Although I cannot fully endorse Robert Kiyosaki’s book Rich Dad, Poor Dad
Just Buy Assets
One of the worthwhile points he makes is to, “Buy Assets and Sell Liabilities”. It is common sense, but often times common sense isn’t that common.
He defines an asset as “something that puts money into your pocket” and a liability as “something that takes money out of your pocket.
I think this is a great way to think about every purchase. How much will this item be worth in 5 years from now? Most of what most people buy will be worth a small fraction of what they paid. If you focus on buying more assets (stocks, mutual funds, real estate, or anything else that will increase in value) your wealth will begin to grow at an impressive rate. As Kiyosaki would say, this is what separates the rich from everyone else.
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Although the original date of this post was almost 3 years ago, I still love the main point.
I also just read and reviewed Rich Dad, Poor Dad a couple of weeks ago, although the book has been out for a long time.
Like you, I also don’t agree with everthing Kiyosaki writes about in his book. But on the other hand, I do think that there’s a lot of good advice in the book. And buying assets, as opposed to liabilities is one of them. If we thought of our purchases with a long-term perspective and considered what they’d be worth years from now, I think we’d be on the path to greater wealth.
I think one of the problems with the advice in the Rich Dad series is that ‘buy assets that put money in your pocket’ can make you focus much more on income than on capital gain. For example, he suggests that your own home is a liability rather than an asset because it takes money from your pocket each month, which is clearly true. However, in the UK for the last 10-20 years, even though your house may have been a liability, if you include the capital gain it is still a fantastic investment/security.
Anyway, they are still great books to read to open your mind to different concepts.
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