Rich Dad’s Guide to Investing


Investing means different things to different people… and there is a huge difference between passive investing and becoming an active, engaged investor. Rich Dad’s Guide to Investing, one of the three core titles in the Rich Dad Series, covers the basic rules of investing, how to reduce your investment risk, how to convert your earned income into passive income… plus Rich Dad’s 10 Investor Controls.

The Rich Dad philosophy makes a key distinction between managing your money and growing it… and understanding key principles of investing is the first step toward creating and growing wealth. This book delivers guidance, not guarantees, to help anyone begin the process of becoming an active investor on the road to financial freedom.

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The Securities and Exchange Commission (SEC) of the United States defines an individual as an accredited investor if the individual has:

• $200,000 or more in annual income, or

• $300,000 or more in annual income as a couple, or • $1 million or more in net worth.

The SEC established these requirements to protect the average investor from some of the worst and most risky investments in the world. The problem is that these investor requirements also shield the average investor from some of the best investments in the world, which is one reason why rich dad’s advice to the average investor was, “Don’t be average.” Starting with nothing this book begins with my return from Vietnam in 1973. I had less than a year to go before I was going to be discharged from the Marine Corps. That meant that in less than a year I was going to have no job, no money, and no assets. So this book begins at a point that many of you may recognize, and that is a point of starting with nothing. All I had in 1973 was the dream of someday being very rich and becoming an investor who could qualify to invest in the investments of the rich. These are investments that few people ever hear about, that are not written about in the financial newspapers, and are not sold over the counter by investment brokers. This book begins when I had nothing but a dream and my rich dad’s guidance to become an investor. This book should be of interest to you whether you have very little money to invest or have a lot to invest, whether you know very little about investing or you know a lot about investing. It is about a very complex subject but written as simply as possible. It is written for anyone interested in becoming a better-informed investor, regardless of how much money they have. If this is your first book on investing, and you are concerned that it might be too complicated, please do not be concerned. All I ask is that you have a willingness to learn and read this book from the beginning to the end with an open mind. If there are parts of the book that you do not understand, then just read the words and continue on to the end. Even if you do not understand everything, you will know more about the subject of investing than many people who are currently investing in the market just by reading all the way through to the conclusion. In fact, by reading the entire book, you will know a lot more about investing than many people who are being paid to give their investment advice. This book begins with the simple and goes into the sophisticated without getting too bogged down in detail and complexity. In many ways, this book starts simple and remains simple, although it covers some very sophisticated investor strategies. This is a story of a rich man guiding a young man, with pictures and diagrams to help explain the often-confusing subject of investing. The 90 / 10 Rule of Money My rich dad appreciated the Italian economist Vilfredo Pareto’s discovery of the 80/20 rule, also known as the Principle of Least Effort. Yet when it came to money, rich dad was more aware of the 90/10 rule, which says that 10 percent of the people make 90 percent of the money. I am personally concerned because more and more families are counting on their investments to support them in the future. The problem is that while more people are investing, very few of them are Guide to Investing well-educated investors. When the market crashes, what will happen to all these new investors? The federal government of the United States insures our savings from catastrophic loss, but it does not insure our investments. That is why, when I asked my rich dad, “What advice would you give the average investor?” his reply was, “Don’t be average.” How Not to Be Average I became very aware of the subject of investing when I was just 12 years old. Up until that age, the concept of investing was not really in my head. Baseball and football were on my mind, but not investing. I had heard the word, but I had not really paid much attention until I saw what the power of investing could do. I remember walking along a beach with the man I call my rich dad and his son Mike, my best friend. Rich dad was showing his son and me a piece of real estate he had just purchased. Although only 12 years old, I realized that my rich dad had just purchased one of the most valuable pieces of property in our town. Even though I was young, I knew that oceanfront property with a sandy beach in front of it was more valuable than property without a beach on it. My first thought was, “How can Mike’s dad afford such an expensive piece of property?” I stood there with the waves washing over my bare feet looking at a man the same age as my real dad who was making one of the biggest financial investments of his life. I was in awe of how he could afford such a piece of land. I knew that my dad made much more money, because he was a highly paid government official with a bigger salary. But I also knew that my real dad could never afford to buy land right on the ocean. So how could Mike’s dad afford this land when my dad couldn’t? Little did I know that my career as a professional investor had begun the moment I realized the power built into the word “investing.” Some 40 years after that walk on the beach with my rich dad and his son Mike, I now have people asking me many of the same questions I began asking that day. In the investment classes I teach, people ask me questions similar to those I began asking my rich dad, questions such as:

• “How can I invest when I don’t have any money?”

• “I have $10,000 to invest. What would you recommend I invest in?”

• “Do you recommend investing in real estate, mutual funds, or stocks?”

• “Can I buy real estate or stocks without any money?”

• “Doesn’t it take money to make money?”

• “Isn’t investing risky?”

• “How do you get such high returns with low risk?”

• “Can I invest with you?”

People are beginning to realize the power hidden in the word investing. Many want to find out how to acquire that power for themselves. READ MORE


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