BOOK REVIEW: BEFORE WEALTH, FIRST A MINDSET CHANGE

Book Review: Rich Dad's Guide to Investing

Author:  Robert T. Kiyosaki

 

                                                

 

I have been a fan of Robert Kiyosaki and his “Rich Dad” series since I bought my first book  -- “Retire Rich, Retire Young”, 20-odd years ago.

Up to that point in my life (blame it on my Catholic upbringing) I believed that wealth accumulation was for a select few, which is true, but not for the reasons I thought. I thought some people were genetically predisposed to be rich, that wealth accumulation was based on the genetic lottery and not a learned behaviour.

I thank Kiyosaki for that shift in mindset.

Lately with time hanging loosely on my hands, I decided to go back “revise” Kiyosaki. To my mind “Rich Dad’s Guide to investing” is the one the series which speaks most to shifting mindset as a starting point to eventual wealth.

Kiyosaki begins with the foundation of financial success—education. He argues that most people are trapped in a cycle of earning and spending because they lack the knowledge needed to make money grow. Unlike traditional education, which often prioritizes job readiness, financial education teaches individuals how to manage, grow, and invest their earnings effectively.

He underscores the concept of assets versus liabilities, a cornerstone of his philosophy. Kiyosaki’s rich dad—the inspiration behind his financial lessons—taught him early on that financial literacy involves understanding the difference between what puts money into your pocket (assets) and what takes money out (liabilities). The book stresses that true investors focus on accumulating assets like real estate, stocks, and businesses, which generate ongoing income.

Kiyosaki’s emphasis on financial education isn’t limited to theoretical knowledge. He advises readers to actively seek opportunities to learn—whether through books, mentorship, or hands-on experience. Investing without understanding the market, he warns, is akin to gambling.

“The more you know, the less risk you take.”

This quote hit me the first time I read it, understanding it to mean that more knowledge is key to mitigating against risk.

 

The Power of Long-Term Thinking

 

Unlike many who are swayed by the lure of quick profits, Kiyosaki stresses the importance of building wealth over decades. He highlights that true investors aren’t focused on the next big stock tip or speculative trend but are instead committed to steady growth through well-chosen assets.

Kiyosaki’s perspective on patience is particularly relevant in today’s social media soaked reality, where the temptation to “Keep up with the Jones” is strondger than ever before.

This approach also involves resisting the temptation to sell assets prematurely for short-term gains. Kiyosaki emphasizes the importance of reinvesting returns to compound growth, a strategy that has been key to the success of wealthy individuals.

By prioritizing sustained growth over instant gratification, Kiyosaki offers readers a mindset shift that is crucial for successful investing.

 

The Role of Leverage in Building Wealth

 

Another crucial lesson in the book is the strategic use of leverage. Kiyosaki introduces leverage as a tool that amplifies financial outcomes by utilizing resources beyond one’s own. Expanding its meaning beyond borrowing capital, to leveraging expertise, or using other people’s time and skills to maximize returns.

While leverage has its risks, Kiyosaki argues that educated investors know how to manage these risks effectively. For instance, in real estate, he demonstrates how borrowing money to purchase property can yield substantial returns when managed wisely. Similarly, building a business involves leveraging the skills of a team to achieve results that would be impossible for an individual to accomplish alone.

Kiyosaki warns that without the requisite financial knowledge, over-leveraging can lead to disastrous consequences, such as unmanageable debt or poorly performing investments. He encourages readers to approach leverage with caution, ensuring they have a solid understanding of the associated risks and benefits.

But my key takeaway when I first read the book and again more recently, is that our expenses determine whether we will accumulate wealth or not. More than our income.

There are only two ways to spend your money either to invest it or eat it. If your expenses tend toward one side or the other will determine whether you have a chance of being rich or not. There is really no way around that.

So when we are struggling financially regardless of our income let us look to ow we spend.

As if I could forget "Rich Dad’s Guide to Investing" excels in its ability to simplify complex financial concepts without diluting their significance. The lessons on financial education, long-term thinking, and leverage are not only practical but also timeless, providing a strong foundation for anyone eager to embark on their investment journey.

“Rich Dad’s Guide to Investing” is an empowering guide for those who want to take control of their financial futures. By emphasizing the importance of financial education, the value of long-term thinking, and the strategic use of leverage,Kiyosaki provides readers with a roadmap to achieving financial independence.

I think this book is good reading for even financial experts who have forgotten or never knew, that before any action first the thought. The actions can only be as good as the mindset dictating those actions.