Rich Dad Poor Dad best-selling author Robert Kiyosaki filed for Bankruptcy for one of his companies after losing a lawsuit. (By the way, he owns more than ten companies)
And as someone (me) in the real estate business, I thought I'd share my thoughts about this.
I used to be a Kiyosaki fan in the late 90s. I've read a lot of his books. The ideas presented in his book was 'fresh and revolutionary' at that time.
"Financial Literacy" quickly became a buzz word those days. Every "business opportunity" presentation can't go without the "cash-flow quadrant" powerpoint!
I kept buying the Rich Dad books. (along with other business books) Until one day, while reading, I realized that he was just saying the same thing over and over again in all of his books. So I took what I could apply in my business and moved on. (people tend to idolize him)
Some of the ideas worked for me. Some didn't.
As an entrepreneur and a real estate investor, here are a few personal lessons I'd like to share.
Disclaimer: These are my personal realizations – it may or may not work for you.
1. Invest in the "right property" or real estate.
Not all properties are good investments. You need to do your homework.
I own a small real estate company that operates 33 rental units today. Owning these assets has worked for me. I guess collecting money from 'rent' has been a good idea – even before Robert Kiyosaki was born.
2. Avoid Irresponsible Borrowing.
You can use fire to cook, to heat or to light. But too much fire can also burn down the house. Irresponsible borrowing is playing with fire.
Borrowing money for an unproven business is a bad idea. Should you borrow money for your business, make sure it's to expand what's already working for you. Don't speculate if you can't afford it! – a painful lesson I needed to learn first hand.
The best way to start is to start small. Then find a way to scale up.
Patience and consistency will take you a lot further.
3. Like Mr. Kiyosaki, I'm also an author. The royalties/income from book sales here may not be as much, but it's opening new doors for me. So, I guess that's a good idea.
4. Rich dad says, "your house isn't an asset, but a liability." Well, you have to live somewhere. He can call it whatever he wants, but for me, i'll call it "my home."
I guess what he simply meant was: Be wise when purchasing a home. Do you really need a big house with a big mortgage? Or would you put your money in a "luxurious car" when you can buy a more practical one and invest the rest somewhere more profitable?
The bible offers the best advice "Finish your outdoor work and get your fields ready; after that, build your house." – Proverbs 24:27
5. A "good name" is still more valuable than riches.
This is not the first time Mr. Robert Kiyosaki was sued.
The sad part is that he has been sued by someone close to him (Sharon Lechter) and by someone who has helped him in a big way. (The Learning Annex)
The Takeaway: Be diligent. Be financially literate. Be successful. But don't neglect the most important – your reputation and your character.
The best gift you can give to your children is 'a good reputation' that they can carry with them.
The best gift you can give to yourself is knowing in your heart that you tried your best to do what's right – even when no one else was looking, counting or expecting.
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