok to buy a Porsche, if it is with ace dollars that worked for you while you were playing golf.
  4. Accounting, investment, tax, management.  I believe these were the 4 tenets the author feels are necessary for successful investment-based self-made wealth.  I’m a list girl so this appealed to me, and I will be looking into it.
  5. The same old lessons are no good for kids anymore.  The author said the traditional lesson of “get good grades, go to a good school, and get a secure job” is old advice that doesn’t work anymore.  There are no more pensions or secure jobs, good grades no longer ensure work, and anyway the advice doesn’t cover what happens after you get that paycheck from the job.  What’s really interesting is that he wrote that in 1997; his observation might be more true now than then, with students today graduating with more debt than ever, with fewer job prospects, and with an increasing market of unpaid internships kids are expected to work after graduating just to qualify to have a job.

A lot of what this guy writes about is risky or might sound too mystical or technical for some.  He’s a real estate guy, and a lot of people (myself included) do not know much about that, nor have the time to become a full time real estate investor.  But he emphasizes that a fortune can be made with little financial investment.  The whole book reminds me of that guy who successfully traded a paper clip all the way up to a house.  So it gives me hope.

Most intriguing was the comment about what kids are taught (or not taught) today about personal finance.  I’m pretty sure it’s about the same as when he wrote the book.  Which is sad.  It made me wonder if there is any market for traveling/rotating financial counselors for high school kids.  I think I made enough early mistakes that I could totally counsel kids on how not to do those things.

Compared to the only other financial-type book I have read, I would say Rich Dad, Poor Dad is inspirational and fun to read.  I later read criticisms on Amazon that this book falsely represents high-risk ventures as ordinary, that the author does not give enough detail about actually getting rich, and that the author later got in trouble for something or other, blah blah.  I don’t really care about that stuff.  Ideas are ideas.  It’s just like that paper clip guy – this author has led a successful and happy life that is probably not for everyone, because it requires being clever and having bold instinct.  Being creative and bold may not sound like fun to some, but it does to me.  I look forward to having the funds to get creative.

2 thoughts on “Book Review: Rich Dad, Poor Dad

  1. Pingback: The rat race. | Yay, Goodies.

  2. Pingback: Where do you get the money books? | Yay, Goodies.

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