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As a general rule, good debt,good expenses, and good losses all generate additional cash flow for you. For instance, debt taken to acquire a rental property, which has a positive cash flow each month, would be good debt. Likewise, paying for legal and tax advice are good expenses if they save you thousands of dollars in reduced taxes from tax planning. An example of good loss is the loss generated by depreciation from real estate. This good loss is also called phantom loss because it is a paper loss and does not require an actual outlay of cash. The end result is a savings in the amount of tax paid on the income offset by the loss.

Investors control. Everyone else gambles. The rich are rich because they have more control over their money than the poor and middle class. The moment you understand that the game of money is a game of control, you can focus on what is important in life, which is not making more money but gaining more financial control. 1. Earned income 2. Passive income 3. Portfolio income It is important because the characteristic of the income is what separates the rich from the working class. The poor and middle class focus on earned income, also called wages or paycheck income. The rich focus on passive income and portfolio income. That is the fundamental difference between the rich and the working class, which explains why control of the C (characteristic) is a fundamental control, especially if you plan on being rich.

A sole proprietorship, a partnership, and an S-Corporation are all part of you. They are, in simple terms, an extension of you. When you do business, you want a clone of you actually doing the business. You do not want to do business or own anything as a private citizen.. If you want to be a rich private citizen, you need to be as poor and penniless as possible on paper. The poor and the middle class, on the other hand, want to own everything in their name. "Pride of ownership," they call it. I call anything with your name on it " a target for predators and lawyers. " The rich do not want to own anything but want to control everything. And they control via corporations and limited partnerships. Proper financial planning for both the family and the business might - through the use of insurance,trusts,limited partnerships, or corporations - have prevented this family from losing its livelihood.

If a person's financial foundation is weak, his or her self-confidence is also weak. The main reason people do not want to look at their personal financial statements is that they might find out they have financial cancer. The good news is that once they cure the financial disease, the rest of their lives also improves - and sometimes even their physical health too. -------------------------------- The difference between a rich person and a poor person is much more than how much money they make. The difference is found in their financial literacy and the standards of importance they put on that literacy. Simply put, poor people have very low financial literacy standards, regardless of how much money they make. People with low financial literacy standards are often unable to take their ideas and create assets out of them. Instead of creating assets, many people create liabilities with their ideas just because of low financial literacy standards.

When you first set out to turn your ideas into your personal fortune, many people will say,"You can't do that". Always remember that nothing kills your great ideas more than people with small ideas and limited imaginations. 1. They say "you can't do that" even if you are doing what they say you cannot do, no because you can't do it but because they can't do it. 2. They say, "You can't do it" because they cannot see what you are doing. The process of making a lot of money is a mental process more than a physical process. Great spirits have often encountered violent opposition from mediocre minds. ~ Einstein Great ideas only become great fortunes if the person behind the idea is also willing to be great. You must have a very strong spirit to withstand the doubt of those around you. But your spirit must be even stronger when you are the person saying to yourself "You can't do that". This does not mean that you plough blindly...

There are investors who buy assets and there are investors who create assets. If you want to solve the 90/10 riddle for yourself, you need to be both types of investors. "I can't afford this land either, but my business can." The business was being created in his head and that ability to create businesses in his head was the reason he would go on to be one of the richese men in Hawaii. Rich dad solved his 90/10 riddle by creating assets that in turn purchased other assets. That plan was not only rich dad's investment plan, it is the investment plan for most of the 10% who make 90% of the money, in the past, in the present, and into the future. Again the formula is to create an asset that buys other assets and that formula is the reason why McDonald's owns the most expensive real estate in the world. It was all part of the plan. "If you want to solve the 90/10 riddle for yourself, you need to be both type of investors. You need to be a person who knows how to ...

Forbes magazine defines rich as $1 million in income and $10 million in net worth. Rich dad had a tougher definition: a consistent $1 million in passive income, which is income that comes in regardless of if you work or not, and $5 million in assets, not net worth. Net worth can be an elusive and much manipulated figure. He also felt that if you could not maintain a 20% return from capital invested, you were not really an investor. The price to reach dad's goal, starting from nothing, is actually measured in rich dad's 3 E's: Education Experience Excessive Cash It starts with a Plan have a plan, be focused, and play to win. the data and the dollars are derived from having a dream, being dedicated, and having the drive to win. Money is just an idea. If you think money is hard to get and you'll never be rich, then it will be true for you. If you think that money is abundant, then that can be true. Bill Gates, Michael Dell, Richard Branson: they did not become billionaires...

You can become rich by being generous. The more people I serve, the richer I become. The problem with being on the E and S side of the Quadrant is that you can serve only so many people. If you build large operating system in the B and I quadrants, you can serve as many people as you want. And if you do that, you will become richer beyond your wildest dreams. If I am a doctor and I know how to work with one patient at a time only, there are just two ways for me to make more money. One is to work longer, and the other is to raise my rates. But if I keep my job and work in my spare time to find a drug that cures cancer, then I will become rich by serving many more people.

A Million Dollars is the starting point Being a millionaire today does not mean that much. Today, $1 million is just the starting point to beginning to invest like the rich. Being financially smart included knowing when to be frugal and when not to be. Many people become rich by being very smart with knowledge from the B and I quadrants. Many of these individuals operate behind the scenes and manage, control, and manipulate the world's business and financial systems . Millions of people faithfully place their retirement savings and other monies into the market. However, the decision-makers of the marketing and distribution system of the underlying investments actually make the large sums of money, not necessarily the individual investor or retiree . As rich dad taught me years ago, "There are people who buy tickets to the game, and there are people who sell tickets to the game. You want to be on the side that is selling the tickets." Own the corporate ladder rather than c...

I am so rich because I've made more financial mistakes than most people. Each time I made a mistake, I learned something new. In the business world, that something new is often called "experience". But experience is not enough. ( just like if you have 10 years of playing basketball in the football field doesn't make you an expert ). Many people say they have a lot of experience because they keep making the same mistake over and over again. If a person truly learns from a mistake, his or her life changes forever, and what that person gains instead of experience is "wisdom". People often avoid making financial mistakes, and that is a mistake. They keep saying to themselves, "Play it safe. Don't take risks." People may be struggling financially because they have already made mistakes and have not learned from the mistakes. So they get up everyday, go to work, and repeat the mistake and avoid new mistakes, but they never find the lesson . These peo...

You want to learn how to operate from all quadrants. Being able to sit on both sides of the table allows you to see both sides of the coin. The Most Important Quadrant Mike already had a personal investment portfolio of over $200,000 by the time he was 15. You had nothing. All you had was the idea of going to school so you could get a job with benefits. That is what your dad thought was important. Ridch dad reminded me that his son Mike knew how to be an investor before he left high school. "I never tried to influence him in his choice of careers," said rich dad."I wanted him to follow his interests, even if it meant he did not take over my business. But whether he chose to be a policeman, politician, or a poet, I wanted him to first be an investor. You'll become far richer if you learn to be an investor, regardless of what you do to earn the money along the way." Years later, as I met more and more people who came from well-to-do families, many of them said the...

Are you Part of the Revolution? Great wealth, vast fortunes, and mega-rich families were created during the Industrial Revolution. The same is going on today during the Information Revolution. The only difference is that because of the Information Age, these young people went through the same phases faster ... and maybe so can you. It took me years to go through the phases, and in fact, I am still going through them. I find it interesting that today we have self-made multi-millionaires and billionaires who are twenty, thirty and forty years of age; yet we still have people forty and over having a tough time hanging on to $50,000-a-year jobs. Are you mentally prepared to be an investor? Money will be anything you want it to be. Money comes from our minds, our thoughts. Such undertaking was not to be taken lightly. You start as I did. You start without any money. All you have is hope and a dream of attaining great wealth. While many people dream of it, only a few achieve it. Think hard a...

Just as there are houses for the rich, the poor, and the middle class, there are investments for each of them. If you want to invest in the investments that the rich invest in, you have to be more than rich. You need to become a sophisticated investor, not just a rich person who invests. The Five Phases of Becoming a Sophisticated Investor 1. Are you mentally prepared to be an investor? 2. What type of investor do you want to become? 3. How do you build a strong business? 4. Who is the sophisticated investor? 5. Giving it back You cannot teach someone to be a sophisticated investor. But a person can learn to become a sophisticated investor. It's like learning to ride a bicycle.I cannot teach you to ride a bicycle, but you can learn to ride a bicycle. Learning to ride a bicycle requires risk, trial and error, and proper guidance. The same is true with investing.If you do not want to take risks, then you're saying you do not want to learn. And if you do not want to learn, then I ...

The following is a list of some of the investments in which so-called "Accredited Investors and Sophisticated Investors" invest: 1. Private placements 2. Real estate syndication and limited partnerships 3. Pre-initial public offerings (IPOs) 4. IPOs (while available to all investors, IPOs are not usually easily accessible) 5. Sub-prime financing 6. Merger and acquisitions 7. Loans for startups 8. Hedge funds For the average investor, these investments are too risky, not because the investment itself is necessarily risky, but because all too often, the average investor lacks the education, experience, and excessive capital to know what he or she is getting into. I now tend to side with the SEC that it is better to protect unqualified investors by restricting their access to these types of investments because I made some errors and false steps along the way. As a sophisticated investor today, I now invest in such ventures. If you know what you're doing, the risk is very low...

An accredited investor This investment is for accredited investors only. An accredited investor is generally accepted to be someone who: * has a net worth of $1 million or more, or * has had an annual income of $200,000 or more in each of the most recent years (or $300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same income level in the current year. Not only are these guidelines tough,but the minimum amount you can invest in this investment is $35,000. That is how much each investment "unit", as it is called, costs. But money alone does not qualify you to be a sophisticated investor. A sophisticated investor knows the 3-Es: 1. Education 2. Experience 3. Excessive Cash Our banker always says "I know" what we do, but for some reason, he does not do what he claims he knows.

I chuckle because I see the irony in the big picture. People invest because they want to get rich. But because they are not rich, they are not allowed to invest in the investments that could make them rich. Only if you are rich can you invest in a rich person's investments. And so the rich get richer. To me, that is ironic. I think it is really to protect the poor and the middle class from themselves. Because there are many more bad deals than good deals. If a person is not aware, all deals - good and bad - look the same. It takes a great deal of education and experience to sort the more sophisticated investments into good and bad investments. To be sophisticated means you have the ability to know what makes one investment good and the others dangerous. And most people simply do not have that education and experience.

While the average investors thinks "Play it safe and don't take risks", the rich investor must also think about how to improve skills so he or she can take more risks. The rich investor must have more flexible thinking than the average investor. For example,while both the average and rich investor must think about safety, the rich investor must also thinks about how to take more risks. While the average investor thinks about cutting down debt,the rich investor is thinking about how to increase good debt. While the average investor lives in fear of market crashes, the rich investor looks forward to market crashes. While this may sound like a contradiction to the average investor, it is this contradiction that makes the rich investor rich. The rich investor is very aware that there are two sides to every coin. The average investor sees only one side. And it is the side the average investor does not see that keeps the average investor average and the rich investor rich.

Types of Investors The Accredited Investor The Qualified Investor The Sophisticated Investor The Inside Investor The Ultimate Investor 1. How to start with the problem of having not enough money, 2. how to make a lot of money and 3. how to handle the problem of too much money. How can you be rich if you think $200,000 is a lot of money? If you want to be rich investor, you need to see that $200,000, the minimum dollar amount to qualify as an accredited investor, is just a drop in the bucket.

Investing Like a Rich Person "I cant afford this land either. But my business can." The richest investors in the world do not buy investments, most of the 90/10 investors created their own investments. The reason we have billionaires who are still in their twenties is not because they bought investments. They created investments, called businesses, that millions of people want to buy.

"Because the mutual fund my money is in has "averaged" over 15% per annum for the last two years. Averages are for average investors The federal government of the United States insures our savings from catastrophic loss (similar in Malaysia - http://www.pidm.gov.my ) but it does not insure our investments. "What advice would you give the average investor?" His reply was, "Don't be average."