The past several posts have been my review of Robert Kiyosaki’s Rich Dad Poor Dad (RDPD), a book that’s had a formative impact on my outlook as an investor and entrepreneur.
As a CPA, I was trained to look at business and investment historically or traditionally. This make sense for those who are investing capital they already have. Entrepreneurs are risk takers, focused on generating new capital, and accordingly view finance a completely different way. With all due respect to accountants: Accounting is the language of business. Accounting is the set of rules agreed to over a thousand years about how to report revenue and expenses. Without that language and without these rules, financial transactions and financial markets would be impossible. We need good CPA’s and accountants alongside us so that we can look beyond tradition and take these risks in calculated ways.
RDPD challenged my traditional understanding of asset and liability. The book has been famous for saying, “Your house is not an asset.” This gets a lot of attention, because it’s commonly known that buying a home is the largest and most significant investment any American will ever make. On the face, the claim that this monumental purchase is not an asset seems absurd. Kiyosaki, however, redefines what an asset is. Simply stated, he purports that an asset is anything that generates more cash than it takes to maintain it. In this sense, your house is not an asset because it’s not actively generating any cash for you.
In summary of our last few blog posts, our favorite points in Kiyosaki’s book are:
- Get your money to work for you.
- Pay yourself first.
- Don’t work for money. Work to learn!
- Invest in things that will generate cash.
- Savers are losers.
Rich Dad Poor Dad is a short book with some sage wisdom about how to think about money. If you are frustrated that your wealth is not growing as you think it should. Pick up a copy and GET IN THE GAME! And as always, for more reading recommendations, or to discuss other entrepreneurial tips and tools, contact Harvard Grace Corporation at firstname.lastname@example.org.