Rich Dad Poor Dad is a starting point for anyone looking to gain control of their financial future

Financial struggle is 
often the result of
people working all their 
lives for someone else.

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Chapter Three: Lesson 3
74
car, another “asset,” was eating them alive. The golf clubs in the garage 
that cost $1,000 were not worth $1,000 anymore. Without job
security, they had nothing to fall back on. What they thought were
assets could not help them survive in a time of financial crisis. 
I assume most of us have filled out a credit application to buy 
a house or a car. It’s always interesting to look at the “net-worth” 
section because of what accepted banking and accounting practices 
allow a person to count as assets.
One day when I wanted a loan, my financial position did not
look too good. So I added my new golf clubs, my art collection, 
books, electronics, Armani suits, wristwatches, shoes, and other 
personal effects to boost the number in the asset column.
But I was turned down because I had too much investment real 
estate. The loan committee didn’t like that I made so much money 
from rent. They wanted to know why I did not have a normal job
with a salary. They did not question the Armani suits, golf clubs,
or art collection. Life is sometimes tough when you do not fit the
standard profile.
I cringe every time I hear someone say to me that their net worth 
is a million dollars or $100,000 dollars or whatever. One of the main 
reasons net worth is not accurate is simply because, the moment you 
begin selling your assets, you are taxed for any gains.
So many people have put themselves in deep financial trouble 
when they run short of income. To raise cash, they sell their assets. 
But their personal assets can generally be sold for only a fraction of 
the value that is listed on their personal balance sheet. Or if there is 
a gain on the sale of the assets, they are taxed on the gain. So again, 
the government takes its share, thus reducing the amount available to 
help them out of debt. That is why I say someone’s net worth is often 
“worth less” than they think.
Start minding your own business. Keep your daytime job, but 
start buying real assets, not liabilities or personal effects that have no 
real value once you get them home. A new car loses nearly 25 percent 
of the price you pay for it the moment you drive it off the lot. It is 

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Rich Dad Poor Dad
75
not a true asset even if your banker lets you list it as one. My $400 
new titanium driver was worth $150 the moment I teed off.
Keep expenses low, reduce liabilities, and diligently build a base of 
solid assets. For young people who have not yet left home, it is important 
for parents to teach them the difference between an asset and a liability. 
Get them to start building a solid asset column before they leave home, 
get married, buy a house, have kids, and get stuck in a risky financial 
position, clinging to a job, and buying everything on credit. I see so many 
young couples who get married and trap themselves into a lifestyle that 
will not let them get out of debt for most of their working years.
For many people, just as the last child leaves home, the parents
realize they have not adequately prepared for retirement and they 
begin to scramble to put some money away. Then their own parents 
become ill and they find themselves with new responsibilities.
So what kind of assets am I suggesting that you or your children 
acquire? In my world, real assets fall into the following categories:
• 
Businesses that do not require my presence I own them, but
they are managed or run by other people. If I have to work
there, it’s not a business. It becomes my job.
• 
Stocks
• 
Bonds
• 
Income-generating real estate
• 
Notes (IOUs)
• 
Royalties from intellectual property such as music, scripts,
and patents
• 
Anything else that has value, produces income or appreciates,
and has a ready market

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Chapter Three: Lesson 3
76
As a young boy, my educated dad encouraged me to find a safe job. 
But my rich dad encouraged me to begin acquiring assets that I loved. 
“If you don’t love it, you won’t take care of it.” I collect real estate simply 
because I love buildings and land. I love shopping for them, and I could 
look at them all day long. When problems arise, the problems aren’t so 
bad that it changes my love for real estate. For people who hate real estate, 
they shouldn’t buy it.
I also love stocks of small companies, especially start-ups, because
I am an entrepreneur, not a corporate person. In my early years,
I worked in large organizations, such as Standard Oil of California,
the U.S. Marine Corps, and Xerox Corp. I enjoyed my time with 
those organizations and have fond memories, but I know deep down
I am not a company man. I like starting companies, not running 
them. So my stock buys are usually of small companies. Sometimes 
I even start the company and take it public. Fortunes are made in 
new stock issues, and I love the game. Many people are afraid of 
small-cap companies and call them risky, and they are. But that risk 
is diminished if you love what the 
investment is, understand it, and know 
the game. With small companies, my 
investment strategy is to be out of the 
stock in a year. On the other hand, my 
real estate strategy is to start small and 
keep trading up for bigger properties 
and, therefore, delay paying taxes on the gain. This allows the value to 
increase dramatically. I generally hold real estate less than seven years.
For years, even while I was with the Marine Corps and Xerox,
I did what my rich dad recommended. I kept my day job, but I still 
minded my own business. I was active in my asset column trading real 
estate and small stocks. Rich dad always stressed the importance of 
financial literacy. The better I was at understanding the accounting and 
cash management, the better I would be at analyzing investments and 
eventually starting and building my own company.