Monday, July 14, 2008

Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money (Rich Dad's) - Robert T Kiyosaki


Managed to browse thru the book in the MPH Mid Valley for 1 hour last Saturday. The book initially explains what's intelligence and IQ definition and subsequently explain how can the Financial IQ be use to improve our chance towards financial freedom. Then he explains his life history in early days, working in Standard Oil, his army service in Vietnam, Xerox and subsequently his own nylon wallet business.

Another important point written on the earlier chapter is the agreement signed by President Nixon on the 1971. He explain on the change of US currency no longer backed by gold (Bretton Woods agreement signed on 1944). Subsequently on 1974 until Nixon resignation, the USD as a world reserve currency had suddenly become Fiat money. Since then, the USD had become so devalued in terms of gold until it's very alarming. He mentioned also on the government program like Social Security and Medicare were on the verge of bankrupt when the baby boomers starting to get retired on 2008. Other interesting info I've seen so far is the difference between Democrat and Republican president elect used their money during their term in the office

The book main themes are as follows
o How to increase your money -- how to assess what you're really worth now, what your prospects are, and how to start mapping out your financial future.

o How to protect your money -- for better or for worse, taxes are a way of life. Kiyosaki shows you that "it's not what you's what you keep."
- be careful of those that can take their money i.e. broker, lawyer etc. Start educating to your kid since young with the use of bunnies etc

o How to budget your money -- everybody wants to live large, but you have to learn how to live within your budget. Kiyosaki shows you how you can.

o How to leverage your money -- as you build your financial IQ, knowing how to put your money to work for you is a crucial step.
- His explanation on his property development leverage.

o How to improve your financial information -- Kiyosaki shows you how to accelerate your wealth as you learn more and more.
- Some of the ways in improving your financial information like joining network marketing, cashflow club etc.

What I like the book
1. The use of pictures on assets/liability and income/expenditure to explain some financial concept across

What's the book shortcoming
1. Didn't mentioned about the sub prime issue that's plaguing the US property market and how he handled that
2. His concept on spending more when you earned more may not be agreeable to everyone.

Some interesting tips
1. Invest in silver precious metal. The relative ratio between silver and gold had widen ( 1 : 15 when historically it's 1 : 10). Other reason also because silver metal had been mined already 95% of the total available silver possible reserve (scarcity). Try to buy on silver ETF whenever possible
2. His emphasis on concentrating one's portfolio. This concept had been mentioned by Sage from Omaha - Warren Buffett on various articles/publications

All in all, I give this book 7.5 out 10. Some of his story may be interesting but may not be applicable to Malaysian market i.e. US currency and his property investment. The book can be completely read in just few hours. His concept here is not as ground breaking as his earlier book i.e. Rich Dad, Poor Dad and Cashflow Quadrant.

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