Assets and Liabilities + Financial IQ. Business Robert Kiyosaki's way

I've already written about Mr.Kiyosaki's most popular book "Rich Dad, Poor
Dad" earlier and you can find it in December's archive. So I am not
going to write again what this book is about. This is the only material of
all his works that I found useful. I watched a few seminars on YouTube and
read some other articles but they don't really seem interesting.
Everything comes from "Rich Dad, Poor Dad", just as an updated version and
with a different name. My personal opinion of course.

In this post I want to describe business and profit making the way
Mr.Kiyosaki explains it. For the beginning, below are a few lines from the
book, it might be a little bit different from the original as I've read
the translated version (in Russian), but idea is the same:

COMPARISONS of opinions:

Poor dad: I cannot afford it
Rich dad: How can I afford it?

Poor dad: Be a good student (study much) and you will be able to get
employed in a good company
Rich dad: Be a good student (study much) and you will be able to buy a
good company as an investment

Poor dad: Our house is our biggest investment
Rich dad: If you consider your house as the biggest investment, you are
going to have big financial problems

Poor dad: Be careful with money, don't risk
Rich dad: Learn risk management


Poverty and bankruptcy are completely different things. Bankruptcy is
temporary, but poverty is eternal.

Assets and Liabilities:

Start your own thing. You don't necessarily have to quit your job . The
main objective is to buy assets, not liabilities. A new coat you buy
without a reason is a liability. A new car you buy just for fun loses
around 25% in price as soon as you leave the dealer. Liability stands for
purchases that fall in price. An asset is what grows in price. Here are a
few examples of assets:

- A business which doesn't require presence of the owner. If you are
obliged to work, then it is not business, it is a standard job. For
example: Many people think they are businessmen if they own a local store.
They think so because they are assured that they have no boss and they
just pay taxes. But it is important to realize that if you visit your
store every day, do the accounting, check invoices, check staff, do the
logistics and etc, then it is not business, it is like any other job. A
business is an asset which doesn't require your presence. For example:
Having an apartment which you contract out to rent for a few years. You
sign the paper, talk the terms and forget about it for next two years or
whatever term mentioned in the contract. And thus, you are not obliged to
be in it temporarily so that you can do something else. This is an asset
and can be called business.

- Buying stocks. Get involved in stock markets. You can never know if it
is for you or not unless you try.

- Buying bonds.

- Buying real estate which brings regular profit. This is probably one of
the best ways again. Although in this case you need good money to start,
unless you inherit a few houses from your grandparents.

- Debtor's receipts

- Honorariums on intellectual property: music, lyrics, scenarios, patents,
self-made paintings, sculptures etc.

- Any other property which has a value, grows in price with time, and is
very liquid i.e. always in demand and easy to sell. Examples: gold,


Another important thing is your financial IQ, which means being
financially very well educated. Here are the key elements:

First element: Accounting - everyone remembers where the revenues come from
but very few people can track down every penny spent. So knowing
accounting and budgeting essentials is necessary.

Second element: Ability to make money. The book is about understanding
that money brings money. This is the concept so I won't stop here, just
read the book.

Third element: Knowing the market. Being aware of demand and supply.
That's not a science, but it sure will take time and experience.

Fourth element: Laws of the country you are living and running your
business in. You have to be acquainted with the legislation if you don't
want to face any problems. Read laws and rules about entrepreneurship,
taxation and etc.
Additions by me:

You must be financially educated. This is the concept. This is what you
will understand while reading this book. You will also understand that for
most of us life is a disguised rat race. We don't realize it but actually
we do the same all the time. First we finish school and dream about
university. Then we get a degree and dream about a good safe job. When we
get the job we start to think about our own family. Then we get more and
more into debts. Loans, mortgage, etc. Then we dream about promotion. We
get promoted and from once junior representatives we grow into
professionals, technicians, senior advisers and etc. The we start to think
about our kids' education. We save more, get into debts more, open more
credit lines. We save enough for kids' school, then comes the college,
university, kids' marriage, helping them move, supporting them. We realize
that getting promoted is not helping anymore. We take another job, do
freelance, work double shifts.....again to save more. Why to save more? To
be able to live a calm retirement. Am I retired already? Yes, you are
already retired, you live in a little skid-row, on your own, eat-sleep-go
to park, eat-sleep-go to park, eat-sleep-go to park. And when you sit in
park with your spouse who is already 70 what do you remember about your
youth together? Travelling, concerts, having rest, enjoying life? No! you
were in a rat race, all you can remember is double shifts, late night work
and paying checks and taxes all the time.

This is what this book is about. Of course every day is a gift and we can
enjoy it. Being poor is not shameful. There is nothing to be embarrassed
about wearing second hand and living on potatoes. But one should be
embarrassed about never trying to make your life better.

Remember this: Think about people like Einstein, Tesla, Jack London. Did
they become this big because of their knowledge or God-given flairs, or
patience and hard work? Maybe. You can become educated too, you can also
master a craft, work hard. But there is one thing that makes these people
different from you: They saw opportunities and reached out to them.

Another advise from me: Never try to fool or con anybody. In business or
in real life. Doesn't matter. Don't be a liar or a fraudster. Don't get
cheap because of money. Dirty money will not buy you happiness. Be an
honest person.