Rich Dad, Poor Dad – Robert Kioysaki

Market Meditations | February 24, 2021

In Rich Dad, Poor Dad, Robert Kioysaki takes us on a journey through lessons from his two dads: his real father (poor dad) and the father of his best friend (rich dad). Both men shaped his thoughts on money and investing, which we can all learn a great deal from ?

1️⃣Make Sure Your Money Works As Hard As You 

Robert’s real dad (poor dad) spent his life working for a company and therefore creating someone else’s wealth. If you want to create real wealth, acquire your own assets that generate your own income. All assets should increase your cash flows (and allow you to buy more assets). This creates compounding income ✅

2️⃣Good and Bad Debt

According to Robert, there is both good and bad debt ? The difference is to do with what your debt is used for. Bad debt is used for expensive purchases and generates weaker cash flows. Good debt is used to purchase assets and generate more cash flow.

3️⃣Minimise Income and Maximise Expense (Yes, you read that correct)

Robert’s poor dad was of the opinion that to maximise wealth: we need to maximise income (through hourly wage) and minimise expenses. ? Rich dad thought the opposite: you shouldn’t try to maximise your income through an hourly wage but rather, you should aim to invest your capital. What’s more, it is a good idea to increase the right type of expenses (going to a seminar, learning a new skill, buying a new book or checking out our Introduction to Technical Analysis Course ? ).

4️⃣The Three E’s

Rich dad believed that to become a successful investor you need: Education -> you need a sound understanding of the markets, otherwise, everything you are doing will be pure speculation. Experience -> it is important to get started with your investing journey (begin, try, fail and try again). Excess cash -> maintain strong cash flows and utilise any excess to invest in assets.

5️⃣Stop Delaying Your Journey

Keep your day job if you need some stable income but put all extra time into your business / investing journey. Stop waiting. After many failures, it becomes more likely that your next attempt will be successful ? However, make sure you only risk enough capital to be able to fight another day. Don’t let the failures wipe you out!