Deep Dive: Rich Dad Poor Dad

Hello folks. This is my first and small contribution to the world of blogging. My friendship with the books began when I read my first and one of my favourite books. Before I read my first book my perception towards reading was different. I used to think books weren’t my cup of tea and books were boring & made for people who had nothing to do with their lives. But now after reading plenty of books, my perception changed. Books are for those who want to do something with their life and make their life valuable.

Enough with the benefits of books, now let’s switch the subject to “Rich Dad and Poor Dad”. It teaches the people how to value, spend and invest their income. This book describes the story of Robert Kiyosaki, the author of this book and also a well-known investor.

The book tells us that the author got mature at very younger age. Robert and his friend had dreamed of becoming filthy rich. The poor dad in the title of the book is Robert Kiyosaki’s father who teaches him the importance of education and how if one keeps on constantly educating oneself can lead to a happy life. The Rich dad in the title is author’s friend’s dad who is rich and teaches him that education is important but with that you should know the other things too like wealth management and assets management.

The major topic covered in this book is the difference between assets and liabilities.
In simple terms, assets are the things which give you money in your pockets and the liabilities are which take money from your pocket. More assets you build, wealthier you become. The major questions is how can we control our liabilities and build more assets.

Being an Indian, I would like to take quote an example of an India guy who just turned 21 and started this job and earning good amount of money. Now he will fulfill all his desires and spend money on luxuries. At the age of 21, he will start building liabilities instead of assets. After getting married, he will buy a car or an apartment through loans. Now he is building, even more liabilities. Now let’s think of with different angle what if he starts his career by investing a small amount of his income into investment? The story would be different when he turns 40.He could live wealthy life instead of paying debts

Author teaches us that why don’t we invest money in assets generation product and from the return of those assets we could buy the luxuries. Assets could be any kind of investment which generates money.

Difference between savings and investment:

One of the lessons in this book describes that “‘It’s not how much money you make. It’s how much money you keep”. Savings are the amount which you put at the safest place with an assurance that it would help you in critical time. This place can be your hidden shelves or your bank account. Bank Account is preferable as you can get at least some amount of returns from it. A person should have enough amount of savings with which he could survive for 6 months in the critical condition. While Investment is the amount which you are risking your money for better returns. As Warren Buffett rightly said, “Do not save what’s left after spending, spend what’s left after saving.” You should not make the investments out of your savings.

Author explains to us why rich men become richer and poor men become poorer.
Middle-class or poor people start building liabilities from the beginning and rich men focuses only on building assets.

Hence, if you are young and still thinking about how to manage your money. Stop whatever you’re doing and read this book. It will take a small investment of your time but will give you a lot more than expected in return. So, stop wasting, start investing !

Book Link