Tuesday, September 29, 2009

Risk, and stock insurance

President Reagan being sworn in for second ter...Reagan being sworn in as President (1985) Image via Wikipedia

Just imagine this... You don't bring knives to a gunfight, do you? Or race your family wagon at the Indy 500?

A lot of people have some deep core values that take a LOT of effort to reprogram. And until you update them to reflect current trends and needs, you will have a very hard time succeeding.

Your mind is a tool, YOUR tool, except your mind can be updated... If you want to. And your mind is the most important investment tool of all. And you would want the best available, right?

When it comes to investment, most people can't see beyond the word RISK. So let's update your mind about what really is risk.

Friday, September 25, 2009

Shift your reality and think rich

Mr. Kiyosaki's conversation with Rich Dad about the different "realities" of rich vs. non-rich is very illuminating. Without rehashing the entire story (You can read that in "Retire Young, Retire Rich") I'll just start by... what is greed, and what is generosity?

Your core programming affects almost everything you see, do, and perceive. You see the world through its filter. In other words, your reality is affected by your core programming. And very often, the first thing you need to change is your core programming, which will update your "reality", or as Stephen Covey put it, a "paradigm shift".

== Greed, Generosity, and Paradigm Shift ==

Most people think of greed like Michael Douglas in "Wall Street", whose famous line: "Greed is good" is so simple and so succint, it almosts make you want to adopt socialism (not!). Others have the concept of Uncle Rich in the Disney cartoons, or even... Ebenezer Scrooge, people so stingy they will gladly squeeze their employees in sweat shops just to put an extra dime in their own pocket.

Generosity, on the other hand, is usually thought of as giving things away, esp. money. Give to charities, give to the poor... etc.

So let us consider this... When you work at a job, you "expect" a raise at the end of the year. Correct? Why? WHY do you "deserve" a raise, if you are doing the same job? Are you better at your job? Are you doing more now than before? If you moved onto a more important job, you absolutely deserve a raise for the increase in responsiblity. But why should you expect a raise just because you've stayed at a job for a year?

Tuesday, September 22, 2009

Leverage by any other name

:en:NASCAR drivers :en:Mike Skinner (NASCAR) (...Image via Wikipedia
In "Retire Young Retire Rich" (Rich Dad book 5), Mr. Kiyosaki used the word "leverage" a lot, and indeed, it is a big topic. He is not only talking about financial leverage (i.e. OPM, "other people's money"), he also talks about how to use other types of leverage as well. Indeed, leverage can be found almost anywhere... if you look close enough.

In military, the equivalent term would be "force multiplier". Basically, it is an advantage you enjoy against the opposition.

For example, if you have machine guns, and they don't, you have a force multiplier. Having machine guns lets you hold ground with a much smaller force than the enemy, all other stuff being equal. Intelligence (as in gathering information, not IQ) is another force multiplier. If you know what the enemy is doing, you can anticipate his moves, set up ambushes, and so on, and defeat him with a smaller force. Basically, a tool no one else has that allows you superior SOMETHING (mobility, information sharing / coordination, firepower, and so on) makes your force more effective, and that is the definition of a force multiplier.

Friday, September 18, 2009

Mistake and Teamwork

Thomas Edison's first lightbulb which was used...Image via Wikipedia
One of the core values you need to update is regarding "mistake".

In school, you are taught that mistakes are bad. If you make enough mistakes, you FAIL the quiz/test/assignment/whatever.

That is NOT the way it works in the real world.

When it comes to mistakes, the famous people made a lot MORE mistakes than the average Joe. It was said that Thomas Edison (in reality, it's probably his team of inventors working for/with him) one THOUSAND tries to find the right filament material for his electric bulb that had the right qualities. Andrew Carnegie was once nicknamed "Dry Hole Carnegie" until he finally hit that one well that made it big and made his fortune.

Yet we are taught mistakes are bad. You are not supposed to make any mistakes. 100% is good. Any thing less is not as good. We marvel and admire any one who scores the full 1600 on the SAT test. We hold public tests of children and flunk them for making a single mistake (They are called spelling bees). We do the same for adults and air them on national TV ("Who wants to be a millionaire?") But is that really what we should learn?

The lesson what we *should* have learned is that one must LEARN from one's mistakes. Any attempt to blame others, blame circumstances, or in any way deny responsibility, is a waste of learning opportunity.

Friday, September 11, 2009

A short intro about the "Rich Dad" series

SHANGHAI, CHINA - DECEMBER 12:  Visitors look ...Image by Getty Images via Daylife

Mr. Kiyosaki has had an interesting life where he received a lot of lessons that took many much longer to accumulate, and now he had decided to share the lessons with us. There are a whole series of books:

  • Rich Dad Poor Dad -- the book that started it all
  • Rich Dad's Guide to Investing -- investor controls to minimize risk, different levels of investors
  • Rich Dad's Cashflow Quadrant -- the four types of earners: employee, self-employed, business owner, investor, and how/why one side gets rich
  • Retire Young, Retire Rich -- power of leverage, in various areas
  • Rich Dad's Prophecies -- why the stock market will crash (and it did) and what you can do about it
  • Rich Dad's Success Stories -- how dozens and dozens of people turned their financial life around thanks to Rich Dad
  • and the boardgames, Cashflow 101 and 202 -- teaches you how to get out of the rat race and get onto the fast track by investing in real-estate
        and many many more

What does it all really teach? Here are the main points, and it's really not a secret:

Friday, September 4, 2009


I am Meeting Robert Kiyosaki Next Week!

Welcome to Rich Dad (tm) Observations, a blog about one guy's path toward financial freedom, and the insights he has gained from various sources, including the Rich Dad (tm) products from Mr. Robert Kiyosaki's company.

The one guy is me, Kasey Chang, currently 39, in a nearly dead-end job, but have a bit of time to get out of the rat race.

There are some things in Rich Dad Poor Dad that I do not completely agree with, but most of Mr. Kiyosaki's advice are sound, and simple to understand. I was able co-relate lot of what I learned with a lot of personal experience and other teachers for even fuller insights.

As this is a discussion about various things in Rich Dad (tm) books, I will have to discuss some of the contents of the books. I will try to link to the books in question.

The blog has a lot of advice on various investment related topics, from motivation to stock picking, from entrepreneurship to company re-engineering, and more. So stay tuned.

There will be two postings per week, unless something really messes up my schedule. 

Book mentioned:
Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!
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