Sunday, December 30, 2007

Inside Rich dad Poor dad

Kiyosaki and Lechter say the rich think differently in how they define simple words like assets and wealth, and how they fund their luxuries. They define an asset as any item which produces income (such as rental property,stocks or bonds), and a liability as anything which produces expense (such as one's own home, new widescreen TV, exercise machine, new garden tractor, motorcycle, computers, processed foods, swing sets, barbecue grill, tools, letting your property rundown and a new car every two years).
No one disputes that the rich buy "income-producing assets". Kiyosaki and Lechter argue that the poor buy worthless items that they think are assets, which clearly do not earn anything, and may have no market value.
According to Kiyosaki and Lechter, wealth is measured as the number of days the income from your assets will sustain you, and financial independence is achieved when your monthly income from assets exceeds your monthly expenses. Each dad had a different way of teaching their sons.

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