Lessons From Rich Dad Poor Dad

 

Lessons From Rich Dad Poor Dad

1. Schools train students to be employees not entrepreneurs or investors. There are more choices in life than just working a job.
2. Financial literacy is rarely taught in school, instead they focus on reading, writing, and math.
3. Working to learn new skills is more important than working to earn a paycheck. Choose a job that allows you to learn, gain experience, and build skills don’t just sell your time.
4. Assets pay you but depreciating assets cost you.
5. Only go into to debt for cash flowing assets, don’t go into debt for depreciating assets.
6. Pay yourself first before you pay your bills. Savings is your most important first step in acquiring capital to invest with. Convert earned income into assets.
7. A financial business plan is more important than a resume in your financial life.
8. The poor and middle class look for a job, the wealthy create jobs.
9. Being broke is temporary for someone with entrepreneurial skills while a poor mindset can be permanent.
10. Your financial IQ is your courage, creativity, and financial knowledge that creates skills, assets, and wealth.
11. The middle class focuses on school, specialization, job security and retiring with benefits which is not as safe a path as they believe in the modern world.
12. Money emerges from good ideas executed well.
13. Without a financial education it will be difficult to hold on to any money over the long-term.
14. Business taxes are structured in reverse compared to employees. Businesses pay taxes on earnings after expenses, employees pay taxes directly on income before expenses.
15. The poor and middle class focus on a paycheck while the rich focus on businesses and assets.
16. Education is one of the greatest investments but only when it’s from the right source at the right price.
17. A good employee is an asset on a business balance sheet.
18. Customers are cash flowing assets on a business balance sheet.
19. The greater your financial knowledge the better your chance of building wealth.
20. The primary lesson of the book is to learn how to make money work for you instead of selling your time for money in a never ending rat race.

Best Rich Dad, Poor Dad Quotes

“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.” – Robert Kiyosaki

“In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.” – Robert Kiyosaki

“The lack of money is the root of all evil.” – Robert Kiyosaki

“Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.” – Robert Kiyosaki

“Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.” – Robert Kiyosaki

“In the real world outside of academics, something more than just grades is required. I have heard it called “guts,” “chutzpah,” “balls,” “audacity,” “bravado,” “cunning,” “daring,” “tenacity” and “brilliance.” This factor, whatever it is labeled, ultimately decides one’s future much more than school grades.” –  Robert Kiyosaki

“The poor and the middle class work for money. The rich have money work for them.” – Robert Kiyosaki

“I can’t afford it’ shut down your brain. it didn’t have to think anymore. besides, it also brings up sadness. a helplessness that leads to despondency and often depression. ‘How can I afford it?’ opened up the brain. forced it to think and search for answers. it also opens up possibilities, excitement and dreams and created a stronger mind and dynamic spirit.” – Robert Kiyosaki

“Rule #1: You must know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. It is rule number one. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this rule is. Most people struggle financially because they do not know the difference between an asset and a liability. “Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets, “ said rich dad.” – Robert Kiyosaki

“Wealth is a person’s ability to survive so many number of days forward — or, if I stopped working today, how long could I survive?” – Robert Kiyosaki

“They get up every day and go work for money, not taking the time to ask the question, ‘Is there another way?” – Robert Kiyosaki

“There is a difference between being poor and being broke. Broke is temporary. Poor is eternal.” –  Robert Kiyosaki

Poor is more of a state of mind in temporary circumstances than a permanent condition.

Other Ref: 

 New Trader, Rich Trader, 

 The Working Dead. 

Charlie Munger on Mistakes to Avoid in Life

Charlie Munger’s lessons came from running real businesses and his own life's journey that was difficult at times. He believes that mistakes can be some of the best education you can get in life as you learn things from experience. He is an avid reader like Warren Buffett but believes that is just one way to grow smarter each day.

Let’s look at some of the mistakes that he says to avoid in life.

Charlie Munger On Life

Avoiding mistakes in the first place is better than managing them after the fact. 

“My system in life is to figure out what’s really stupid and then avoid it. It doesn’t make me popular, but it prevents a lot of trouble.” – Charlie Munger

You should be very thoughtful in your choice of spouse as it can cost you half your net worth when chosen poorly. 

“I think life is a whole series of opportunity costs. You know, you got to marry the best person who is convenient to find who will have you.” — Charlie Munger 

“Opportunity cost is a huge filter in life. If you’ve got two suitors who are really eager to have you, and one is way the hell better than the other, you do not have to spend much time with the other. And that’s the way we filter stock buying opportunities.”
—Charlie Munger 

Enter investments with enough of a margin of safety that you can adjust for errors and still win. 

“How do you scramble out of your mistakes without them costing too much? And we’ve done some of that too. If you look at Berkshire Hathaway, think of its founding businesses. A doomed department store, a doomed New England textile company, and a doomed trading stamp company. Out of that came Berkshire Hathaway. Now, we handled those losing hands pretty well when we bought into them very cheaply. But of course, the success came from changing our ways and getting into the better businesses. It isn’t that we were so good at doing things that were difficult. We were good at avoiding things that were difficult.” – Charlie Munger

Holding onto resentments and hatred just destroys yourself and does nothing to fix the original problems. 

“Part of the secret of a long life, that’s worked as well as mine, is not to expect too much of human nature. It’s almost bound to be a lot of defects and problems. And to have your life full of seething resentments and hatreds, it’s counterproductive. You’re punishing yourself and not fixing the world. Can you think of anything much more stupid than trying to fix the world in a way that ruins yourself and doesn’t fix the world? It’s pretty stupid.” – Charlie Munger

Stop worrying so much it’s not productive. Patience is required to seize great opportunities as they don’t come around often, but when they do you must take action aggressively. 

“Most people are too fretful, they worry too much. Success means being very patient, but aggressive when it’s time.” – Charlie Munger

Charlie Munger 10 Rules

1. Never stop learning.
2. You must deserve what you want, it takes hard work to earn trust, respect, and success.
3. Know what your own strengths are, focus on your edge and your own circle of competency.
4. Managing risks and surviving is the first step to success.
5. Practice doing the right things with every opportunity you are given.
6. Understand what you are doing, stay within your circle of competence.
7. Invest in people, businesses, and methods you trust.
8. Understand all of the big ideas and mental models.
9. Operate in your professional life as competently as you can but know that you will fail at times, we all do.
10. Don’t submerge yourself in self-pity.

What does Charlie Munger read every day?

Charlie Munger believes it is a huge mistake to not read as much as you can each day. 

Charlie Munger’s observation lines up with what Warren Buffett has said about himself — that he often reads up to 500 pages a day. 

“As long as I have a book in my hand, I don’t feel like I’m wasting time.” – Charlie Munger 

He also reads a lot of newspapers including “The Wall Street Journal,” “The New York Times,” “The Financial Times” and the “Los Angeles Times,” and is a weekly reader of “The Economist.” He believes the simple habit of reading is the key to wisdom and success. 

“In my whole life, I have known no wise people who didn’t read all the time — none, zero.” – Charlie Munger

Notes from Market experts

 Vijay Kedia: 21/05/22

The market is crashing because everybody has a gambling device in their hands. About 95 per cent of people have become legitimate gamblers with their mobile phones all over the world led by the US. It is like playing poker or teen patti. 

Bull market beginners become geniuses, advisors, chartists and economists overnight but in a bear market geniuses, advisors, chartists and economists become beginners.

Almost 95 per cent of people play blind. They don't know the fundamentals. New people come like a child and after 1-2 trades, they think of themselves as an analyst.

A new bull market will not come till the time euphoria converts into a crisis. When the market inches up a little, people think that it has reversed. This may last for a month or two. The market may make a bottom in the next 1-2 months. Bull markets are becoming longer and bear markets shorter. The new bull market will be led by stocks that did not participate last time.

தர்மம் : விளக்கம்

Mahabharath: Words from Lord Krishna to Drowpathy when She tries to determine the purpose of her birth. Ref - Episode S8 E11.

தர்மத்தின் ஐந்து அஸ்திவாரங்கள்; ஞானம், அன்பு, நியாயம், சமர்ப்பணம், துணிவு ஞானம் புத்தியை ஸ்திரமாக்குகிறது துணிவு மனத்தை ஸ்திரமாக்குகிறது அன்பு இதயத்தை ஸ்திரமாக்குகிறது மேலும்சமர்ப்பணம் சரீரத்தின் ஆவேசத்தினைஅடக்கி சரீரத்தை ஸ்திரமாக்குகிறது நியாயமானது ஆன்மாவை ஸ்திரமாக்குகிறது

Investment Rules by RK

 

Lessons to be learn from RK Damani

Every great investor and businessman has a few lessons to give to prospective investors. Here are a few lessons that you can take from RK Damani’s life:

Stake your own money to reap rewards

The switch from a stockbroker to a stock trader underlines that RK Damani believed in staking his own money to make gains. Investing your own money raises the stakes as you are careful not to lose your hard-earned savings. So, if you want the stock market to work for you, invest your money in quality stocks.

Don’t follow the herd mentality

While others did not practice swing trading, RK Damani did, which helped him grow his portfolio in earlier days. The lesson here is to avoid herd mentality. What others are doing might not always be conducive for your investments. Understand the market, develop your own investment strategy and be different from other investors.

Believe in your business

Though RK Damani made D-Mart public, he did not relinquish his stake in the company. He still owns a major part of the business as he believes in his business model. This teaches you to believe in your decisions and stick to them consistently, no matter how the condition of the market may seem like. 

Have a long-term outlook

Since the last couple of decades, RK Damani has become a firm believer in the long-term investment strategy. He maintains his portfolio and does not make considerable changes to it. You also need to have this long-term outlook if you want to earn attractive returns and grow your portfolio.

Conclusion

One does not have to be born rich to become a millionaire. The life and investment journey of Radha Kishan Damani is a leading testament to this fact. Born in a modest family, RK Damani did not have the proverbial silver spoon. Yet, with a smart investment strategy and a good business model, he charted his journey to reach the pinnacle of success. He was also never afraid of taking big decisions or switching fields. You can also take a leaf out of RK Damani’s life and make your money work for you. 

Investing Rules

Do not follow Warren Buffett blindly. It is equivalent to driving on the Indian streets by blindly following the road signs.

Put yourself in the role of a Sherlock Holmes or a Hercule Poirot  investigating a financial mystery when you are studying the annual reports of some of the Indian companies.

Like the Kurunji flower (Strobilanthes kunthianus) which blooms once in twelve years, finding a truly outstanding company run by an honest and competent management is also a rare event. If you happen to find one such company then bet your house on it.

Investing in the Indian markets solely based on bookish knowledge or the wisdom shared by foreign investing Gurus is equivalent to appearing for a mathematics exam by reading the science textbooks.

Stock market is like a giant financial Chakravyuha. Easy to enter but difficult to exit. If you enter the markets without adequate investing skills and knowledge then you may end up being a “financial Abhimanyu”.

“Minimum Government, Maximum Governance” is a popular political slogan which is equally applicable for the individual investor. Seek to invest in companies that have minimum Government holding, interference and regulatory oversight.

When you find that the promoters (or their family members) love hobnobbing with Bollywood film stars and celebrities then double up on your normal due diligence before investing in such companies.

Asking stock brokers financial tips for long term investing is equivalent to a sheep asking the butcher health tips for a long life.

Do not blindly join the passive investing index bandwagon; Fund managers in India have routinely outperformed the broader markets and over a fairly long period of time.

If there is a sudden action in a particular stock counter for no apparent reason and you suspect that some trades are being done based on non-publicly available information then probably you are right.

When a market expert or a pundit appears on media and recommends a particular scrip as a “Strong buy” then shorting or even selling that scrip may not be a bad idea.

Just as you would not attempt to do a surgery at home, you should also not attempt to do a financial surgery at home (if you are not professionally qualified). Half knowledge is a dangerous thing and it’s more rewarding in the long run to pay a certified financial adviser for professional advice.

Never discuss your portfolio or your trades publicly even if you don’t believe in the “Nazar lagna” (evil eye) concept.

Seek for a mentor or a true friend (not one with vested interests) to bounce off your investing ideas.

Stronger the connection of a business with a single political party then greater should be the caution you must observe before investing in that stock.

The crowd is mostly right. If you still want to bet against them then better check your facts and reasoning a dozen times before you go contrarian.

If you go contrarian then Mr. Market is more likely to turn around and veer towards your contrarian position as a large cruise ship than like a small speed boat. Be patient.

While analyzing a business let us say you have come up with 5 positive scenarios and 1 negative scenario that might possibly happen; Be ready to welcome the negative scenario as invariably it will be the first to arrive.

If you have analyzed a stock and then decided to give it a pass, be also mentally prepared to face the scenario of your rejected stock idea doing spectacularly well in the short term. Avoid any feelings of regret and move on.

The price of a stock will continue rising while you are still contemplating to buy it. And the price may promptly start falling post your actual purchase. Do not be interested in a stock when everyone else also seem to be interested in it.

There is nothing called as “Free Lunch” across the whole of the financial industry and it’s for you to figure out the hidden and implicit price for things given to you free.

Use television more as a source of entertainment and less as a source for your investing ideas.

Sometimes the accuracy or completeness of your analysis has no bearing on the money you eventually make or lose on a stock. Good luck and prayers do matter.

Whenever someone offers you a scheme for doubling or tripling the money in a short time; remind yourself that they are talking about their money and not yours.

Only a handful of people will really want you to succeed in life and in investing. Find your real well-wishers early.

Karma now works in a much shorter cycle time than before , more like T+1 or T+2. Bad things done in the market will come back to bite you pretty quickly. See Good, Be Good and Do Good.

The unwritten rule and the one which has not been mentioned above is that for success in any field including investing “Hard work” is mandatory. All the midnight oil burnt and the early morning lost sleep will eventually pay off.

Hard work + Humility = Success.

John C Bogle famously quipped “Learn every day, but especially from the experiences of others. It’s cheaper.”

Quotes

"Stop Telling people more than they need to know."

 "If you focus on the hurt, you will continue to suffer. if you focus on the lesson, you will continue to grow."

"When your head hit the pillow tonight, remind yourself that you're alright. You're doing a great job. Be patient with yourself, and remember that big things are achieved not all at once, but one day at a time."

"They laugh at me because I am different, I laugh at them because they are all same."

"When you fully trust someone without any doubt, you get one of these two results: A person for life or A lesson for life"

"Some people think I hate them, No Bro I don't even think of you."

"No one notices your tears, No one notices your sadness, No one notices your Pain. But they all notice your mistakes."

"Never expect to get what you give, not everyone has a heart like you."

"Always speak how you feel and never be sorry for being real."

"Morgan freeman once said: Self-Control is strength. Calmness is mastery. You have to get to a point where your mood doesn't shift based on the insignificant actions of someone else. Don't allow others to control the direction of your life. Don't allow you emotions to overpower your intelligence."

"People will provoke you until they bring out your ugly side, then play victim when you go there."

"You'll never be criticized by someone who is doing more than you. You'll always be criticized by someone doing less. Remember that."

"Once you hit a certain age you become permanently unimpressed By a lot of shit."

"Be Careful what you tolerate, you are teaching people how to treat you."

"Funny thing about getting older: Your eyesight starts getting weaker but your ability to see through people's bullshit gets much better."

"Positive people also have negative thoughts. They just don't let those thoughts grow and destroy them."

"5 Things to quite right now: 

1. Trying to please everyone 

2. Fearing change 

3.Living in the past 

4. Putting yourself down. 

5. Overthinking."

"If someone is ok with losing you they never really cared for you."

"The problem today is people don't cherish good people, they try to use them."

"Be careful about who you invest your time in. Wasted time is more costly than wasted money."

"3 Things to keep private: 1. Your income 2. Your next move 3. Your love life"

"Do not tell someone about your good side to make them stay. Tell them about your worst side and see who stays!"