RICH DAD POOR DAD FOR TEENS- THE SECRETS ABOUT MONEY-THAT YOU DON'T LEARN IN SCHOOL!", BY Robert Kiyosaki

In order to build wealth you first have to accumulate it in some way shape or form. However, which way or ways are the most efficient?

I think I talked about this in a prior letter but to reiterate, Robert went over the three types of income : active/ordinary earned, portfolio and passive.

• Active income: money you get from working.

• Passive income: earned even where you’re not physically doing any work.

• Portfolio income: money invested in paper assets (stocks or bonds).

He then submerged all his readers into understanding the concept of assets and liabilities. When we speak of assets and liabilities it is not the accounting definitions where assets, fixed and current, are what you own and add some level of value to the business or individual and liabilities, fixed and current, are people or entities you owe. Well, the liabilities definition is fine but the asset section is where we tend to get skewed. Even though you may own your car out right it is still in need of maintenance work such as servicing and gas. You may own your home but you still have to fix a pipe if it bursts, the roof when it leaks as well as pay the mortgage. When it comes to assets and liabilities in terms of investments:

• An asset puts money in your pocket and

• A liability takes money out of your pocket.’

As simple as that. In order to achieve wealth you must buy assets that produce income.

Lines that had me reading twice:

• “The key to becoming rich will be your ability to convert ordinary earned income into passive income and portfolio income.”

• “…taxes are highest on earned income and lowest on passive income. When he told me this, it was clear that the best kind of income was the kind that worked hardest for me and cost me the least: passive or portfolio income.”

• “Rich people acquire assets and the poor and middle class acquire liabilities that they think are assets.”

• “I call these things “Doodads.” Doodads go down in value the minute you buy them.”

That’s all I got for you today.