Memorable quotes
That is why so many people say, “When I retire, my income will go down. ” In other words, they are saying, “I plan on working hard all my life and then I will become poorer after I retire. ” Tat may have been an okay plan in the Industrial Age, but that is a very poor plan in the Information Age.
Tat is why I am concerned and why I write and why I teach. I believe we need to better educate and better prepare people for the Information Age— the age where we all need to know a lot more about money, the age where we all need to be more financially responsible and depend less on a company or government to take care of us when our working days are over..
Maybe this is why Alan Greenspan, former chairman of the Federal Reserve Board, said, “We need to start teaching fnancial literacy in our schools. ” We need to start teaching our kids to take care of themselves fnancially, rather than teaching them to expect the government or the company they work for to take care of them after they retire.
I knew it was time to grow up, or give up and go home. I realized that it was this moment of weakness on the mountains that I had come for. It was decision time once again. It was time to choose. I could let my self-doubt and laziness win, or I could change my perceptions about myself. It was time to move forward or go backward.
Whenever I tell this story, the question I am asked is, “How? How did you do it?” I then say, “It’s not about how. It is about why Kim and I did it. ” I go on to say, “Without the why, the how would have been impossible.
When it comes to how we did it, all I will say is that, from 1985 to 1994, Kim, Larry, and I focused on rich dad’s three paths to great wealth, which are: • Increasing business skills • Increasing money-management skills • Increasing investments
Who is going to get richer in the long run? Someone who works all his life trying to save a million dollars? Or someone who knows how to borrow a million dollars at 10 percent interest and also knows how to invest it and receive a 25 percent per year return on that borrowed million dollars?
Who would you have to be and what would you have to know in order to call your banker and say, ‘I want to borrow a million dollars,’ and then have the banker say, ‘I will have the papers ready for you to sign in 20 minutes.
People who only work hard have limited leverage. If you’re working hard physically and not getting ahead financially, then you are probably someone else’s leverage.
If you have money sitting in the bank in your savings account or retirement account, then your money is someone else’s leverage.
I learned that 5,000 years ago, humans began utilizing sails and the power of the winds to propel their ships across vast expanses of water. In this case, the wind and the sails of the ship were the leverage, allowing humans to travel further and carry greater payloads, with less effort. Te people who employed the power of large ships with large sails became far richer than people who did not.
The reason most people do not get richer faster is simply because it is their money (their savings held in a bank) and their time and labor (a safe secure job) that the rich are using as leverage to acquire and create the assets that make them rich. I could not have acquired so many assets in such a short period of time if I had not used those two different forms of fnancial leverage, which are OPM (Other People’s Money) and OPT (Other People’s Time).
The most expensive advice is often free advice.
His lesson behind his lesson was: What you think is real is your reality.
It was my rich dad’s ability to continually change his reality that ultimately made him rich. It was not the beachfront property that made him rich. It was his ability to change his reality. After he bought that piece of property, he was soon looking for even bigger pieces of property to test his reality on.
In the end, the primary difference between my rich dad and my poor dad was simply the difference in their realities. One chose to expand his reality by saying, “How can I afford that piece of beachfront property?” even though he could not afford it at the time. Te other chose to say, “I can’t afford it. ”
I think clinging to job security all your life is a lot riskier than taking the risk to learn to build a business. One risk is short-term and one risk lasts a lifetime.
“So a person who thinks job security is smart will fnd examples of why job security is smart and find examples of why building a business is risky. A person will seek verification of the reality they want to believe in,”
My rich dad said, “It is hard to become rich working for money. If you want to become really rich, learn how to build, buy, or create assets. ” He also said, “Working hard for pay raises is very risky. ” It is risky because people often get deeper into the Rat Race of life working for pay raises.
If you want a faster way to get rich, you need to have a mind open to new ideas and have the skills to take on possibilities greater than your current abilities. In order to do that, you must have a reality that can change, expand, and grow quickly. To try and get rich with a poor person’s reality or a reality that comes from lack and limitation is a mission impossible.
Having a mind that can expand its reality or context quickly is an important form of leverage. In fact, it may be your most important form of leverage, especially in this rapidly changing world. To rich dad, having a mind that could expand its reality quickly was very important.
In order to take the fast train, a person will need an open mind, high-speed ideas, better business and investment education, and a faster plan. In other words, these people will need to operate from a different mental context and content than that of the masses.
But what if someone does not know how to raise capital?” asked another student.“Ten it is best you save money or invest some time learning how to raise capital. Raising capital is a learned skill.
“Your profit is made when you buy, not when you sell. ” In other words, he never expected his investment to appreciate in value. If it did, to him, appreciation was a bonus.
Investing in mutual funds is investing at the end of the food chain.
An important step if you want to retire young and retire rich is to sit quietly and ask yourself, “What and whose plan am I following?” Other questions you may ask yourself are: • What is the exit strategy for my life? • How fast are my words and my ideas? • What track am I on today? • What track do I want to be on in the future? • What kind of income am I working for today? • What kind of income do I want for my tomorrows? • What is the long-term price of security.
The moment you make passive income and portfolio income a part of your life, your life will change. Those words will become flesh.
One of the ratios rich dad had me watch and monitor was what he called the wealth ratio. His wealth ratio is: Passive income + Portfolio income Total expenses
Choosing how you want to feel and choosing to think what you want to think are very important habits rich dad taught me.
As Nike says, “Just do it. ” In life, it seems that what winners do is focus on what they want. Losers seem to focus on what they don’t want. That is why it is important to make a habit of listening to yourself on a regular basis. Winners keep those winning feelings and winning thoughts, even though they may not be winning. That is a very important habit.
One of the strategies we used to keep our money moving was to buy a rental property, and within a year or two, borrow out our own down payment and buy another rental property.
When you go to your banker with a real estate investment over, let’s say, a million dollars, the banker is not lending money to you. Te banker is lending money on the property. ” “What is the difference?” asked the pilot.“When the average person goes to the bank to ask for a loan, the bank evaluates the credit-worthiness of the individual. When this same person wants to buy, let’s say a small rental property, a property such as a condominium or house or duplex, the banker still evaluates primarily the person. As long as you have a steady job and enough income to pay for these smaller properties, the bank will often lend you, not the property, the money.
“On larger properties, the asset really is the property and its income stream, not the individual borrower’s income stream. ” “So it can be easier to buy a bigger property rather than a smaller property,” said the pilot.“
A great strategy for shopping for property is the 100:10:3:1 method. Tat means you should analyze 100 properties, make offers on ten of them, have three sellers say yes, and then buy one. In other words, it takes shopping and looking at over 100 properties to buy one property.
In real estate, if Kim and I have a plan to buy ten properties, that means we need to look at 1,000 properties. Of those ten properties, we expect two to be great investments and two to be dogs, investments that we could lose money on. Tese are generally sold immediately. Tat leaves six investments that we either have to improve or sell. Regardless if it is real estate, stocks, mutual funds, or building businesses.
When I was younger, rich dad constantly reminded me that there are four basic classes of assets. Tey are: 1. Real estate 2. Paper assets 3. Business 4. Commodities.
So an entrepreneur takes on a task that requires a team,” I said.“A B-quadrant person does not get paid unless their team can do what needs to be done as a team. Most employees and self-employed people get paid for what they can do as individuals. Entrepreneurs don’t get paid unless their team is successful.
Just as a building contractor uses trades people (such as plumbers, electricians, and carpenters) and professional people (such as architects and accountants) to build a house, an entrepreneur brings in different trades people, technicians, and professional people to help him or her build a business.
“I have noticed that all of us have some leadership skills. Te problem with most people is that they devote their lives developing their professional or career skills, which is why there are more people in the E and S quadrants. Very few people devote their lives developing their leadership skills, which is the skill most required for the B quadrant.So, yes, leadership can be learned. ” Years later, rich dad said, “Leaders rise to challenges, while others look for job security.
Every business, every church, every charity, and every community needs more leaders. Each organization gives you the opportunity to step forward and be accountable. Each opportunity gives you a chance to learn those priceless leadership skills required in the world of entrepreneurship.
In the richest game in the world, leadership is the key, because it takes a leader to turn individuals into a team.
Each and every day, new Goliaths are born and new Goliaths step forward. What the world needs are more and more new Davids, armed with just a slingshot, but backed by the most powerful forces in the world. Regardless whether or not you choose to play the richest game in the world, just know that you too can access the power that powered David’s slingshot. All you have to know is who your Goliath is, and then find the courage to step forward bravely. Te moment you do that, you begin playing the richest game in the world, a game where the rewards are far more important than money.
• Residual income, which is income from a business, such as a network-marketing business or a franchise business you own, but someone else runs.
• Dividend income, which can be income from stocks.
• Interest income, which is income from savings or bonds.
• Royalty income, which can be income from songs or books you have written, and trademarks and inventions (whether or not patentable) that you have created.
• Financial instrument income, such as income from trust deeds from real estate.
Wrapping up the answer, I said, “So that is when my journey began. After that conversation with rich dad, I became very curious. I thought about what he said for several years. Te more I thought about it, the more what he said became a possibility. When I was in my early thirties, I knew I had to push my reality. I knew my school days with rich dad were over. I knew rich dad could not teach me much more or give me any more answers until I decided to change my reality and begin my journey. More answers were not going to help. I needed a new expanded reality. I knew it was time to leave the nest, as they say. I did not know if such a world existed, but I wanted it to exist.
Slowly, I realized that too much of the time, my fear of not being enough or not having enough prevented me from allowing the abundance that life here on earth offers. I realized that my personal struggle to become rich was primarily my personal struggle against my fears.
Too often we think we are alone and we have to survive on our own. Too often we believe that, in order to survive, we need to do our job on our own. We are often taught that it is the survival of the fittest and if we are not ft, we do not survive. Tat is the way a prisoner thinks. Many people are financial prisoners of their fears. Tat is why they cling to threads of security, become greedy, and fight for scraps of money like starving dogs fighting over a meatless bone, rather than seek financial freedom.