Chapter 8
Business and Finance Books

Chapter 8

financial literacy

There Is a Difference Between Savers and Investors

This chapter mostly talked about financial leveraging and how the current economic system needs debtors rather than savers. Kiyosaki first gave his view on the matter and describes leveraging as “the ability to do more with less.” His example was how there are a lot of people who work hard, but with that they are only thinking about themselves and there is almost no leverage in that. His examples of leveraging is how Donald Trump and himself utilize the skills of other people to work for them to help them become rich which is form of leveraging. Robert Kiyosaki then emphasized how the economy needs people that can create jobs in order for it to grow as it would collapse if we only had people looking for jobs.

Kiyosaki then started to go into detail on how “debtors” and not “savers” are needed in order to expand the economic system. He used this diagram to demonstrate his example:

Personal and Financial bank statement

The gist of it is that your debt is a liability for yourself but is an asset to the bank. On the flipside, your savings is an asset for yourself but is a liability for the bank. This is suppose to demonstrate that for the economic system to grow, it needs people who can borrow money and use it to successfully become richer rather than poorer. The 90/10 rule was then used on how 10 percent of borrowers use debt to get richer while 90 percent of them use debt to get poorer. He then emphasized how banks love people like Donald Trump and himself as they use debt to get richer which translates to more money to the bank as the more they borrow the more money the bank makes.

Donald Trump then talks about how he sees an investor as an active saver and how you can get a higher return from investing rather than simply saving. He wrote an interesting description about the two as he sees as an investor as someone who takes big steps in and out of a bank while a saver takes big steps in and small steps out. He then mentions how he thinks that investors are visionaries who are reaping the big rewards and that savers are living in fear when it comes to money which is hindering their ability to take advantage of a lot of opportunities. Basically, he encourages one to utilize leveraging.

In this chapter, they also explicitly mention that one should educate themselves financially first before trying anything big. I fully agree with the message that people should find ways in leveraging their money to help create wealth. One of my old post titled Valuing Time wasn’t specifically about leveraging money, but rather time leveraging. I guess it falls under the same concept on how finding ways to utilize leveraging can allow you to work better and smarter as you can get more things done with less effort. The way they described about a “debtor” and “saver” in this chapter was definitely interesting for me.

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