Robert Kiyosaki - Teachings

Teachings

A large part of Kiyosaki's teachings focus on what he calls "financial education" generating passive income by means of investment opportunities, such as real estate investments and businesses, with the ultimate goal of being able to support oneself by such investments alone and thus achieving true financial independence WITHOUT working for a paycheck. In tandem with this, Kiyosaki defines the term "assets" as things that generate cash inflow, such as stock dividends, rental properties, or businesses, and the term "liabilities" as things that use cash, such as houses, cars, and so on. Kiyosaki continuously argues that financial leverage is critically important in becoming rich, despite the inherent financial risks, repercussions, and pitfalls that come with it.

Originally self-published before being picked up commercially to become a best seller, the central concept of the book is an anecdotal comparison of his "two fathers." His "poor dad" was his biological father, who was highly educated and became Superintendent of the Hawaii State Department of Education but was poor. Contrasted with this is his (possibly fictitious) "rich dad," his best friend's father who became "the richest man in Hawaii" by investing his smaller income into income-producing investments, and was a high school dropout. Its main purpose as a self-help book is to help people rethink their idea of money and especially their concept of themselves as employees who will gain financial rewards from conformity and education.

Kiyosaki uses the "rich dad, poor dad" comparison to illustrate his view that the majority of people are stuck in what he refers to as "the rat race"—living paycheck to paycheck and spending all of their time working to pay bills and other expenses. In his books, Kiyosaki advocates tax-advantaged investment vehicles, such as real estate or businesses, rather than ownership of securities such as stocks. This idea is further developed in his later books and "Rich Dad" became Kiyosaki's personal brand for various publishing ventures.

Kiyosaki continuously stresses financial literacy through the acquisition of he calls "assets" as the means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an "Industrial Age idea." And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner, an investor, or both generating passive income, particularly on a monthly basis.

Kiyosaki often refers to The CASHFLOW Quadrant, a conceptual tool which he developed to categorize the four major ways income is earned. Depicted in a diagram, this concept entails four groupings, split with two crossed lines (one vertical and one horizontal). In each of the four groups there is a letter representing a way in which an individual may earn income. The letters are as follows.

• E: Employee — Working for someone else.
• S: Self-employed or Small business owner — Where a person owns his own job and is his own boss.
• B: Business owner — A person who owns a business to make money; typically where the owner's physical presence is not required.
• I: Investor — Investing money in order to receive a larger income in the future.

For those on the left side of the divide (E and S), Kiyosaki says that they may never obtain true wealth. Conversely, those on the right side of the divide (B and I) are supposedly following the only road to true wealth.

Kiyosaki also classifies the four main "asset" classes as means of gaining wealth.:

• Businesses: Businesses that generate monthly cash flow that don't require the owners physical presence.
• Real Estate: Real estate such as owning warehouses, small family homes, or apartment houses that generate monthly cash flow.
• Paper Assets: Investments such as stocks, bonds, hedge funds etc.
• Commodities: Gold, silver, iron ore, or copper that are used to hedge government's mismanagement printing of the nations currency.