Nobody will share the secret of making money. (if there is one and if nothing is really based on opportunities and chance).

I believe it is a great book and there is a lot of lessons to be learned by it.
I did change the way I think.

I returned and saw under the sun that—
The race is not to the swift,
Nor the battle to the strong,
Nor bread to the wise,
Nor riches to men of understanding,
Nor favor to men of skill;
But time and chance happen to them all.

I prefer "The Richest Man in Babylon" by George S. Clason. It's much wiser and practical.

Hi All,

I know this is an old post, but I have the Cash Flow board game and wanted to know if anyone wanted to get together to play?

I'd be up for that. I was always curious about that game.

Hi everyone,
i am Alessio and new to the forum...
I got into economics since a few months and i read almost all books by RK...
I think they are really good but abstract...

In other words i think they are really good as a starting point to get into the proper mind set and to get inspiration but they do not really get to much into
the "practical" side..For this i read beautiful books from Warren Buffet (e.g. How to read financial statements) and Peter Lynch (e.g. one up on wall street)..

i highly recommend them

cheers

Alessio

We read this book about 3 years ago. Financial independence and good planning for retirement were always on our minds. In one's portfolio one should collect assets not liabilities. It was like a good idea. My wife and I, we both warmed up to this concept very much and tried to realize it. Now managed to secure three properties just before the day I turned 40. We are debt free as well.

Surely, the author filed for bankruptcy due to his trickery and dubious methods and probably made more money by selling what people want to hear. Ok, we may argue that the real estate is not as lucrative form of an investment as it used to be prior the bubble. Despite currency depreciation and inflation rate versus property market appreciation and renting out are not profitable as previously, we believe that the real estate is still great mean of long term investment. Time will truly tell.

Bottom line, no matter what they think about the author and how irrational his methods might sound (some truly are out of dough and over the top and we do not take everything literally). It is just a food for thought that one can truly become financially independent pleases the readers, if one tries hard enough.

Personally, for myself who works in corporate world here and climbing up the corporate ladder with mediocre financial reward seems like only option and success to be achieved in workplace plus recognition. However, if you invest and secure your assets early enough then the whole outlook for your financial future may be brighter than ever. We were doers. We did it and do not regret reaching for this book one bit.

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Hi jacek,
i agree with you...it´s really a matter of trying hard enough...i think one of the most important message in RK books is really to be disciplined enough and do the homework in terms of studying, attending seminars, starting early enough to accumulate assets...personally i just started entering this world and i am trying quite hard to get financially literate....i hope i ll manage to get soon enough assets but of course one should be aware that it´s a life long path..

by the way...did anyone buy the Cashflow board game 101?? What do you guys think?? i have the feeling it could be a good investment...opinions??

cheers

Alessio

One has to find one's own way to success. You do not have to always take a house bond and keep on repaying your loans. Combination of one's savings, inheritance, retirement annuities, unit trusts, shares, bonuses and other assets might come handy in time - opportunities present themselves in time. Importantly, do not put all your eggs in one basket

My father was the same, save every penny, never bought "dodah´s" worked all his life, honest, hard working, very money orientated, had house, a car etc. dropped dead not two years into his pension.

For me, just happy that I don´t have a lot of money to worry about.

It's worth playing once but I wouldn't advise buying it. It's expensive and I have doubts as to the replayability. It reinforces the book's message - 'don't buy stuff that drains your cashflow, buy productive assets'.

If you take your hundred francs (or whatever it costs here) and think how to use it to make money you'll have learned everything the game wants to teach you.

When you make a balance sheet, you have two columns, one with assets and one with liabilities. The sum of the assets equals the sum of the liabilities.

We tend to gloss over this simple fact and assume it's just a manner of speaking or a chore of bookkeeping. We might do well to occasionally remind ourself that it is neither a chore nor something we just happen to do, but that these columns have a meaning.

An asset is basically something that somebody owes us. So if its a bank account, the bank really just owes us some money. If it's a house, its really just a security to represent that the "market" owes us the value of the house. Ditto for gold. Even cash in hand is ultimately a debt of the currency bank towards us. All assets are debt. We need to see that that way rather than seeing the "mine" in everything.

Similarly, a liability is something we owe somebody. If you think you don't have any debt, think again. Your finances are a company of which you are the sole shareholder and as a company you hold a debt to the shareholder. Liabilities are not in themself bad, as without liability there can be no asset and vice versa. But you have to match the right type of liabilities and the right type of assets as well as possible.

The sum of the assets is the sum of the liabilities. So everything somebody owes us is balanced by something we owe to somebody else. All this has been understood since the middle ages. But sometimes if we stopped to think of this as real rather than as just a way of bookeeping, we might treat money and assets differently.

So to invest wisely we need to be able to maximize income and/or growth of assets while minimizing costs and exposure of liabilities. If your new car or new shoes are not doing that,and you are matching liabilities that cost you to assets that don't earn back that money, you need to think hard whether you can afford them.

firstly, not everyone has the luxury of saving.

but for those that manage to earn more, the initial temptation is to spend the extra that we have. and so going on this way, we are no better off than someone who is on the breadline, except that we consumed more along the way.

i guess personal finance books encourage people to invest for their future/retirement and allocate some of their money in a way that it will generate a return for them, whether that is in the form of interest, rental income or profits.

hopefully, the more you invest, the more returns you'll have, which themselves can be invested so that your investments end up doing more and more of the 'work' for you.

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I have at certain times during my life kept a book listing every tiny amount I spent. At other times I didn't bother. I never did anything with that book. I could have typed it up in Excel and made some nice statistics but I never thought it was worth the time. But an interesting observation was that whenever I was keeping the book I always had more money in my pocket at the end of the month that at times that I didn't, as just the fact that I knew I was going to have to write this little sum in my book helped me not buy something. It also forced me to think back at the end of every day and recall every little thing I had done with money and this drove home the stupidity of some of the things I was spending it on. I think keeping a book is a valuable psychological crutch to saving money, even if it serves no other purpose. It was especially useful in my student days as it often made the difference between having money left over at the end of the month or having to dig into reserves I didn't really have.

@amogles... isn't it:

assets = liabilities + equity

???

Also, this talk of buying assets, not liabilities...

A car, boat, "doodah", etc is an asset. Not a liability. It's just a crummy asset that generates no income and depreciates over time.

I believe the author to whom you are all referring got rich by using extreme leverage to invest in property during a bull market. He then got more rich buy selling his book. He then went bankrupt when the property market crashed and the leverage bit him on his arse. I wouldn't be taking lessons from this guy.

The only useful takeaway from his book seems to be "don't buy crap".

I hope we would all be setting our financial education goals a little higher than that...

don't know the background to what happened to him, but some of his advice was definitely dubious. he also didn't understand the difference between an asset and a liability and imparted his confusion upon his many readers.

I just finished the book — literally yesterday — and that's not how the author defines asset.

The author defines "asset" as something that is generating income. Cars, boats, etc., don't generally do that. Even with real estate, he doesn't settle for something that might increase in value if you sit on it long enough. For example, real estate is an asset if you're getting regular rental income from it. Same for any other investment (e.g., stocks, bonds, etc.): If you're routinely getting some direct monetary reward because of the investment, it's an asset, otherwise, no.

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@Texaner

Oh-kaaaay.

But, the thing is, banks, financial regulators, finance professors, auditors, etc are all pretty clear on the definition of assets and liabilities. And on financial statements, like balance sheets.

I'm going to go with them, rather than Mr Rich Dad Poor Dad.

assets = liabilities + equity is the balance sheet equation. It's not really up for debate...

yup. his definition is not just wrong and confusing, but also nonsensical.

for example, the home you live in doesn't generate an income directly, but you SAVE money by not having to pay rent when you live in it.

not only that, in some countries, it is also highly tax effective as you live in your house tax free, where as you would have to pay rent out of taxed income, which could be up to 100% more expensive! (e.g. if you are in the 50% band in the UK).