Sunday, 21 September 2014

Rich Dad, Poor Dad ; Book Review


A humble review of this book by me! :)

Throughout my time that I read this book, I was also testing his theories in my head wondering if I could apply them to real life situations.

Some of his theories remain unclear to me, others however gave me a better understanding of his perspective.

I would advise all potential readers to have a certain level of knowledge about investments and how they work so as to better understand the second half of this book.

This book gave me a clear view of 2 very different men and what they were doing with their lives. On one hand, you have the highly educated man who surprisingly turned out to be the "Poor Dad" and the less educated but adamant on taking a different path from the rest a.k.a the "Rich Dad".

What do I find interesting about this book?
Robert Kiyosaki talks about the education system which is largely focused on creating "Employees" rather than "Employers".

The long-surviving mantra of Go to school, get good grades, get a good job is something that has been passed on from generations to generations as everyone listens and complies with as little as 1% of the people out there actually asking"Why?"

In addition, he also shoots down many beliefs by the mass community out there including
"Your House is NOT your Asset"

This book got me to think outside the box, but I wouldn't recommend taking the book word for word. However, that being said I felt that there were several notable quotes in his book worth sharing. Call them life lessons if you will.

"Life is the best teacher of all. Most of the time, life does not talk to you. It just sort of pushes you around. Each push is life saying, 'Wake up, There's something I want you to learn.' If you learn life's lessons you will do well. If not life will just continue to push you around.  Some just let life push them around. Others get angry and push back. But they push back against their boss, their job, husband.wife. They don't know that it's life that's pushing.

"Most spend the best years of their lives working for money, not really understanding what it is they are working for."

"Each human being had a weak and needy part of their soul that can be bought, but he also knew that each human being had a part of their soul that was strong and filled with a resolve that could never be bought. It was only a question of which one was stronger."

"Most people have a price. And they have a price because of human emotions named fear and greed.

"A job is really a "short term solution to a long term problem"



I was quite inspired as I read this book, but it was only at the last few pages that got me wondering... How can I apply this to my current situation? His advice of keeping your day job, work hard and build your assets.

Essentially, I believe he's talking about building a portfolio that gives a steady stream of dividends which would one day match your expenses therefore giving"Financial Freedom". Something like that.

But readers should understand this takes time. It doesn't happen overnight. I don't know if it's just me but reading it initially gave me the sense of inspiration to go out there and start doing something, anything.

The early part of the book was very captivating, but as it proceeded it became more focused with investment issues that I feel were not suitable for people my age.

Lastly, what this book lacks is perhaps it's suggestions for actions. It gives the reader a instinct to act, but no knowledge / plan of action.

Some things I took away from this book, and you can too includes:


  • Try to have "assets" that pours money into your pockets instead of taking away.
  • Don't be a wage slave.
  • Financial knowledge is very important and cannot be emphasised enough. 
  • Don't let fear and greed be an opportunity cost.
  • Keep a healthy balance between your Assets and Liabilities.
  • Keeping expenses low
  • Invest in learning about investing (Agreed, haha)


One thing about the book is that it did not state the risk involved when accumulating your "assets" therefore do invest with caution.

That's it! Of course there are much more that I feel / learnt from this book that cannot be expressed by a blogpost itself, you would have to read to understand!

Signing off,
Teenage Investor

Posts you might be interested in:
1. Truth of World Ventures & Passive Income
2. 80% of Young Singaporeans have little to no savings at all
3. Dividends from Investing

14 comments:

  1. Teenage Investor,

    Impressive.

    You are the few who consider the risks involved ;)

    ReplyDelete
    Replies
    1. Hi SMOL!
      Thank you for the compliment! But I'm afraid i don't really understand what you mean by consider the risks involved? Haha sorry!

      Delete
    2. Teenage Investor,

      "One thing about the book is that it did not state the risk involved when accumulating your "assets" therefore do invest with caution."

      ;)

      Delete
  2. Quiz time

    1) What are your Assets?

    2) Where does your Cash Flow come from?

    ReplyDelete
    Replies
    1. Haha :( Later i fail!

      1) I believe my assets to be investment products like stocks/bonds/ (insurance?) not so sure. Basically anything that provides a stream of income.

      I would have claimed my house to be an asset (well parent's asset) but i feel it depends. It can be a liability if home value drops.

      Cash flow can come from jobs / dividends.

      Delete
    2. Wow! That's a really easier way to understand!

      Delete
  3. the thing about this book which resonates with me is the part to quickily convert active income earned to use it to make more money in the various ways described.

    ReplyDelete
    Replies
    1. Hi Paul! First time seeing you here!
      I feel it's similar to a Dividend Reinvesting Plan or something (DRIP) if i'm not wrong. Any dividends/income you get, is reinvested

      Delete
  4. Hi Teenage Investor,

    I drew some of the same conclusion as you, there is no action plan.
    But the location is different.

    My conclusion is that the author is mainly buying undervalued properties and sell it for quick profit or lease it out to be sold when the property value increases over time.

    Undervalued properties can be easily found during recession but there are also undervalued properties during boom times.

    However, at this point in time, its not advisable for Singapore property due to the current property cooling measures, you can't flip a property as fast. But there is still opportunities for undervalued properties to earn rental income.

    In short, in my opinion, what is described goes into my property playbook. Its currently shelved, but when the opportunity comes, I'll take it out of the cupboard.

    naro

    ReplyDelete
    Replies
    1. Hi finance!

      That's one thing I did not like about the book. While the first part was significantly easier to understand, the second part was more focused especially towards properties which the average teenager would not understand.

      Delete
    2. Not just teenagers, most working adults too!

      I'm keeping this property strategy as one of the few strategies in my drawer. Wait till its a good time, pull it out and implement.

      Delete
  5. This was the book thag inspired me too. True that there's no detail on how to achieve financial freedom but this book inspired me until I keep finding the thing that worked. The Inspiration made me where Im today.

    ReplyDelete
  6. great post, stumbled upon your blog today
    keep on the good work!
    Kudos

    Forum Damani
    forumdamani.wordpress.com

    ReplyDelete