Rich Dad's Conspiracy of the Rich. Роберт Кийосаки
this information. That is why financial education is important.
Today, financial information is coming at us from all directions. Without financial education, a person is less able to process financial information into personal meaning. For example, when someone says a stock has a P/E of 6, or that a piece of real estate has a cap rate of 7 percent, what does that mean to you? Or when a financial planner says the stock market goes up an average of 8 percent a year, what does that make you think? Maybe you ask, “Is that information true, and is 8 percent a year a good or bad return?” Again, without education a person cannot translate information into personal meaning. Information without education is limited in value. This book is dedicated to adding to your financial education by teaching you the new rules of money, and how the new rules affect your life whether your realize it or not.
New Rule of Money #1: Money Is Knowledge
The first new rule of money is: Money is knowledge.
Today, you do not need money to make money. You simply need knowledge. For example, if a stock is priced at $100, on some stock exchanges you can short that stock, which means sell shares that you do not own. For instance, let’s say I borrow 1,000 shares valued at $100 from the exchange, sell them, and put $100,000 in my account. Then the stock falls to $65, and I go back to the exchange, purchase 1,000 shares for $65,000, return for a full refund the 1,000 shares I borrowed at $100 a share, and keep the $35,000 difference, less fees, commissions, and transaction costs. That is in essence what it means to short a stock. To make this money all I needed was knowledge. First I needed to know that the concept of short selling existed, and second I needed to know how to use the method. I can do similar transactions in business and in real estate.
As this book progresses, I will use similar examples of money being made out of nothing—nothing but knowledge. Many of these examples will be real-life transactions that I’ve personally completed, and on top of these transactions creating money out of nothing but knowledge, my returns were also higher, gained with much less risk than investing in mutual funds, and resulted in little to nothing in taxes.
Today, in the Information Age, fortunes are won and lost in the blink of an eye as a result of good or bad information. As most of you know, many people recently lost trillions of dollars due to bad advice, bad information, and a lack of financial education. The frightening thing is that most of those people who dished out the bad financial advice are still handing out that same bad information. A famous biblical quote is “My people perish for lack of knowledge.” Today, many people are perishing financially because they follow the old rules such as save money and get out of debt. Or they believe investing is risky, when it is the lack of financial education, experience, and bad financial advisors that is much more risky. Today, you can make money without money. You can also lose your life savings in a blink of an eye. That is what I mean when I say money is knowledge.
Reader Comment
I would say that this notion is correct, but I would also state emphatically that ACTION on knowledge is actually more important. That one knows how to short a stock, or build a website, or whatever, does not necessarily translate into that person taking the actions necessary to create wealth.
—ramasart
Reader Comment
I would state the maxim in reverse, but the essence of this rule is that having the correct information is much better than simply having money. A rich man may not need to fear being broke, for he knows the tactics that may be exercised in order to regain his wealth. Conversely, the man who holds a significant amount of money today may live in great uncertainty because he does not know how to increase his holdings through new skills—new information that he has not been able to apply.
—dlsmith29
In Conclusion
It is bad enough that our schools do not teach students much, if anything, about money. But today, in 2009, many of the rich are fighting President Obama’s economic stimulus plans to spend more on improving education. Only time will tell whether Obama’s stimulus plan will work, but regardless, I do think spending more on education is vital to developing a strong economy, country, and free world.
I am an advocate for education. In Asian culture, the most respected professional is the teacher. Yet in Western culture, teachers are the lowest paid of educated professionals. I believe that if we valued education like we say we do, we would pay our teachers more money and build better, safer schools in bad neighborhoods. To me, it is a crime that in America our real estate taxes determine the quality of education a child receives. In other words, schools in poor neighborhoods receive less tax money than schools in rich neighborhoods. Talk about a conspiracy of the rich!
I also believe that if we truly valued education, we would teach people financial literacy because we would recognize that money is a central and important aspect of our existence. So while many so-called “advocates of education” deride my ideas, I simply ask: Why continue advocating a system that is designed to create cogs instead of freethinkers, and a system designed to suppress financial knowledge rather than create financially literate people who can prosper in a capitalist system?
Whether you believe as I do that there is a conspiracy in education, the fact remains that a sound education, one that includes financial education, is more important today than ever before. When I was a kid, if one of my classmates did not do well in school, he or she still could get a high-paying job working for the sugar plantation or a factory. Today, as factories close and jobs move overseas, a child who does poorly in school will probably do poorly in life. This is why the world needs better schools, safer schools, better-paid teachers, and more financial education.
In the Information Age, we are overloaded with data. Education gives us the power to translate that information into meaning, meaning we can use to make our lives better. Give us the power to solve our own financial problems rather than expect the government to solve our problems for us. Stop the bailouts and all the handouts. It is time to put an end to the conspiracy of the rich. It is time to teach us how to fish.
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