Rich Dad's Who Took My Money? summary

One common mistake people make is to only invest in paper assets, like mutual funds or individual stocks. They do this because it’s the easiest way to invest. You simply ask your broker to buy a fund or a stock for you. With a mutual fund, you don’t even have to decide what stocks to choose – that’s left to the fund manager.

But, as the author argues, this isn’t the way to build wealth. You’ll be waiting a long time for financial independence if you invest only in a mutual fund or a handful of stocks. Instead, you need to use several asset classes at the same time and become a “power investor.”

Imagine two types of farmer: a cattle rancher and a dairy farmer.

A cattle rancher will raise a herd over a period of time, making sure the cows are fed and housed. Then, when they’ve reached the right age, she’ll round them all up and send them off to the slaughterhouse. Her profit will come when her cows are sold for meat. That sum is the only money she’ll make. 

When he was in his twenties, the author went to Las Vegas to gamble for fun. Starting with only a dollar at the craps table, he soon hit a hot streak. It wasn’t long before he’d won over $300.

With the crowd cheering him on, he started placing bigger and bigger bets. Soon he was sitting on $3,000. A little voice in his head told him to pocket his winnings and carry on with a smaller amount. But he got greedy. On the next roll of the dice, he lost it all. Luckily, he gained a powerful lesson in the process. 

When the author was younger, his friend’s rich dad took him to the bank. It was here that the author asked the loan officer a question: Would it be possible to borrow money from the bank to put into a mutual fund?

As he asked the question, the loan officer smiled, then politely explained why he couldn’t do that: It was just too risky. There was no way of guaranteeing that the bank would ever get their money back if they loaned it for such a volatile investment. And before they’d lend him any money for anything else, they’d need to see his financial statements.

In these blinks, we’ve learned the best way of achieving financial independence. 

To recap, you become a “power investor” by combining different asset classes – like real estate and a business – and creating a constant flow of income. At the same time, you keep your money moving, rather than letting it sit for too long.