Book Club – Rich Dad, Poor Dad

TRANSCRIPTION

Rich Dad, Poor Dad by Robert Kiyosaki. A book review and summary.

So today, we’re going to have a quick look at the book Rich Dad Poor Dad. It’s an incredibly famous book and it’s always top of the charts on Amazon when it comes to personal development and building wealth and it’s a really good place to start if you’re…maybe you’ve been in a salary job or maybe you’re still studying and you’re trying to figure out how can I get somebody to help me and what lessons do I need to learn so that I can build up my wealth from the very beginning?

This is a beginner’s guidebook. It’s more about shifting your mindset from, “I’ve got to work for my money, you know, on an hourly rate or on a salaried income,” to shifting your mindset to, “I want to put money into working for me rather than working for money.” And so, Rich Dad Poor Dad is kind of trying to pull you out of what he describes as the rat race and on the fast track towards building up your wealth to where you want it to be.

You know, the premise behind the book is that the poor dad is thinking that money is evil and you’ve got to work hard and you’ve got to study and it takes a long time to build up wealth, versus money should work for me, I love money, I don’t have to work really hard for the money.

I’ve got to find the smart way to do things, rather than the hard way. And so, what I’m going to do is pull out a few little bits of the book and what I… the premise behind it is the guy Robert, he grew up and his dad was very highly educated, worked hard his whole life but didn’t do things that were business- minded. He always thought that he was very risk-averse, didn’t really put money into investments and anything like that.

He had advice from a mentor that when he was a young age, he worked for this guy who taught him how to make money in creative ways and move over the business mind. So if we pull a few bits out of here, one of the first lessons that Robert was faced with is he was working for this rich dad of his which was a mentor to him.

On the weekends, he would go and do jobs for him and get paid. For a little bit while, he was paid a small salary and then, he was offered bigger salaries but what he was actually offered was, “Hey, you work for me for free and I’ll teach you how to make money.” And so, what would happen is sometimes, other opportunities would come along, like all his mates would be playing softball in the sun.

He grew up in Hawaii, so, constant distractions like going surfing, comic books, playing softball. He had to sacrifice so that he could learn the business lessons and, you know, people that are incredibly successful, if you’re looking from the outside, then you can think, “Oh, they got lucky.” But generally speaking, these people have made sacrifices along the way and, you know, I get invited to go and play rugby all the time.

Aussie rules, you know, I used to play rugby league. There are a lot of things that I used to do that I would still love to be doing and actually new hobbies that I’d love to pick up but I know that, okay, I’ve got to put my family first and then, I’ve got to set aside time for business. And business doesn’t just mean my 9 to 5, you know, I’m one of the owners of this business.

So it’s quite often from 7 till, you know, 10 pm. I’ve got to sacrifice time on hobbies because I want to learn more about property investing all the time and more about wealth building. So sacrifice and learn ideas from mentors. If you’re going to the pub, you know, every week on Thursday or Friday or Saturday for a couple of hours and then, maybe you’re sleeping in as a result of that on the next day, that’s the time you’re sacrificing from learning.

So what Robert is alluding to is what you want to be doing over the course of your life is building up your assets. So one of the things he helps introduce is a quadrant. So these quadrants, it’s kind of like a personal balance sheet.

So what it has is income, expenses, assets, and liabilities. And so, what he’s suggesting that you do is think more about building up your asset column and the way that you do this is by accumulating things like businesses.¬†So you want to buy or create shares in businesses that don’t necessarily require your input. You want to buy stocks and bonds, mutual funds, income-generating asset and that’s real estate, that’s where we are most interested. So you want to be looking at property investments and royalties from intellectual property. Pretty much anything that has value, that produces income and appreciates.

If you just work your 9 to 5 job and you don’t accumulate property, the odds are that the only real asset you’re going to have is savings, you know, cash savings. It’s not going to get you to your income, your passive income goals. And Robert alludes to as there’s two kinds of investors. The most common type are people that buy packaged investments, stocks, bonds, you know, they buy like new-built property and you’re buying it pretty much off the shelf.

The second type of investor is the one that creates investments or creates opportunity. So this is somebody that buys a property on a big bit of land and maybe, they put a minor dwelling or they get subdivisions done and they might look to partner up with a friend or a bunch of friends to buy a property because they can’t afford to buy it themselves.

So if you want to be an off-the-shelf investor, that’s fine. But the people that generally make the most money and build up wealth the fastest are the people that create investments. And so, you need to know how to find opportunities that everyone else has missed and the way that you can do that is doing lots of research and talking to mentors.

And you need to learn about how to raise money and how to find people that will partner with you and how to organize these people. And if you’re knowledgeable in a particular market or in doing a type of deal, then you can be a hub for your friends and family for that type of deal. Robert also alludes to overcoming your obstacles and a lot of these are self-imposed or they’re mental obstacles.

So like fear, cynicism, laziness, bad habits, arrogance. So generally speaking, people know if they’re lazy. So if you hit snooze every day, if you’re scared about putting money into a property investment, what you’re going to do is find people you trust and try and retrain your brain to be excited about investments, excited about opportunities.

There’s a lot to it. We’re not going to cover it now but really worth looking at that chapter on overcoming obstacles and getting started. So, Robert talks about, you know, finding deals of a lifetime and, you know, he says it’s not just going to happen.

You can’t just rely on school to teach you how to do deals. You’ve got to find people that are going to help you and you’ve got to do a lot of reading and watching videos that are going to educate you on how to do these deals and BiggerPockets is a good place to start. There’s podcasts and online resources for that. So, if you don’t have a strong purpose or a strong reason why you’re going to build up your wealth, then it’s unlikely you’re going to dedicate time to it every single week.

And so, if you don’t understand, I’m building up wealth for my grandkids and so that I can go on holidays all the time and you’re not constantly thinking about that, then you will make short-term decisions like, “Hey, maybe I should watch the footy today instead of analyzing 20 or 30 properties.” What I like to do is I love watching the All Blacks and I quite often watch them live but for games that I’m interested in, maybe, you know, it’s Canterbury vs.

Wellington Super 15, what I’ll actually do is I’ll just watch the highlights and maybe even put it on mute and read a book while I’m doing that and I find that, okay, I’m doing two things at once, I’m downloading this knowledge into my brain and I feel like I’m not missing out on the footy. What you’ve got to understand is every minute that you spend doing something is a sacrifice not doing something else and, you know, without your focus and a long term vision, it’s very hard to do that.

Rob also talks about choosing your friends carefully. So, you know, power of association. You really are the sum of your group of friends. So you can’t just choose rich friends. Sometimes, you’ve got to bring something to the party that those people that have wealth and have good ideas will want to be friends with you too.

But if all of your friends are not building wealth and don’t care about anything other than paycheck to paycheck, then it’s likely that you’re going to be in that same boat. So you don’t have to necessarily give up those friendships but spending less time with them and trying to spend more time with financially-savvy mentors is going to be a better use of your time and you don’t have to be face to face with these people.

You can read their books, you can watch their videos on YouTube and quite often, those sources of information allow you to rewatch them, relearn, and you can have 100 mentors online if you want as long as you really are diligently taking in the information. A couple of last quick points.

If you’re not going to take action, then things aren’t going to happen. So you need to find someone that has done what you want to do and try and emulate that, try and copy what they’ve done, take classes, buy tapes and make lots of offers. So my business partner, he made about 50 offers on different property investments but when he was trying to buy his last property, then he ended up getting about, I think it was like $80 grand discount on the revalue after he bought the property.

So what that means is the owners were trying to sell the property for over 700,000, he paid about 600,000 and then, it got revalued 6 months after he bought it at just over 700k. So it’s not lowballing but it’s offering… making lots of property offers is going to net you good results, even if it takes you 100 offers to get a really good buyer or a good deal, it is worth your time if you’re making a property offer every single week and then only once a year, those offers are being accepted, then you can actually make $50 to $100 grand just through that one deal.

And one last thing I want to suggest is when you do read books, have a look at the back of the book because there’s often recommended reading and it’s got a bibliography of books that are referred to or used to help write this book. There’s some awesome books in here, I’ve read a lot of them like E-Myth, As a Man Thinketh, The Warren Buffet¬†Way, you know, even Trump: The Art of the Deal is in here, Unlimited Wealth, Unlimited Power, there’s lots of really good book suggestions in here.

If you are not quite convinced or you’re really just beginning on your property investment journey, I do suggest Rich Dad Poor Dad for learning about the quadrants, about focusing on minimizing your expenses and your liabilities and maximizing your asset and income column. That’s a real mind shift for a lot of people and if you don’t have somebody in your corner giving you good investment and business and finance advice, it’s a good place to start with.

You don’t have to just listen to your old man or listen to somebody that’s been in your ear your whole life. If they’re not rich, then odds are they’re not the right ones to be giving you advice for getting rich.