How to Retire Early: Insights from Blinkist’s Rich Dad, Poor Dad Book Review
Robert Kiyosaki on the one simple lesson in finance that you need for a comfortable future.
On the road to riches, being talented and capable isn’t enough. After all, there are plenty of people on this planet who fit the bill, and they’re certainly not all billionaires. What separates the high-rollers from the would-be wealthy, then?
According to Robert Kiyosaki, author of Rich Dad, Poor Dad, the secret ingredient is financial intelligence.
The Rich Dad, Poor Dad Book Review
In Rich Dad, Poor Dad, Kiyosaki argues that financial literacy and an understanding of financial subjects like accounting and investing is the key to ensure financial wellness.
Unfortunately, most people never get even a basic financial education. This lack of training in financial intelligence is a problem – even for highly educated adults, which is especially evidenced by their total lack of retirement planning.
Did you know? Based on the information from the U.S. Census Bureau, in 2020, more than 40% of Baby Boomers (aged 56 to 64) do not have a retirement account.
So, society has left us poorly equipped in terms of financial knowledge, but here’s one simple lesson that you can learn today in order to start planning for the future. Kiyosaki counsels that you invest only in assets (things that put money in your pocket) and avoid liabilities (which take money out).
It sounds reductive, but are you absolutely sure you can tell the difference between the two? Consider a new house: is it an asset, or a liability?
If you said “asset,” you’re wrong – and you wouldn’t be alone. Though it seems like a good investment on the surface, a house is actually one of the biggest liabilities you can have. You could end up working your entire life to pay off a 30-year mortgage and property taxes.
Buying a house works against you in two important ways: first, you’re guaranteed to have a massive expense taken away from your income every month (a tell-tale sign of a liability) for the next 360 months. Second, those 360 payments could have been invested in potentially more lucrative assets, like stocks or real estate you rent to tenants.
As Kiyosaki says, knowing the difference between a liability and an asset is critical if you’re going to make strong investment decisions and actually become rich. To help you differentiate, here’s a quick cheat sheet:
What Are Assets?
What they do: Make you money
What they look like: Businesses, stocks, bonds, mutual funds, income-generating real estate, IOU notes, royalties from intellectual property, and anything else with value that produces income, appreciates over time, and can be sold readily.
Why they’re key: When you invest in assets, your dollars become employees working to create income for you. The more “employees” you commit, the better.
What Are Liabilities?
What they do: Cost you money
What they look like: Houses, boats, flash new cars; in some cases, even an education (if it isn’t sufficiently actionable) can be a liability.
Why they’re important: knowing what they really look like will help you make wiser investments and ensure that you’re making each one of your dollars work as hard for you as you work to earn them.
Want to learn more about what makes some people rich while others financially languish? Check out Rich Dad, Poor Dad or read the quick summary on Blinkist.
Rich Dad, Poor Dad
Rich Dad, Poor Dad
- 29 min reading time
- audio version available
Read or listen to this Rich Dad, Poor Dad book review, and you’ll learn how crucial it is to be knowledgeable about finance and investment strategies. Kiyosaki illustrates this through his own asset management, showing how he was able to retire at age 47 by applying these principles.
And if you’re eager to further elevate your financial knowledge, explore a range of top finance and investing books recommended in Master Your Money with Today’s Best Finance and Investing Books. This Blinkist article is your gateway to transforming your financial understanding and potentially adding significant value to your net worth.
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