Saturday, 5 March 2016

Book review: Rich Dad's guide to investing


I borrowed this book from the library last week by chance. It is the third book of the famous Rich Dad, Poor Dad by Robert Kiyosaki. If you expected it to be your usual FA TA book then you would be sorely disappointed. I find it more of a pep talk book - to help in adjusting the reader's mindset to think rich.

The first couple of chapters in the book reminded me of SMOL's favourite line "come have a kopi and char shao bao...". Then it goes on saying one should get to know oneself and what type investor one wants to be.

(The message I got: One should aim to be a sophisticated investor in order to earn from the market. One may not necessarily start off being rich but a good mentor is important.)

Part of being a so-called sophisticated investor involves running your own business. Much of his advice are in context of the US business environment which might not be applicable here in Singapore. The generic part is on finding capable professionals to help run your business eg. lawyer, accountant etc. and remembering to file for patent for your products so they don't get copied. Much of his advice are more conceptual than concise.

Some worthwhile take-home points are

  • Education, Experience and Excess cash are three important factors to determine your success
  • Your vocabularies are powerful tool and they depict your thoughts. If you want to broaden your knowledge in a subject, you should first broaden your vocabularies in that subject.
  • What sustains a great business is the system, not its products. It can be kickstarted with wonderful products but without a good system in place to run the business it cannot be sustained.
  • Know which are your assets and which are your liabilities (do up your personal balance sheet). Assets put money into your pocket, Liabilities take money out of your pocket.
  • The rich put their money to work such that it generates value / more cash for them (think monopoly game strategy). Earned income vs portfolio income vs passive income.

However as we all know, things are easier said than done. It may take years of planning and many failures to set a vehicle rolling (towards the goal). Thomas Edison didn't take only one day to invent the lightbulb, Newton didn't take only one day to discover the science behind a fallen apple. 

A lengthy pep talk of 416 pages in mostly full paragraphs, this book might serve well as an inspiration to those who have no vision of being rich and the tools needed (simplified concepts) in getting there legitimately.


Disclaimer: I have not read his previous book of Rich Dad, Poor Dad so I could not draw comparison to that. Would get down to borrowing it soon!
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5 comments:

  1. Yalor. Lengthy, lengthy, lengthy. But, it can be simplified into one simple formula. LOL!

    Read? Investing Lessons From Conversation With Uncle8888 (1)

    ReplyDelete
    Replies
    1. Hi Uncle8888,
      Not everybody can look at your level4000 simplified formula and write an essay out of it wor. Students often have to do it the other way round -
      read an essay, digest, derive their own formula to summarize their understanding. :)

      Delete
  2. Rainbow lady,

    Got chance read his first book in the series - Rich Dad; Poor Dad.

    All the other subsequent books in the series are what we snake oils call - milk a successful formula to death ;)


    ReplyDelete
    Replies
    1. He is a smart Businessman, He knows how to game the system, Declare bankruptcy but still remain rich.

      Delete
    2. Vertical product line extension. Good move to keep the money flowing in and prevent people from forgetting his success formula.
      I think he is a better business man than an investor.

      Delete

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