Login

Enter your username and password below

Investments: Rich vs. Middle Class

Dear Reader,

Rich dad often said, “Money will be anything you want it to be.” What he meant was that money comes from our minds, our thoughts.

If a person says, “Money is hard to get,” it will probably be hard to get. If a person says, “Oh, I’ll never be rich,” or “It’s really hard to get rich,” it will probably be true for that person. If a person says, “The only way to get rich is to work hard,” then that person will probably work hard. If the person says, “If I had a lot of money, I would put it in the bank because I wouldn’t know what to do with it,” then it will probably happen just that way. You’d be surprised how many people think and do just that. And if a person says, “Investing is risky,” then it is. As rich dad said, “Money will be anything you want it to be.”

Rich dad warned me that the mental preparation it takes to become a sophisticated investor is probably similar to the mental preparation it would take to climb Mt. Everest or to prepare for the priesthood. He was kidding, yet he was putting me on notice that such an undertaking is not to be taken lightly. He said to me, “You start as I did. You start without any money. All you have is hope and a dream of attaining great wealth. While many people dream of it, only a few achieve it. Think hard and prepare mentally because you are about to learn to invest in a way that very few people are allowed to invest. You will see the investment world from the inside rather than from the outside. There are far easier paths in life and easier ways to invest. So think it over and be prepared if you decide this is the path for your life.”

Investments of the Rich

I remembered that when I was a kid working for rich dad, all he talked about was building his businesses. But now that he was rich, all he talked about was his investments—investments for the rich. That day over lunch, he had explained, “The only reason I built businesses was so I could invest in the investments of the rich. The only reason you build a business is so that your business can buy your assets. Without my businesses, I could not afford to invest in the investments of the rich.”

Rich dad went on to stress the difference between an employee buying an investment and a business buying an investment. He said, “Most investments are too expensive when you purchase them as an employee. But they are much more affordable if my business buys them for me.” I did not know what he meant by that statement, but I knew this distinction was important. I was now curious and anxious to find out what the difference was. Rich dad had studied corporate and tax law and had found ways to make a lot of money using the laws to his advantage. I drifted off to sleep that night excited about calling rich dad in the morning.

My poor dad’s plan was to continually go back to school so he could be promoted and receive higher pay. Although he did his best to be at home with the kids, the reality was that he was often on the road while rich dad was at home, letting his employees run his businesses and investments. Suddenly, it struck me that I had many friends who only wanted to get rich and did not. So I asked, “But what about people who invest in the investments of the rich. What happens to them?”

“Some make it,” said rich dad, “but very few do. I meet people who invest in wild business schemes with lofty tales of making billions of dollars, but most of those people lose their money because they fall victim to the con men, crooks, and dreamers of the business world. Most who try to win big without a strong foundation wind up losers.”

Nodding, I could only laugh at myself, saying, “I’ve met many of those people along the way. In fact, I was one of those people when I was just starting out.”

Rich dad grinned and said, “I know. You sure had some wild stories about how you were going to strike it rich. The problem is, you did strike it rich with your first business. The trouble was that you got lucky, but you did not have the skills to maintain your luck. That is when you and the three clowns who were your partners went broke. You had the business, the rich level of investment, but you boys forgot about the importance of the first two levels, the middle-class and poor levels. That is why, when your business struck it rich, instead of you and your partners becoming rich, you became clowns and lost it all.”

“So the lesson of the day is that as individuals, we tend to only invest in what we think is important,” I added. “Many of your employees know investing is important to them, but investing is not yet important enough. They have other things they invest in that are more important, and that is where their time and money goes.”

“Exactly,” said rich dad. “Look at the differences between your dad and me. Your dad says his house is his biggest investment. To him, his home is far more important than his stock portfolio or industrial real estate, which I invest in. That is why his college degrees and job title are more important to him than going to school to learn to invest. I invest time and money in what I think is important, and he invests time and money in what he thinks is important. The problem is, now that he has lost his job and most of his savings, he is finding out how unimportant what he thought was important really is in the real world. He is finding out that his big house is not really an asset, and he found out that his college degrees and work experience did not help him in the real business world or in the investment markets. The real world is very different than the world of education and government. What he invested in will not pay off in the real world.”

Rich Investments

  • Good financial education
  • Build businesses
  • Large real estate investments
  • Private-equity funds
  • Hedge funds
  • Personal money manager
  • Private placements Limited partnerships

Middle Class Investments

  • Good education
  • High-paying job profession
  • Home
  • Savings
  • Retirement plan
  • Mutual funds
  • Small real estate investments

Final words from rich dad, “If you want to invest in the investments of the rich, I’m recommending you continue to invest in your financial education. If you have a high financial IQ, what seems risky to most people will be safe to you. And what seems safe to the poor and the middle class will seem risky to you. It’s all a matter of what you think is important. That is what you will ultimately invest in. I leave that decision to you.”

Regards,
Robert Kiyosaki

You May Also Be Interested In:

Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

View More By Robert Kiyosaki