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Rich Dad, Poor Dad (summary)

Many people work very hard, but they never seem to earn enough. In Rich Dad, Poor Dad, Robert Kiyosaki explains how to escape this "rat race" and achieve financial independence.

"Know what an asset is, acquire them and become rich."
That's it! Easy, huh? The trouble is that people are not properly taught how to spend their money. Many do not know the difference between an asset, something which puts money in your pocket, and a liability, something which takes money out of your pocket. Kiyosaki's main point is that the only way to become financially independent is to accumulate income generating assets which can pay for your expenses. However, many people rather buy a new car or an iPad (liabilities) instead of investing that money in stocks or real estate (assets). I recently posted an infographic which shows the difference in returns if you would have bought Apple stocks instead of one of their products.
The fear of straying from the generally accepted life path plays a big role in the financial decision making process. However, if you do not want money to control you like it does most people, then you will have to do things differently from the crowd. Investing legend John Templeton seems to agree on this point.
But you already own income generating assets, because you own a house. The best investment you can make, right? Not really. The book lists several reasons:
  1. Most people work all their lives paying for a home they never own
  2. Despite a tax deduction for interest on mortgage payments, all expenses are paid with after-tax dollars
  3. Property taxes can suddenly be increased without notice
  4. Houses do not always go up in value
  5. Opportunity costs are tremendous, because when all your money is tied up in your house, there will be no money left to invest in income generating assets
Location: Kolkata, West Bengal, India

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