Some Thoughts on Wealth

I was recently listening to Kiyosaki’s audio course entitled “Think Rich”. There were many fascinating aspects, some that were new to me and many which were not. (Many of his ideas reflect those written about by Henry Ford, Napoleon Hill and Richard Clason). I agree much of his work (and disagree with some – such as his definition of luck), so here are some of the ideas that stuck out.

“Money is an merely an idea that can make you rich or poor”.

In this sense money has no validity as a source for wealth unless channeled properly. Many people make money doing their job but few have the intelligence to maintain that wealth and increase it over time.

“Think of wealth as a time frame. If spend $1000 a month and have $10,000 in the bank: You have 10 months worth of money”.

I found this fascinating in the sense that it applies to businesses too. If a business has $1M today that it doesn’t have to spend till next year, that’s significant.

“If you are going into the Real Estate market don’t buy until you’ve seen 100 houses”.

He bases this on the Law of Averages. The more homes you look at the better your chances of finding a bargain.

Q: Why are Brokers called Brokers?
A: Because most Brokers are Broker than you!

“Failure is a verb, not a noun. The fact that 9 out of 10 businesses fail means that 1 of every 10 succeed.”

Again he uses the Law of Averages. He says how it took him only 3 tries before starting a successful business. In a sense he may be considered in the top 3rd percentile in regard to financial intelligence. The truth is most people don’t even bother to try.

“Investing is Saving in what goes UP in value”

You become wealthy by owning appreciating assets, not by holding liabilities. This is why no one ever made money by buying real estate. You make money through the spread of your cost to profit.

“You don’t invest in stocks. You invest in a plan”.
Stocks may go up and down but your financial goals and the strategies by which to reach them stay put.

“Invest in a plan. Know why you wish to become wealthy and the how will follow”.
This sounds much like Enron’s old adage “Ask why.”, but it reminds me of a good joke.

“A man, having trouble with his furnace, calls in a repairman. The Repairman takes a look, grabs a hammer, bangs the wall and the furnace is as good as new again. Receiving the bill the man cries, “50 bucks? I could have done it myself and saved half a union!”. The Repairman takes the paper back for a second, scribbles something, and hands it back. It reads “Bang of Hammer, $1. Knowing where to bang, $49”.

I came up with a few good ideas while listening but that’s for another time.

Until then… Buy appreciating assets. The keyword is “Appreciating”. Kiyosaki says too much of tomorrow’s financial dependence is relied upon the stock market. We say like Jim Rogers “The next thing… is Things”.

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