Rich dad, poor dad – the story that formed my views on making money(micaelwidell.com)
micaelwidell.com
Rich dad, poor dad – the story that formed my views on making money
https://micaelwidell.com/rich-dad-poor-dad/
123 comments
The problem with all these "how to get rich" books is that they're full of anecdotes, quotations, fictional stories, motivational bullshit etc. which make you feel good while reading them, but as soon as you put the book back on the shelf, it's all gone. It's just a temporary boost of energy and motivation, because reading requires almost no effort and more often that not it's just another way of procrastination. Seriously, do you think the majority of rich people prepared for "getting rich" by reading hundreds of motivational and self-help books? It's not like you'll find some magical recipe in one of the books which you can just apply to your life and 10 years from now become a billionare. Each success story is so different and depends on so many factors - being in right time at the right place among the most important - that it's impossible to simply recreate any of them and just wait for the results.
> do you think the majority of rich people prepared for "getting rich" by reading hundreds of motivational and self-help books?
No, I don't. But you know what they do have? They've grown up in a household and a culture that teaches them thousands of small lessons in being and staying rich. They don't have to read about it, because their parents and friends and lawyers and accountants and country club associates have all been reinforcing those lessons their entire lives.
No, I don't. But you know what they do have? They've grown up in a household and a culture that teaches them thousands of small lessons in being and staying rich. They don't have to read about it, because their parents and friends and lawyers and accountants and country club associates have all been reinforcing those lessons their entire lives.
According to The Millionaire Next Door; I am not sure this is true. Many children of 'rich people' have their lifestyle funded by their parents and only learn how to spend beyond their means; which does not accumulate them wealth in the long-term.
That's basically the difference from what used to be referred to as 'new' rich vs 'old' rich back in the day. The old rich were families whose wealth passed down or perpetuated through generations specifically because they taught their kids the discipline needed to build and keep wealth. Where as new rich fizzled out fairly quickly.
> The old rich were families whose wealth passed down or perpetuated through generations specifically because they taught their kids the discipline needed to build and keep wealth.
No, the old rich were families whose wealth was secured by long-established bonds of connection with other old-rich families who constituted the ruling class and dominated politics and business and acted together, for protection of their mutual interest, as a tribe jealously defending against outsiders, the new rich were those who had secured money but not yet been admitted to the ruling tribe.
(This is still the case, though "old rich" and "new rich" aren't particularly popular terms for it; if your family has connections where, e.g., the Saudi royals will bail out your failing enterprises for the value of maintaining a useful network, and you wealthy establishment donors will pour fortunes into your brothers campaign for office for the same reason despite being willing to say that they think the whole thing is a waste as long as they can be anonymous while doing so, what your parents have given to you is connections more than discipline.)
No, the old rich were families whose wealth was secured by long-established bonds of connection with other old-rich families who constituted the ruling class and dominated politics and business and acted together, for protection of their mutual interest, as a tribe jealously defending against outsiders, the new rich were those who had secured money but not yet been admitted to the ruling tribe.
(This is still the case, though "old rich" and "new rich" aren't particularly popular terms for it; if your family has connections where, e.g., the Saudi royals will bail out your failing enterprises for the value of maintaining a useful network, and you wealthy establishment donors will pour fortunes into your brothers campaign for office for the same reason despite being willing to say that they think the whole thing is a waste as long as they can be anonymous while doing so, what your parents have given to you is connections more than discipline.)
> But you know what they do have?
Inheritance. And connections.
Inheritance. And connections.
Isn't it rather the money they have access to, from their parents, that allows them to invest, rather than spend all of their money on subsistence?
Hearing how dad weathered a hostile merger, or a neat tax shelter, doesn't mean much if you aren't in a place to have that happen to you in the first place.
Hearing how dad weathered a hostile merger, or a neat tax shelter, doesn't mean much if you aren't in a place to have that happen to you in the first place.
> it's all gone
Well, that depends. The core lessons really stuck with me and changed the way I thought about money. Especially about the cash flow differences between poor people vs rich people (income goes into assets and the income generated by assets is what can be spent).
I would directly credit this book for my start in real-estate investments and for changing my mindset. I used to be blind to the opportunities around me.
As with most things in life, it's what you get out of it. If you want to forget it, you probably will.
Well, that depends. The core lessons really stuck with me and changed the way I thought about money. Especially about the cash flow differences between poor people vs rich people (income goes into assets and the income generated by assets is what can be spent).
I would directly credit this book for my start in real-estate investments and for changing my mindset. I used to be blind to the opportunities around me.
As with most things in life, it's what you get out of it. If you want to forget it, you probably will.
It has been a long time since I read it; but I don't consider "Rich Dad, Poor Dad" a 'how to get rich' book.
The real benefit I got from that book was how it draws a line between a liability and an asset. For example, a car is not an asset; especially if you had to take a loan to pay it off. That is something that takes money away from your cash flow every month; not add to it.
A rental house that brings in money every month is an asset. The book goes on to say you should never get rid of an asset unless you are replacing it with another 'more valuable' asset.
The real benefit I got from that book was how it draws a line between a liability and an asset. For example, a car is not an asset; especially if you had to take a loan to pay it off. That is something that takes money away from your cash flow every month; not add to it.
A rental house that brings in money every month is an asset. The book goes on to say you should never get rid of an asset unless you are replacing it with another 'more valuable' asset.
That was the only take-away for me, back when I read it maybe 15 or more years ago. But in addition to that, I can't say I got more out of it...
Sounds important enough. It changed my view of things too.
Sort of. I find reading other people's stories gives me "permission" to do and try things.
I'm naturally quite a retiring person, but getting candid explanation of people's techniques and approaches has given me the "if they can do that, I can try it too" attitude numerous times (as has HN and numerous blog posts, to be fair - I can pinpoint certain things I've done to being inspired by specific pieces of content).
I'm naturally quite a retiring person, but getting candid explanation of people's techniques and approaches has given me the "if they can do that, I can try it too" attitude numerous times (as has HN and numerous blog posts, to be fair - I can pinpoint certain things I've done to being inspired by specific pieces of content).
Could you give examples of things you've done and the HN posts that triggered them, please?
I'm familiar with the feeling you describe (They can? Then I can too!) so I'm just curious to see what is in those posts that can inspire someone (content, semantics, anything).
I'm familiar with the feeling you describe (They can? Then I can too!) so I'm just curious to see what is in those posts that can inspire someone (content, semantics, anything).
I can't remember where I first read this, but one basic piece of advice I've carried in my head for at least three decades is "if you want to be good at something, find a person who is good at that thing, and then do what they do"
This helped me a lot in my first few jobs, i.e. identify a person who is successful and well respected, get to know them and try to do things the way they do.
Works in school too -- if you want to do well, do what the successful students are doing. Usually boils down to pretty simple stuff, e.g. studying a lot more.
This helped me a lot in my first few jobs, i.e. identify a person who is successful and well respected, get to know them and try to do things the way they do.
Works in school too -- if you want to do well, do what the successful students are doing. Usually boils down to pretty simple stuff, e.g. studying a lot more.
http://jasonlbaptiste.com/commentary/email-newsletters-busin... was on HN 6+ years ago and inspired me to get into email newsletters, which I was very skeptical about. Now we're a company of 9 doing it :-) It's not a very self help style post, but just seeing examples of something was enough to inspire.
When I was a kid I remember the Rich Dad, Poor Dad guy doing tv specials or perhaps they were paid tv segments to sell his book where he would preach the lessons of his book. I remember him being a very talented motivational speaker but when I got done watching as a kid I remember thinking it was all more or less BS because while his over arching message isn't wrong; for someone who is working class or inexperienced it is a HUGE leap and the general tone of his delivery is much more miracle cure than practical steps. For that reason I've always sort of lumped this guy in with televangelists.
I liked the 4 hour work week. Sure many here have probably read it. Title sounds cheesy, and I was ready to think it belongs on an infomercial. But throughout the book a step by step process on testing products, figuring out whats the best channel for ads, then how to negotiate better deals on the ads. It's a lot of work that many aren't willing to put in.
Read Rich Dad Poor Dad before. There are criticism online about how they aren't real people. But it does display different mindsets, and how that mindset will change the perception of an event -> action taken because of the event.
And to your question of the majority of rich people reading these books. Meh. Not sure the majority, but the more interviews I read/listen/watch from wealthy people there are certain books they have in common, for example Tony Robbins (haven't read any of his books yet). Not to say the majority of self help books aren't total fluff.
Read Rich Dad Poor Dad before. There are criticism online about how they aren't real people. But it does display different mindsets, and how that mindset will change the perception of an event -> action taken because of the event.
And to your question of the majority of rich people reading these books. Meh. Not sure the majority, but the more interviews I read/listen/watch from wealthy people there are certain books they have in common, for example Tony Robbins (haven't read any of his books yet). Not to say the majority of self help books aren't total fluff.
Possibly this is biased, but I'm not sure I'd ever seen this kind of financial self-help book till I saw them in the US. I flicked through a few books expecting basic info about compound interest or whatever but instead it was all "if you believe hard enough then the money will be magnetically attracted to you" and similar woo. A very strange experience.
The US: a mixture of economic fear, economic hope, and pseudo-Christian rhetoric that is stoked for gain by many.
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” Ronald Wright
"17 percent of Christians surveyed said they considered themselves part of such a movement, while a full 61 percent believed that God wants people to be prosperous. And 31 percent—a far higher percentage than there are Pentecostals in America—agreed that if you give your money to God, God will bless you with more money." Time magazine, Does God want you to be rich?
Healthcare costs cause 62% of personal bankruptcies in the US; 72% of those who file for bankruptcy due to medical costs had health insurance at the time of illness. RomneyCare didn't change those figures in Massachusetts much even though everyone had health insurance, and ObamaCare has not made much of a dent there either.
What will an average person do in the face of such market forces? One (God-given) illness will wipe away everything they ever had, and just getting a better job won't in general help -- it's not a big enough pay bump. And collective political action is for socialists. So... pray!
edit in response to some downvotes: I'm not saying anything anti-religion or anti-Christian here; read carefully.
“Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.” Ronald Wright
"17 percent of Christians surveyed said they considered themselves part of such a movement, while a full 61 percent believed that God wants people to be prosperous. And 31 percent—a far higher percentage than there are Pentecostals in America—agreed that if you give your money to God, God will bless you with more money." Time magazine, Does God want you to be rich?
Healthcare costs cause 62% of personal bankruptcies in the US; 72% of those who file for bankruptcy due to medical costs had health insurance at the time of illness. RomneyCare didn't change those figures in Massachusetts much even though everyone had health insurance, and ObamaCare has not made much of a dent there either.
What will an average person do in the face of such market forces? One (God-given) illness will wipe away everything they ever had, and just getting a better job won't in general help -- it's not a big enough pay bump. And collective political action is for socialists. So... pray!
edit in response to some downvotes: I'm not saying anything anti-religion or anti-Christian here; read carefully.
This comment adds clarity to a new angle on the discussion. Not sure why the downvotes.
There is a huge class of working poor, who earn just enough (or not enough) to cover real necessities. For this group, there's not much value in advice on economic strategy. Even in the event of a moderate-sized windfall, the history of scarcity makes it impossible to use a windfall to improve your situation in a lasting way.
However, there is another huge class of people in the US who earn more than enough to be free from economic worries and start building serious wealth, yet they squander their huge paychecks each month. For this group, maybe books like this can have some value.
There is a huge class of working poor, who earn just enough (or not enough) to cover real necessities. For this group, there's not much value in advice on economic strategy. Even in the event of a moderate-sized windfall, the history of scarcity makes it impossible to use a windfall to improve your situation in a lasting way.
However, there is another huge class of people in the US who earn more than enough to be free from economic worries and start building serious wealth, yet they squander their huge paychecks each month. For this group, maybe books like this can have some value.
Absolutely - all mixed in with a good proportion of survivorship bias: all we learn (at most) is that someone behaved in a certain way and became "successful" (for some values of success). We never seem to hear about those who did the same things and never made it rich.
RDPD seemed to me as parasitic - the "solutions" there work only if somebody gets into trouble, like foreclosures etc. Not a "wealth creation" book, rather a misfortune-of-others exploitation one.
I don't get it - you're not causing the foreclosure, so why feel guilty about it?
Morality aside, it's not a book that would teach you how to found a new Google, rather how to exploit social structures in place assuming most people would keep their way of thinking/doing. Exaggerating, it's like when you identify how an ideal member of a religion would behave (because of archetype and social conformity pressure put on them), and then exploit what they aren't allowed to do. Imagine though if every single member of your nation followed RDPD strategy - when everybody is doing that, nobody wins.
In other words... it is not scalable.
We all need to seize good opportunities we get, but we also need to focus on creating wealth. Something that can benefit society as a whole.
The quintessential example of this is a guy like Dean Kamen, working on the Slingshot clean-water project. I hope he gets rich from that... because he'll have done it saving millions of lives per year.
We all need to seize good opportunities we get, but we also need to focus on creating wealth. Something that can benefit society as a whole.
The quintessential example of this is a guy like Dean Kamen, working on the Slingshot clean-water project. I hope he gets rich from that... because he'll have done it saving millions of lives per year.
Interesting, I learned from it from a non-misfortune stance.
E.g.:
Work your job, but move towards income from a business.
(Not that I've gotten very far yet ;) )
E.g.:
Work your job, but move towards income from a business.
(Not that I've gotten very far yet ;) )
That depends on your temperament. I read Automatic Millionaire by David Bach and started saving money right away. I maxed out on tax savings through the advice in that book and used that money to bootstrap a company which I sold for a hefty price.
This is such a great point.
The bottom line, as I've always thought about it, is that if you can usefully create significant value, then you will always have a livelihood, and just basic common sense will get you to your goals.
"Creating significant value" is a pretty high bar though, and a different story.
The bottom line, as I've always thought about it, is that if you can usefully create significant value, then you will always have a livelihood, and just basic common sense will get you to your goals.
"Creating significant value" is a pretty high bar though, and a different story.
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The basic problem with Kiyosaki is that he wrote a work of fiction and passed it off as autobiography.
No, wait, the basic problem is that he is passing inspirational advice off as financial advice.
But don't take my word for it, read the critique:
http://www.johntreed.com/blogs/john-t-reed-s-real-estate-inv...
No, wait, the basic problem is that he is passing inspirational advice off as financial advice.
But don't take my word for it, read the critique:
http://www.johntreed.com/blogs/john-t-reed-s-real-estate-inv...
This quote from that link sums it up best for me:
"But you have to admire a guy who can spin two or three paragraphs of very ordinary financial platitudes into such a range of books."
Luckily I bought my copy at a library book sale for something like 50 cents. I quit after reading half of it, because there's just nothing there.
"But you have to admire a guy who can spin two or three paragraphs of very ordinary financial platitudes into such a range of books."
Luckily I bought my copy at a library book sale for something like 50 cents. I quit after reading half of it, because there's just nothing there.
Also he's outsourced some of his seminars to some pretty sketchy operators http://youngandthrifty.ca/rich-dad-poor-dad-seminars-a-scam/
General advice for anyone young who is reading this-- if the person you're trying to learn from offers seminars, it's a good sign he's not worth your time, and seminars are rarely worth the money. "Free" ones are the worst.
Good books are the best educational value (though maybe some MooCs are a better value now.)
Good books are the best educational value (though maybe some MooCs are a better value now.)
Hands down the best book I have read on money is Your Money or Your Life: http://amzn.com/0143115766
I'm a naturally frugal person, but the book helped me formulate new ways of thinking about money and my relationship with it. The major concept being that money is a representation of your life energy. You work X hours a day at an hourly rate of $Y. Knowing those numbers allows you to think about purchases in a new way. For instance, "That new phone will cost me 2.5 days of work" or "If someone offered me $500 or the new phone, which would I take?" If you chose the $500, then you know you don't need to buy the phone.
I would recommend Your Money or Your Life before all other financial "self-help" books. In fact, I think I'm going read it again.
I'm a naturally frugal person, but the book helped me formulate new ways of thinking about money and my relationship with it. The major concept being that money is a representation of your life energy. You work X hours a day at an hourly rate of $Y. Knowing those numbers allows you to think about purchases in a new way. For instance, "That new phone will cost me 2.5 days of work" or "If someone offered me $500 or the new phone, which would I take?" If you chose the $500, then you know you don't need to buy the phone.
I would recommend Your Money or Your Life before all other financial "self-help" books. In fact, I think I'm going read it again.
That advice seems to apply to wage slaves (hourly rate) but not entrepreneurs or salespersons (not hourly).
Many other financial books recommend developing income streams outside of selling your labor at an hourly or yearly rate, which would seem to be missing from your book.
Many other financial books recommend developing income streams outside of selling your labor at an hourly or yearly rate, which would seem to be missing from your book.
Even the salaryman can calculate his hourly rate.
I am salaried, but when I sat down and calculated my hourly rate, I was a little shocked. I didn't factor in benefits or anything besides my after tax take home pay. It's as simple as $(2 week paycheck) / 80. What you get is effectively your hourly rate.
As a salaryman, knowing this value will help you avoid working overtime since overtime is unpaid. The more hours you work, the less your effective hourly rate. I would argue that if you are asked (either implicitly or explicitly) to work more than 40 hours a week, you should find a different job as you are diluting your own pay.
I am salaried, but when I sat down and calculated my hourly rate, I was a little shocked. I didn't factor in benefits or anything besides my after tax take home pay. It's as simple as $(2 week paycheck) / 80. What you get is effectively your hourly rate.
As a salaryman, knowing this value will help you avoid working overtime since overtime is unpaid. The more hours you work, the less your effective hourly rate. I would argue that if you are asked (either implicitly or explicitly) to work more than 40 hours a week, you should find a different job as you are diluting your own pay.
I think you're misunderstanding hammock. Indeed only (forms of) the salaryman can calculate an hourly rate.
Money as "life energy" approach helps me be thrifty, but my real struggle is how do I asses risk when I want to buy an asset. If I wanted to use $500 from my work to buy a share of SpaceX, does it provide a better return than any other investment at some acceptable risk ? I don't see the life energy approach as helping this question but I need to read the book you recommend.
Note that SpaceX is not publically traded, but it represents assets I would like to own.
Note that SpaceX is not publically traded, but it represents assets I would like to own.
RDPD is basically a fad diet book. There's some good advice, but it's mixed with bad advice and illegal schemes, slathered with a thick layer of inspirational bullshit.
For a better personal finance book, try "I will teach you to be rich", despite the clickbait title: http://www.amazon.com/Will-Teach-You-To-Rich/dp/0761147489
For a better personal finance book, try "I will teach you to be rich", despite the clickbait title: http://www.amazon.com/Will-Teach-You-To-Rich/dp/0761147489
Also, my interactions with Ramit (through his blog) have always been a pleasant experience.
The title and bright color was bait by his own admission. The point being he follows it up with great practical advice instead of stories and filler.
The title and bright color was bait by his own admission. The point being he follows it up with great practical advice instead of stories and filler.
How I hate people like this. "Building assets and letting them work for you". For this you can read: "be the footsoldier for the banks who have a monopoly on money creation. Ask the bank to create money for you then use this to join the land monopolists. Then let those stupid little people who are actually creating wealth rent it back from you. This way you get a stream of their labour." For assets read "property".
People should be aiming to keep most of the wealth they create. What makes the world shit, and what we cannot all do, is live off the backs of others.
If he knows people who are billionaires they go there by not passing on the wealth created by others. Nobody adds a billion of wealth creation, not even Gates.
People should be aiming to keep most of the wealth they create. What makes the world shit, and what we cannot all do, is live off the backs of others.
If he knows people who are billionaires they go there by not passing on the wealth created by others. Nobody adds a billion of wealth creation, not even Gates.
>Nobody adds a billion of wealth creation
How about JK Rowling. Must be close.
How about JK Rowling. Must be close.
Copyright is a temporary monopoly; monopolies tend to drive up prices.
Yes, but not beyond the value to the eventual purchasers ...
That isn't particularly relevant. Value to purchasers is not constant. With a higher price, you generally get fewer purchasers, and with a lower price, more. I could argue that the maximum net societal value for any already-written book is generated by having a price of zero. The question of price then becomes one of incentive: what price generates sufficient profit to motivate the creation of cultural products? A price that generates billions for the author is probably too high.
Debt is a lever, in itself it's neither good nor bad.
If I have a $10m net worth, I might want to lend someone $1m for a year on which they will pay me 5% interest per year. If that person can turn that million into one and a half million, what's the problem?
If I have a $10m net worth, I might want to lend someone $1m for a year on which they will pay me 5% interest per year. If that person can turn that million into one and a half million, what's the problem?
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Not when it's only issued by a monopoly.
I'm with you on this brother. Keep telling people. Think back to 2006, you hardly saw anyone criticise the system in this way, now I see it all the time. It's coming.
Who says only banks can make loans?
That's the thing, they don't loan the money, they create it, banks haven't functioned the way they're popularly imagined to function for centuries. And it's so sad that this false image is the moral basis for banks going after borrowers assets.
The bank doesn't lend you someone else's money, it creates the money(no effort) and you have to work and put up real collateral to pay it back.
By G-d we should all be working to expose and undo this madness.
The bank doesn't lend you someone else's money, it creates the money(no effort) and you have to work and put up real collateral to pay it back.
By G-d we should all be working to expose and undo this madness.
> it creates the money(no effort)
Err, there most certainly is an effort assessing credit risk and dealing with the fallout when someone defaults.
Err, there most certainly is an effort assessing credit risk and dealing with the fallout when someone defaults.
What exactly is the risk to the Bank in lending out money they just created?
They didn't magic it out of thin air. It's a liability to them. If the loan is paid into another bank they then have to transfer central bank deposits to that other bank. If the loan is never paid back then they've lost money.
Is it genuinely not obvious to you than bank deposits aren't something that banks can create and destroy on a whim?
Is it genuinely not obvious to you than bank deposits aren't something that banks can create and destroy on a whim?
That's actually not quite correct. The loan itself is an asset to the bank. When you sign the promissory note, they then give you a balance at the bank in the amount of the principal of the note, THAT is the liability.
The loan is the asset because that is money coming into the bank. Your deposits are liabilities because that is money you could withdraw from the bank.
So it is both a liability and an asset. They don't create it out of thin air, they create it out of ink and paper. It's a hack of the double-entry bookkeeping system.
I recommend Paul Grignon's Money As Debt: https://www.youtube.com/watch?v=jqvKjsIxT_8
The loan is the asset because that is money coming into the bank. Your deposits are liabilities because that is money you could withdraw from the bank.
So it is both a liability and an asset. They don't create it out of thin air, they create it out of ink and paper. It's a hack of the double-entry bookkeeping system.
I recommend Paul Grignon's Money As Debt: https://www.youtube.com/watch?v=jqvKjsIxT_8
The balance in the bank, which is colloquially called a "loan", is a liability to the bank, yes.
And do you agree there is a "risk to the Bank in lending out money they just created" or is that still up for discussion?
And do you agree there is a "risk to the Bank in lending out money they just created" or is that still up for discussion?
No, the balance in the bank is not the loan. You need some understanding of double-entry bookkeeping to understand fractional reserve banking. The loan(promissory note), is on the banks balance sheet as an asset. Your balance which you can withdraw as cash is on the banks balance sheet as a liability.
What is the bank risking when it creates the money and uses the anachronistically titled "loan" contract to distribute it? • They risk only being able to extract so much labor. • They risk taking on collateral which is a REAL asset that someone worked for, like their home if they're unable to generate enough of the assets the banks just write into existence. • They risk passing the buck up the ladder ultimately to the lender of last result if they're "too big to fail" which just creates more money to deal with the problem.
Banks are not lending out other people's money, everyone tacitly knows this, if they were how come when you go to the bank they never say, sorry its out on loan at the moment? This was the case at historically and banks are still riding on the fact that people haven't gotten wise to the way it's worked for centuries now.
There is no lending taking place when bank loans are made.
What is the bank risking when it creates the money and uses the anachronistically titled "loan" contract to distribute it? • They risk only being able to extract so much labor. • They risk taking on collateral which is a REAL asset that someone worked for, like their home if they're unable to generate enough of the assets the banks just write into existence. • They risk passing the buck up the ladder ultimately to the lender of last result if they're "too big to fail" which just creates more money to deal with the problem.
Banks are not lending out other people's money, everyone tacitly knows this, if they were how come when you go to the bank they never say, sorry its out on loan at the moment? This was the case at historically and banks are still riding on the fact that people haven't gotten wise to the way it's worked for centuries now.
There is no lending taking place when bank loans are made.
Hmm ... are we still on the same page? This is where the discussion started: https://news.ycombinator.com/item?id=10995433
You seemed to be claiming that a bank incurs no cost ("no effort") to issue a loan. Are you sticking to that?
You seemed to be claiming that a bank incurs no cost ("no effort") to issue a loan. Are you sticking to that?
Only banks can create money. Bank of England official blog:
http://bankunderground.co.uk/2015/06/30/banks-are-not-interm...
Debt is not a lever it's a stick to beat the landless with in order to extract labour as tribute to the elite.
http://bankunderground.co.uk/2015/06/30/banks-are-not-interm...
Debt is not a lever it's a stick to beat the landless with in order to extract labour as tribute to the elite.
Anyone can make loans. However, banks borrow newly created money from the ECB or FED at an extremely low rate. If you borrow money at 2% from a bank then they are getting it at 0.1%. The spread - that 1.9% - is their profit.
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The problem is when people are seeing all their labour disappear as rent / mortgage to people who are adding no value. This is happening way too much.
The problem is ethics, you just made somebody slave for a year. Now if you're happy with that, that's ok.
> Nobody adds a billion of wealth creation, not even Gates.
A billion dollars is not very much. There are ~150M Americans working in the US, if something helps every one of them make $7, then over a billion dollars has been created.
Microsoft has enabled practically every person in a developed nation to do their job more efficiently. This is worth far, far more than a billion dollars.
A billion dollars is not very much. There are ~150M Americans working in the US, if something helps every one of them make $7, then over a billion dollars has been created.
Microsoft has enabled practically every person in a developed nation to do their job more efficiently. This is worth far, far more than a billion dollars.
MS is worth a lot and yes they have helped productivity. Did Gates do that or did he do it with the help of many people before him inventing all sorts and many workers adding software. Were the workers compensated sufficiently for the value they added? Did MS use a pseudo monopoly using the legal system to capture more value than they actually added?
Gates did a lot but he stood on the shoulders of giants, seemed to have some "sharp" business practices enabled by our monopoly loving nation states and a lot of employees did the heavy lifting.
I'm not criticising Gates, I don't mean to pick on him. If we had cheaper land I think the balance would shift to workers being less over a barrel and more able to negotiate higher wages to capture a greater share of their added value.
Gates did a lot but he stood on the shoulders of giants, seemed to have some "sharp" business practices enabled by our monopoly loving nation states and a lot of employees did the heavy lifting.
I'm not criticising Gates, I don't mean to pick on him. If we had cheaper land I think the balance would shift to workers being less over a barrel and more able to negotiate higher wages to capture a greater share of their added value.
Then I think what you're saying is lots of people create millions or billions of dollars worth of value, but few of them capture it. That's fair. I think one of the lessons of this book (at least subtextually) would be to aim to caputure the value you create.
Managing people is a critical component to a successful business. While he did get his hands dirty a lot during the early years, you can't take away from him credit just because he commanded others to do the labor.
I understand and appreciate you sentiment. You're right, it wasn't entirely due to him, it was a collaboration between hundreds of people. But, if he left during the very early years, it's an almost certainty that MS would not have achieved its success and influence.
I understand and appreciate you sentiment. You're right, it wasn't entirely due to him, it was a collaboration between hundreds of people. But, if he left during the very early years, it's an almost certainty that MS would not have achieved its success and influence.
I still think he's very far from doing it alone, he's using tech that govt helped build, he's using infra also that is common. They should tax these guys more. Someone would have done "computers", Gates or someone else. Taxing them more wouldn't put them off.
I agree with not agreeing with his debt-based asset-building approach.
But you can still follow the same path in a tech way, such as selling your own product online. As you work on it, if it's producing income, that can begin to be an asset for you.
But you can still follow the same path in a tech way, such as selling your own product online. As you work on it, if it's producing income, that can begin to be an asset for you.
Sure, that I have no problem with. Go forth and create wealth. Do not take land monopoly in a flawed system and force others to give you their labour.
What if the value I create is a house that other people can live in? Am I allowed to collect payments from them, or was I supposed to gift it to them?
And if that land was purchased with wealth that was created, what's the problem?
Most is purchased with debt - this is what sets the price. Also they are not making new land. Why should people have the right to charge people to live on a part of the earth in perpetuity? The state builds infra around it then the land owner charges a fortune for people to have the right to exist.
Land is a special case and should be treated as such. Land value tax would address this by capturing most of the added value from land for the common wealth rather than land monopolists.
Land is a special case and should be treated as such. Land value tax would address this by capturing most of the added value from land for the common wealth rather than land monopolists.
>Land value tax.
Property taxes already exist. The people renting the property already pay it. If that tax goes up, then so do the rents.
Property taxes already exist. The people renting the property already pay it. If that tax goes up, then so do the rents.
Agreed.
Many years ago a CEO friend told me about this book. I was an useless office drone daydreaming the startup dream. I read the book. I was super motivated for 3-4 days but nothing happened. Nothing. After one week motivation was gone and I had been an office drone for a decade.
In hindsight: the book is great and the key message is very true. And this book is a great motivator (three days motivation is better than nothing) but in my case I needed way more to enter the dark side than reading a self-help book (which would be another long post).
Life is more complex.
In hindsight: the book is great and the key message is very true. And this book is a great motivator (three days motivation is better than nothing) but in my case I needed way more to enter the dark side than reading a self-help book (which would be another long post).
Life is more complex.
I read this book, was skeptical given the gungho attitude, so I did some due diligence: Roberty Kiyosaki claimed to have founded a company that went public. So I figured Kiyosaki was a rare enough name and searched the SEC records to find out if this was true. Was unable to find any evidence that he had taken a company public, and so he lost credibility with me.
You meet really entertaining characters in bars sometimes too. They are fine for entertainment but don't take them too seriously.
Putting money to work for you is wise, good advice and there are better books for it. Like "The millionaire next door" and "the wealthy barber" (a little lite but a good intro) and "Buffetology" and "The dummies guide to REITs" and the like.
Managing real estate yourself is no small task- you have tenants and a lot of work to do for them. Putting an agency in between you and the tenants means you may be giving up a lot of your profits to the agency.
The best thing that happened to me, though was I started reading http://mises.org. There in 2000ish I learned about how the fed and CRA were going to create a housing bubble. And the consequences of that. I invested along that thesis in the mid 2000s, getting out of the market in 2007 when things were too crazy to make sense (missed the top by a year, but still good timing.)
Macroeconomic understanding (And I don't mean what politicians talk about or the politically connected people like Paul "we need a housing bubble" Krugman) has been very profitable for me. More profitable than any stock tip.
Also gained a lot of insight from attending Berkshire Hathaway annual shareholder meetings, but now I just read the annual reports.
You meet really entertaining characters in bars sometimes too. They are fine for entertainment but don't take them too seriously.
Putting money to work for you is wise, good advice and there are better books for it. Like "The millionaire next door" and "the wealthy barber" (a little lite but a good intro) and "Buffetology" and "The dummies guide to REITs" and the like.
Managing real estate yourself is no small task- you have tenants and a lot of work to do for them. Putting an agency in between you and the tenants means you may be giving up a lot of your profits to the agency.
The best thing that happened to me, though was I started reading http://mises.org. There in 2000ish I learned about how the fed and CRA were going to create a housing bubble. And the consequences of that. I invested along that thesis in the mid 2000s, getting out of the market in 2007 when things were too crazy to make sense (missed the top by a year, but still good timing.)
Macroeconomic understanding (And I don't mean what politicians talk about or the politically connected people like Paul "we need a housing bubble" Krugman) has been very profitable for me. More profitable than any stock tip.
Also gained a lot of insight from attending Berkshire Hathaway annual shareholder meetings, but now I just read the annual reports.
Plus in "managing real estate" you are living off the backs of others in a flawed system. These real-estate "investors" are simply the foot-soldiers of banks who are creaming off real wealth creation.
You only have to think about it for a moment to realise this. What if everyone did it? We'd all starve. What if everyone worked hard to gain a skill and then used it to create wealth? We'd have a great life.
I understand what's happening with land exploitation but I won't join in because it's disgusting. It's not "just business" as these sorts would say.
You only have to think about it for a moment to realise this. What if everyone did it? We'd all starve. What if everyone worked hard to gain a skill and then used it to create wealth? We'd have a great life.
I understand what's happening with land exploitation but I won't join in because it's disgusting. It's not "just business" as these sorts would say.
> What if everyone did it? We'd all starve
If everyone did anything other than grow/hunt food, then we'd all starve. The entire structure of our economy is built are specialization where only a small fraction of workers produce enough food for the entire population.
If everyone did anything other than grow/hunt food, then we'd all starve. The entire structure of our economy is built are specialization where only a small fraction of workers produce enough food for the entire population.
I knew someone would try to skew this so that's why I specifically categorized it into "creating wealth" vs "rentier activity". I don't see your point as valid, of course if we all made kitchenware and nobody made food we'd starve, that wasn't the point of my post.
If you knew somebody was going to make that argument, you should have preemptively addressed it in your origin post.
I've come away from some of these types of books with some good tidbits, but have a hard time recommending them, especially to a young person. They tend to be a gateway drug into a culture of "The secret to making money is giving me some money." that I'm not comfortable with. I'd be far more comfortable recommending something data driven like "The Millionaire Next Door" (regardless of how that book is marketed) that highlights things like frugality, saving, and hard work.
Fun fact: in my almost 10 years experience in banking I've never met anyone in the industry, who'd consider the book not a scam.
And you know you're in trouble, if even bankers consider you a scam.
And you know you're in trouble, if even bankers consider you a scam.
Whether the autobiographical bits are true or not, the highlights as presented by the article are a valuable message for people who didn't already understand as such.
A friend of my is a zealous adherent of "Rich Dad, Poor Dad". So much so, that the first thing he did after saving up enough money on his first real job, was to follow the book's advice: take out two mortgages and get two apartments. That was around early 2008. In my opinion that is a very shitty outcome: you're stuck with real estate in a stagnant market, bogged down by mortgage payments, and thus totally lacking any professional mobility. Your only choice is to wait out, rent out what you can, and hope to break even sometime in the next 20 years.
In my opinion, personal financial stability (and even prosperity) can be boiled down to a few simple rules:
1. Earn more money than you lose.
2. Be very careful with debt.
3. Take risks, but be very aware of the downsides.
4. If you have to invest, invest in yourself first (education, connections, etc.) and in securities second.
In my opinion, personal financial stability (and even prosperity) can be boiled down to a few simple rules:
1. Earn more money than you lose.
2. Be very careful with debt.
3. Take risks, but be very aware of the downsides.
4. If you have to invest, invest in yourself first (education, connections, etc.) and in securities second.
How did this get up-voted to the front page ?
Reading Rich Dad, Poor Dad represented a paradigm shift for me.
Having been brought up in a middle class, academic family and moving successfully down an academic track, it opened my eyes to ideas that I couldn't even have comprehended existed before.
I don't know if the majority of what Robert Kiyosaki sells is bluff and bluster, but I do know that the foundational message of the book (as told in the quotes on this blog post) were absolutely revalational to me.
Having been brought up in a middle class, academic family and moving successfully down an academic track, it opened my eyes to ideas that I couldn't even have comprehended existed before.
I don't know if the majority of what Robert Kiyosaki sells is bluff and bluster, but I do know that the foundational message of the book (as told in the quotes on this blog post) were absolutely revalational to me.
I recommend
http://www.theschooloflife.com/shop/how-to-worry-less-about-...
Similar lessons, less smarmy (own the ladder? dude, stfu).
Similar lessons, less smarmy (own the ladder? dude, stfu).
8 pounds less money.
entrepreneurship is a 1/0 game generally. Investing everything you have into something that has a 95% chance of failure is pretty risky. I would argue putting more than 10-20% of your money into one venture is really risky.
I disagree. There are lots of tried and true businesses out there which have a high likelihood of success with some basic research. It's just that a lot of these markets are cornered, so you probably wouldn't call investing in them entrepreneurship. Opening a McDonalds or gas station has a pretty high likelihood of success with enough research. As does real estate.
Trying to invent the next great technology is hard, and you'll probably fail. But following in the footsteps of others greatly increases you odds of success.
Trying to invent the next great technology is hard, and you'll probably fail. But following in the footsteps of others greatly increases you odds of success.
Isn't he basically preaching a rentier economy? That sort of thing is not sustainable at scale - at best you can have something like 10% of people getting rent (leeching off of) the people doing the actual work. Speaking ethically, this is one of the sleaziest ways you can make money - you're making your own basic income, except it's 5 times bigger than the income of the people who actually do the work. You're depriving honest workers of the fruits of their labour.
People like him are what's wrong with society today and nothing short of a bloody revolution will set us back on the right path.
People like him are what's wrong with society today and nothing short of a bloody revolution will set us back on the right path.
Yep, he is. The guy is a leech. Another is mr money moustache with his 3 homes telling us to save by eating oats or whatever. These guys make me sick. I half agree that we need a revolution, these people can never be persuaded of their ills they are just horrible people.
What exactly is your argument here? Why is he a horrible person? Because he rents houses?
There's nothing inherently exploitative about renting homes. Owning a home in the US is within the reach of most American families. So lots of people rent because they chose to. Some people prefer the flexibility to move, don't want to do maintenance, or prefer to live in higher density areas where personal homes are less common.
People who rent real estate are just providing a service, and a critical one at that. If nobody rented places to live, then we'd have a lot of homeless people in the world.
There's nothing inherently exploitative about renting homes. Owning a home in the US is within the reach of most American families. So lots of people rent because they chose to. Some people prefer the flexibility to move, don't want to do maintenance, or prefer to live in higher density areas where personal homes are less common.
People who rent real estate are just providing a service, and a critical one at that. If nobody rented places to live, then we'd have a lot of homeless people in the world.
Yes they are horrible and yes they are exploiting people. It's not a service, they are exploiting the capped supply of a basic need.
The argument about "if nobody rents out" is just wrong. Are they going to knock the place down if they don't rent? Yes there is a need for rentals but this should be within a world where we have land value tax so the bulk of the gain is passed onto the state to reduce labour taxes, reduce land costs and improve living standards.
These guys are adding nothing, they are taking labour.
The cost of a home is not the cost of the bricks it's the cost of the land in the main areas with employment prospects.
The USA was originally a land of opportunity. Why? Because you could get hold of land cheap. You were no longer constrained to near-serfdom by total land enclosure in Europe. Now here we are back to square one with the rentiers creaming off labour and books on how to join them.
The argument about "if nobody rents out" is just wrong. Are they going to knock the place down if they don't rent? Yes there is a need for rentals but this should be within a world where we have land value tax so the bulk of the gain is passed onto the state to reduce labour taxes, reduce land costs and improve living standards.
These guys are adding nothing, they are taking labour.
The cost of a home is not the cost of the bricks it's the cost of the land in the main areas with employment prospects.
The USA was originally a land of opportunity. Why? Because you could get hold of land cheap. You were no longer constrained to near-serfdom by total land enclosure in Europe. Now here we are back to square one with the rentiers creaming off labour and books on how to join them.
> The argument about "if nobody rents out" is just wrong. Are they going to knock the place down if they don't rent?
They will construct a building that earns them money. So all those people who rented the apartments are now homeless and their former homes are now an office complex, a parking garage, or a CVS.
Net result: land owner makes money (still), but now people are homeless.
> this should be within a world where we have land value tax
We live in a country where property taxes exist. These people (usually) pay them and it's not cheap. In fact, high property taxes fuel higher property values in the US.
Also interesting, property taxes are also a form of rent. They are often used by the local governments to force people off of their land. This is usually the first step to gentrifying a neighborhood. Rising property taxes cause property values to rise, creating a property tax feedback loop that forces people from their homes. This exact thing happened in my home town where property taxes doubled, then housing values went from $40k to $120k in like five years, effectively increasing taxes 6-fold in the neighborhood.
> Yes they are horrible and yes they are exploiting people
People need food, clothing and shelter. Companies sell food and clothing and I'm sure you think that's okay, but a company selling shelter is exploitation?
You are telling me that I'm being exploited because I live in a rental property. I just don't see it. I gain more value from my place than I lose in rental fees. Being able to move cheaply and quickly has earned me tens of thousands of dollars in extra wages and saved me tens of thousands in real estate transaction fees and maintenance.
Plus, I get to sleep indoors.
> The USA was originally a land of opportunity. Why? Because you could get hold of land cheap.
There's cheap land all over the US. Throughout most of the midwest, you can buy acres and acres of productive, high quality land for <$10k acre. You won't have neighbors for miles and you'll have to construct your own roads, but it's out there and abundant, just like it was in the 19th century.
They will construct a building that earns them money. So all those people who rented the apartments are now homeless and their former homes are now an office complex, a parking garage, or a CVS.
Net result: land owner makes money (still), but now people are homeless.
> this should be within a world where we have land value tax
We live in a country where property taxes exist. These people (usually) pay them and it's not cheap. In fact, high property taxes fuel higher property values in the US.
Also interesting, property taxes are also a form of rent. They are often used by the local governments to force people off of their land. This is usually the first step to gentrifying a neighborhood. Rising property taxes cause property values to rise, creating a property tax feedback loop that forces people from their homes. This exact thing happened in my home town where property taxes doubled, then housing values went from $40k to $120k in like five years, effectively increasing taxes 6-fold in the neighborhood.
> Yes they are horrible and yes they are exploiting people
People need food, clothing and shelter. Companies sell food and clothing and I'm sure you think that's okay, but a company selling shelter is exploitation?
You are telling me that I'm being exploited because I live in a rental property. I just don't see it. I gain more value from my place than I lose in rental fees. Being able to move cheaply and quickly has earned me tens of thousands of dollars in extra wages and saved me tens of thousands in real estate transaction fees and maintenance.
Plus, I get to sleep indoors.
> The USA was originally a land of opportunity. Why? Because you could get hold of land cheap.
There's cheap land all over the US. Throughout most of the midwest, you can buy acres and acres of productive, high quality land for <$10k acre. You won't have neighbors for miles and you'll have to construct your own roads, but it's out there and abundant, just like it was in the 19th century.
I totally disagree and the arguments you are supplying show me you aren't on the same wavelength, for example citing land outside cities as being cheap or that most landlords self-build (no). I can't write an essay on this but I disagree.
And suppose that someone follows the teachings of Rich Dad, Poor Dad but doesn't buy land or property, instead investing in something else that generates revenue, otherwise following the book's advice to the letter. Do you still object? On what grounds?
I can see you think that land tax would be fairer (I'm inclined to agree) but that's really not related to the message of the book. Are you opposed to private ownership of capital in general?
I can see you think that land tax would be fairer (I'm inclined to agree) but that's really not related to the message of the book. Are you opposed to private ownership of capital in general?
I think land prices are at the root of it all and I think for most of these advice books "assets" == "property", which includes pulling forward money creation in order (renting money from the bank) to capture labour via land monopoly.
Were this to stop I think that we'd see a lot more actual productive work and a fall in the need for people to work all the time. The existing system ensures we all work all the time. If we get more productive rents go up to capture the gain.
If this stopped we'd see more people able to opt out of the labour market and we'd see a shift towards employees dictating terms, who would demand a higher cut of their value added via higher wages. They'd also get to keep more as most income tax would be replaced by land value tax.
If you invest in wealth generation that's fine to take a share of this. I'd like to see the high end taxed so being born isn't like joining a game of Monopoly near the end but in general this works for me.
What I'd really like to see is people who create wealth getting to keep that. What I see now is a bunch of b@stards exploiting our flawed / corrupt debt based system to capture wealth creation.
Land is a special case. You can make more laptops so if want to corner the market in that go right ahead, waste your money. Land is finite and it's the source of all wealth. Why should someone own this in perpetuity and be free to extract a percent of labour from someone else, handing it down across generations like kings?
We should each contribute and if we contribute well we live well. An end to the rentier leeches.
https://www.youtube.com/watch?v=ltz3e9LDaJ0
First 10 seconds "the game Monopoly" used as praise. Originally called "the landlord's game" inspired by the writings of Henry George as a criticism of land enclosure and money. He retires early because he has a stream of income from the labour of others. Nice!
http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-h...
Were this to stop I think that we'd see a lot more actual productive work and a fall in the need for people to work all the time. The existing system ensures we all work all the time. If we get more productive rents go up to capture the gain.
If this stopped we'd see more people able to opt out of the labour market and we'd see a shift towards employees dictating terms, who would demand a higher cut of their value added via higher wages. They'd also get to keep more as most income tax would be replaced by land value tax.
If you invest in wealth generation that's fine to take a share of this. I'd like to see the high end taxed so being born isn't like joining a game of Monopoly near the end but in general this works for me.
What I'd really like to see is people who create wealth getting to keep that. What I see now is a bunch of b@stards exploiting our flawed / corrupt debt based system to capture wealth creation.
Land is a special case. You can make more laptops so if want to corner the market in that go right ahead, waste your money. Land is finite and it's the source of all wealth. Why should someone own this in perpetuity and be free to extract a percent of labour from someone else, handing it down across generations like kings?
We should each contribute and if we contribute well we live well. An end to the rentier leeches.
https://www.youtube.com/watch?v=ltz3e9LDaJ0
First 10 seconds "the game Monopoly" used as praise. Originally called "the landlord's game" inspired by the writings of Henry George as a criticism of land enclosure and money. He retires early because he has a stream of income from the labour of others. Nice!
http://www.theguardian.com/lifeandstyle/2015/apr/11/secret-h...
Firstly, I'm tentatively in agreement when it comes to taxing land.
Secondly, I don't think this really has much to do with the book unless you think the returns to capital invested in land and housing is much greater than the returns to capital invested elsewhere.
Thirdly, land is only an issue because it's currently in short supply. You can't make laptops any more once we've run out of rare earth metals, say. When that happens we might have to start taxing stocks of them, too.
Secondly, I don't think this really has much to do with the book unless you think the returns to capital invested in land and housing is much greater than the returns to capital invested elsewhere.
Thirdly, land is only an issue because it's currently in short supply. You can't make laptops any more once we've run out of rare earth metals, say. When that happens we might have to start taxing stocks of them, too.
The problem with a lot of such material is that it's very U.S. centric. Being from Eastern Europe a lot of the advice in the book is not relevant.
The only good take away was the assets vs liability distinction.
The only good take away was the assets vs liability distinction.
My g/f and her friends got suckered in by this... they were going to the seminars which then led to currency trading.
I think there might be some good tips in there, but IMO, very few people get rich from seminars, bar the seminar leader and the company behind it. but at the end of the day i'm a cynic and quite likely a wage slave for the rest of my life.
I think there might be some good tips in there, but IMO, very few people get rich from seminars, bar the seminar leader and the company behind it. but at the end of the day i'm a cynic and quite likely a wage slave for the rest of my life.
Depends on the perspective you read the book, it could be life changing. While I disagree with his manners described in the book, I totally agree with the way he described different mind sets between a business owner and a public sector employee.
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2 books for the HN types (not as self-helpy as the titles make them appear):
- The Millionaire Fast Lane
- How To Get Rich (Dennis, not Trump)
- The Millionaire Fast Lane
- How To Get Rich (Dennis, not Trump)
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