How To Make Yourself Rich

The main solution that is needed to achieve financial success according to this chapter was once again the need for one to improve their financial IQ. This time, Kiyosaki first voiced how he felt a Defined Contribution Plan is bad and that people relying on it will face financial challenges as a result on basing their future around it. To advocate his point about these types of retirement plans, he used some quotes from the Time Magazine article titled “The Great Retirement Ripoff” which was published on October 31, 2005.

He then had an interested example about one’s financial IQ by using America’s oil supply situation and how he was taught that Wealth = Energy.

He then used these arrow diagrams to describe about how when the price of energy goes down, wealth goes up:

Vice versa, when energy prices go up, wealth goes down:

A real example he used was how when he worked for Xerox, during the high oil prices in 1974 people were not renting and also canceling copier rental contracts which as a result caused him to lose a lot of money. That was a typical example on how you can be hurt as a result of rising energy prices.

On the flip side, he then demonstrated how you can capitalize on it instead with some knowledge. For him, he decided to work part-time for an oil company which also sold gas tax shelters. Back in his old days, an investor investing $100,000 could receive $400,000 worth of tax write-offs meaning that you would essentially be receiving a 4 to 1 tax break on one’s investment. With this new knowledge, he realized that you can make money during these bad times and began to sell tax shelters in his spare time. That inspired him to become rich. That basically shows that instead of being on the poor side in a bad situation, with some proper knowledge you can increase your financial IQ to make it a positive situation. With this example, basically you can make it so that when energy prices go up, so does your wealth.

Donald Trump then gave his opinion on the matter and his example of financial education is how he spends money wisely. He talks about how one of the restaurants at the golf course needed 150 chairs and that his manager was quoted that each chair would cost $1500. Instead of simply giving the go-ahead to make the purchase, as obviously he is not afraid to spend that much money, he decided to do some research himself and in the end he ended up buying chairs that were better at $90 for each chair. Basically, he was demonstrating how he likes to buy the best, but at the same time he doesn’t like to waste money which also rubs off on his staff to be smart with money. His other advice revolved around how you need to have the mentality of a leader and treat problems as challenges that provide you an opportunity to achieve a great reward.

Once again, there were interesting stories to read in terms of how they did it along with their mindset in those types of situations. I fully agree with that fact that one must see problems as challenges. Doesn’t matter if you are on a sports team, simply playing a game or starting a business, being able to see problems as challenges forces you to expand your thoughts and to create a solution. Is this really the answer as to how to make yourself rich like what the chapter title implies? While having that type of mentality is definitely a factor I would say, I think that is a little too general as the examples can be used across many different categories and subjects such as in a how to become successful book where you want to teach people on how to get out of a rut.

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The Shrinking Middle Class

The theme of this chapter revolved around how people’s financial intelligence, which they refer to as “financial IQ”, is not up to par and as a result the middle class is shrinking and making society into a two-class demographic consisting of the very rich and the very poor. They used this diagram to explain this:

The interesting note from Robert Kiyosaki’s point of view is how America has been investing into Social Security and Medicare which he classifies as a Ponzi Scheme. For those who don’t know, a Ponzi Scheme is where people invest their money into some kind of business/company with the assumption that you will generate income from the profits of the business, but in reality there is no business and your funds are simply being used to generate funds through other means.

A quick example of a Ponzi Scheme would be say me convincing you to invest in my oil company for $1,000,000 and in return you can expect to make at least $5,000 a month continuously with the option to take back your one million whenever you want. Imagine me doing this to about thirty other people. Now with my thirty million dollars, I will place it into a special high interest account and with the money I earn there I will simply give a portion of it back to everyone else. Basically, I don’t really have an oil company and am deceivingly using your money to generate profits by others mean.

Kiyosaki then briefly goes over how the rich often does not want others to know their secrets and strategies in creating financial independence which is a part of the problem. In retrospect, Trump and Kiyosaki wants to teach people to take care of themselves financially and have no problems sharing as much as they can.

Donald Trump’s concerns were similar in regards to the shrinking middle class. In his writing, he also attributes this problem to knowledge and used China and India as examples as they are growing their middle class suggesting that America can learn something from that. Some interesting examples he used to demonstrate the growing economy in China is how Starbucks opened up there two years ago and now there are more Starkbucks stores in China than in the US. Shanghai also had only one skyscraper back in the 1970’s and today it has almost 800.

For India, Trump used a lot of examples to demonstrate its knowledge and potential with facts such as how India invented the number system, 38% of doctors and 12% of scientists in the United States come from an Indian descent and that out of all the ethnic groups in the United States they are the wealthiest. With all these facts, he considers China and India as a force to be reckoned with and that we can learn so much from them.

I think this chapter gave a lot of educational and thought-provoking facts to think about in terms of growing an economy and becoming better financially. For myself, as interesting as it was to read, I personally didn’t really get anything out of it directly. I’m getting a little concerned so far that the rest of the book will be similar in the sense that it will provide general information on what’s good or bad and then leaving you on a wild goose chase to figure things out for yourself. If I was to put my business owner hat/mentality on, reading it did make me think and so in that sense I guess what was written was effective. If I was to think like a hopeful willing to learn on what steps I would need to take, I’d probably be getting a bit anxious by now as I wouldn’t have the experience to see things with that kind of perspective and would need something to get me going.

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Our Shared Concerns

This chapter was pretty short as it mostly talks about how Trump and Kiyosaki shared the same concerns and belief about various economics issues by using a lot of references from their past books. This time they were in Dallas, Texas where The Learning Annex’s Real Estate Expo was taking place on February 19, 2006. They first showed this diagram to explain how the country has $72 trillion worth of off-balance sheet obligations:

They describe how the country could simply print more money, but that would cause hyperinflation which wouldn’t really solve the problem. Now the example they used for this was pretty incredible when I think about. They talked about how back in the 1930’s the German dollar had pretty much lost its value due to the government printing so much money. Apparently, a common story that was told to reflect this was how there was a lady who went to see a baker to buy some bread and to pay for it she brought with her a wheelbarrow that was full of money (Try imagining that happening today). She went inside the store and once she decided on what she wanted to buy she went back out to get some money to pay for it and then realized that she had been robbed. The thing is the thief didn’t take any of the money, but rather just the wheelbarrow. I’ve always been taught in school about how simply printing more money would be bad as it would cause inflation, but for some reason reading this example makes it so much more apparent.

Afterwards, they talked about how too many people are expecting things to be handed to them, such as pensions, rather than taking action to take care of themselves and used the following diagram:

They want people to lose the “entitlement” mentality and to do this people need to educate themselves and to try different things. The Albert Einstein quote was used where he defined insanity as “doing the same thing over and over again and expecting different results.” Robert Kiyosaki thinks that a good example of this is how the education system does not teach kids about money and used his “Cashflow Quadrant” picture to explain this which looked this:

E – Stands for employee
S – Stands for small-business person, self-employed or specialist
B – Stands for big-business owners such as Donald Trump
I – Stands for Investors.

Kiyosaki mentions how the education system is teachings kids a lot about E’s and S’s, but not B’s and I’s. Trump shares the same concern in a different view it seems where he thinks too many people are in a “goupthink” mentality where everyone follows the same herd. He wants to help people break out of this groupthink mentality to teach people how to think and take care of themselves.

To me, for the most part this chapter felt like it was trying to advertise Donald Trump’s and Robert Kiyosaki’s other books. As I mentioned, I never read them before so a lot of the information about their perspective on things were new to me, but I can see how readers of the previous books could be disappointed. That wheelbarrow example was something new to me though and I guess this Cashflow Quadrant thing has probably been a key tool in Kiyosaki’s books and teachings.

Having to think outside of the box and doings things differently from people who are not where they want to be financially is true of course which seems to be the key message to take out of it.

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Millionaire Meets Billionaire

It starts off by talking about how odd it is that Donald Trump and Robert Kiyosaki got together to write this book as their backgrounds are very different. Donald Trump came from a wealthy family and made billions at a young age while Robert Kiyosaki came from a middle-class family and became a millionaire late in his life. All this is suppose to show what kind of an important message that these two are trying to get out to the public through this book.

The whole chapter basically explains how the two met and decided to write a book together from each other’s own perspective. In a nutshell, there was a Real Estate Exposition that was taking place by The Learning Annex in Chicago back in November 6, 2005. Donald Trump was a speaker at the event and Robert Kiyosaki had the honors of introducing him. Just before going on stage to be introduced, Trump pulled Kiyosaki aside and mentioned how since he was the number one business author and that Kiyosaki is the number one personal-finance author that they should write a book together. They agreed that it was a good idea.

From Robert Kiyosaki’s point of view, he was initially very nervous in talking to Trump as his view would constantly be describing Trump as this larger than life figure who had these huge bodyguards and in terms of money he was nowhere near Trump’s success. From Trump’s view, he knew that when he first approached Kiyosaki that he would be talking to a powerhouse and would probably be intimidating to talk to as the man has sold over 26 million copies of his books.

While they agreed to write a book together, what exactly the book should be about was unclear. It wasn’t until Kiyosaki went to Trump tower to officially meet Donald Trump about it that it was decided on what kind of book they will write. While waiting to meet Trump, Kiyosaki got to speak with some of Trump’s employees and through those conversations he was able to learn that Trump had a passion of wanting to teach people on how to be successful. So when they did actually meet, this provided a foundation on what to write about and how they both create these educational products out of the passion to help others as they both share a deep concern on the financial problems in the country as a result of things such as how Medicare is the nation’s biggest debt. In the end, they decided that they wanted to help end poverty by writing a book that provides financial education as it seems to be a category that is lacking. Not only that, but they wanted the book to be about how people can “save themselves”.

I guess the story is interesting so far. If I was to be a very cynical person, I would say that so far the book is simply painting a picture on how noble and successful the two authors are. That’s what I think most people would say as, like myself, my initial perception of the book was that they were going to give specific examples/tips on things to do to help you make better financial choices. But as the introduction describes, the book is more about one’s attitude and financial education, so I’m keeping that in mind. A lot of the stuff they say is cliché, but nevertheless true such as how you should be doing things that you have a genuine passion for.

At the end of the chapter was a url link to the official site and how there were two free audio files available for download. One was by Donald Trump called “Think Big” and the other one was with Robert Kiyosaki called “The Art of Winning”. The server must have been getting slammed when I tried downloading them as the download kept getting cut off. I thought both of the audios were pretty good. So, I’ve uploaded it below for you all to hear and for other people who may have been having trouble downloading it as well.

Donald Trump – Think Big

Robert Kiyosaki – The Art of Winning

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So the first book that I decided to read for this business and finance book review section is the book called “Why We Want You to Be Rich: Two Men – One Message” which was created by Donald Trump and Robert Kiyosaki. Just some quick background information about the authors for those who may not know, Donald Trump is a billionaire who made his money in real estate with one of his most notable recent accomplishments being the reality TV show The Apprentice, which I’m a fan of. Robert Kiyosaki is best known for writing a series of best selling books called “Rich Dad, Poor Dad”. Although I never read them myself, the book is apparently about the type of mentality and approach that a wealthy person has in dealing with business and money.

I chose this book because it seems relatively new and the author combination seemed kind of interesting. Since I don’t usually read these types of books, I guess at worst the book will be filled with vague advice that solely serves as a way for the two to advertise their businesses and success or it will actually turn out to be something useful and relevant. Of course, I will read it with an open mind. So, as mentioned I will be basically reading the book chapter by chapter and posting updates as I go along.

The introduction of the book basically explains that the essence of it is to help educate people about successful people’s approach and practices in regards to money and finance. The two author’s concern is that in America it seems like the rich is getting richer while the economy overall is getting poorer due to the middle class shrinking. They explain how if it keeps up it will be a two-sided country consisting of the very rich and the very poor which threatens democracy in general. Because of this, Donald Trump and Robert Kiyosaki would like to help educate people on how to become rich by learning the right attitude.

They try to make it clear that the book is not intended to tell you what to do with your money or how you should be investing it, but again why they are successful and how they win financially. They believe that for example if someone had money problems, just giving them more money won’t solve the problem. The solution would be to educate them about through financial lessons. They used a popular quote to describe this philosophy which goes like this:

“Give a man a fish, and you feed him for a day”

“Teach him to fish, and you feed him for a lifetime”

One of the more interesting things in the introduction is how they broke down the type of financial advice that the poor, middle and rich class receive:

Poor Class – The government will take care of them through programs such as Social Security and Medicare.

Middle Class – Simply find a good job, work hard at it, live below your means and invest for the long term in something like mutual funds that has a no risk guarantee to ensure that you will get some money out of it.

Rich Class – Become an “active investor” which means you are working and investing with the intentions of winning to earn the great life.

The rest of the introductions talks a bit about the history and how it affects us today such as 401 (k) plans.

Since I live in Canada, obviously some of the things described in the book are foreign to me. In general so far, I guess the important thing to take out of this is that when reading further one shouldn’t expect this book to teach you what to do with your money which is what I think most people would initially expect it to be. I definitely agreed with the teach the man to fish example in relation to solving money problems. Kind of reminds me of the lifestyle changes post I made more than a year ago where I think you have to change yourself first in order to solve these types of problems.

On to the first chapter.

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