Wisdom of Rich Dad

~ Mark Bridge ~

The economic crisis has prompted many people to seek help from personal finance books, with Amazon reporting a significant uplift in sales. Classics of the genre promise a quick route to riches, while recent examples, written since the start of the downturn, tend to be more cautious and realistic in their claims.

Times Money has looked at the five bestselling financial self-help books at Waterstone’s and asked financial planners for their views on the key ideas, rating the books from one to five stars. All have a snappy style and are accessible to the novice, but some are considerably more helpful than others.

Note that the recommended retail prices shown can be beaten easily. All the books are selling at a discount at Amazon, and the fifth, by Richard Templar, is half price at Waterstone’s.

Rich Dad, Poor Dad by Robert T. Kiyosaki
Sphere, £8.99
This 1997 book, the centrepiece of the author’s self-help empire, tells the perhaps allegorical story of two fathers: Kiyosaki’s own and his best friend’s. The former, poor dad believed in working hard for a company and keeping “secure”. He died penniless. Rich dad chose to own businesses and boosted his income “passively” by investment, becoming one of the richest Hawaiians and leaving tens of millions of dollars.

Kiyosaki admires the “positive-thinking” guru Napoleon Hill (see below) and touts mantras such as “I choose to be rich and I make that choice every day”. The focus is on getting rich, rather than being comfortable. He explains that his “personal basis” is property.

Expert’s verdict
Zac Ghadially, of Yellowtail Financial Planning, says: “Building an investment income stream can work, but not for everyone. Also, we are advising people to scale down on property at the moment — to use it to meet their life goals, but not as an investment.”

Times Money rating (out of five): 1 star

How to be Smart With Your Money by Duncan Bannatyne
Orion, £12.99
This new book has the advantage that it was written for a British market with the credit crunch in mind. It offers a comprehensive guide to earning, spending, borrowing, investing, saving and budgeting — with sections on choosing a savings account and buying a car, for example. It also has a list of questions to ask when shopping for a loan. There is no get-rich-quick carrot or big “secret” to success.

Bannatyne takes a more cautious line than Kiyosaki, writing, for example, that “the golden rule of investment is to spread your risk” — a strategy dismissed by the American as for people who “go nowhere”. He emphasises that readers should stop worrying about money and start to think about it and make changes.

Expert’s verdict
Mr Ghadially agrees that thinking about money is the first step to healthier finances, and says that Yellowtail asks its clients to complete a written review — something readers of Bannatyne’s book can do on a shoestring using its budgeting charts.

Times Money rating: 5 stars

Think and Grow Rich Napoleon Hill
Vermilion, £8.99
This was first published in 1937 to spread the author’s “secret” to those who, without it, might “go through life as failures”. The secret is never spelt out but will “jump from the page”, apparently. The book is big on popular psychology, particularly positive thinking and the importance of identifying goals.

Hill’s style is rambling, with lengthy diversions on telepathy and the “transmutation of sex energy” — something apparently achieved by the author’s namesake, the French Emperor. The tone is old-fashioned and some of the specific advice is out of date.

Expert’s verdict
Jason Witcombe, of Evolve Financial Planning, says: “We start with the premise that everything is possible. Clients come to us in a financial mess because they don’t know what they want from life. Any book that makes you think about that is a good thing.”

Times Money rating: 2 stars

The Naked Trader by Robbie Burns
Harriman House, £12.99
The cover of this 2007 edition sets the laddish tone, showing the author naked at his laptop.

Burns says that anyone can make money trading shares. He explains how by outlining the mechanics of trading online and listing “winning strategies” and rules, with the classic caveat: “Only play with money you can afford to lose.”

Much of the other advice is conservative, too. For example: “My research involves finding out everything I can about a company before I consider buying.” He does offer some more original tips, such as to consider shares in companies moving up from an AIM listing to the main stock market.

Expert’s verdict
Mr Ghadially has doubts about “anyone” being able to make significant sums in the markets. He adds: “If he had a ‘system’ to make easy money, he would not be writing books.”

Times Money rating: 3 stars

How to Spend Less Without Being Miserable by Richard Templar
Pearson, £9.99
This is another book that is written with the recession in mind and offers 100 money-saving tips. These range from the very general, such as “get organised” and “remember the glass is half-full”, to specifics such as suggesting that you go out later in the evening to reduce your beer bill. Some suggestions are a little extreme. For example, readers are advised to fill old jars and bottles of premium-brand products with supermarkets’ own-brand alternatives to trick fussy loved ones into eating them.

The theme is lifestyle, rather than broader personal finance, so there is no overlap with Bannatyne’s book. Overall, the advice is uncontroversial, but may irk readers who are already fairly savvy. For example, a reviewer at Amazon.co.uk writes: “There is absolutely nothing in this book to justify its existence. It is full of banality, such as do not shop when you are hungry and use any vouchers you might have. This must be some kind of joke. Avoid at all costs.”

Expert’s verdict
Mr Witcombe says: “Your grandma told you ‘look after the pennies and the pounds will look after themselves’. It’s not true. You have to look after the pounds first — addressing big issues such as debt. It’s good to reduce day-to-day spending by cutting out things such as coffee, but do not put off going for a drink with friends. You won’t be happy and that impacts on everything, including your finances.”

Times Money rating: 2 stars

Recently as I sat at a local coffee shop in downtown Charlotte recently I couldn’t help but overhear several patrons passionately discussing the Bernard Madoff case.

“He’s such a crook” one gentleman exclaimed. “They should give him the electric chair” another woman protested. It got hot and heavy for awhile and really had me thinking about something my Dad told me years ago.

He intimated that in a crisis situation before I start pointing the finger and blaming someone else for my problems I need to first check-in with the man-in-the-mirror (my dad said it way before MJ, but we love you for that song anyway Mike – RIP).

In the many years since my dad’s death I’ve had the opportunity to reflect and contemplate his statement on many an occasion. My years in the finance business working with client after client revealed a dire lack of accountability on the part of clients who flatly refused to take personal responsibility for their own financial minefields.

Often I’d develop compelling arguments as to why a couple needed to be involved in their financial makeover so as to learn the basics of what to do and not to do. “Can’t we just pay you to do it for us without being involved?” was the answer I would hear more often than not. I became exhausted with “fixing” a client’s situation only to have them present me with a new bag of goodies (debt, late payments, etc.) 6 months later.

When I consider this Madoff case I ponder how all these supposedly-intelligent and savvy individuals could look at that man or woman in the mirror every day and not hold him/her at fault. They blindly trusted this man who really couldn’t be trusted. How could this happen you say?  Where was the S.E.C….(that’s another story).

As far as this situation goes it all starts with poor stewardship. Individuals who, like many of my former clients, refused to take personal responsibily for their own money management. “I don’t have the time”, “I’m not good with numbers” or “My wife handles that” are some of the poor excuses I’ve heard.

Now we are faced with the most horrific financial scam of our nations’ history. And while the victims are applauding the conviction as well as the 150 year sentence they still fail to see the forest for the trees. What Americans still don’t realize is that unless and until we turn off noise of the flat screens, two-ways and I-pods it’s only a matter of time before history repeats itself.

Robert Kiyosaki has preached fiscal responsibility in his numerous best-sellers. However, it’s the same basics grandmom and grandad taught our parents years ago. Have we become so modernized that we can’t do anything for ourselves any more? The irony of it all is that it seems the more sophisticated and advanced we’ve become educationally and technologically, the worse financial decisions we make.

So you couldn’t afford to pursue a degree in finance from Harvard University? Well, that’s understandable. However, for most a Harvard-level education is now availible to the common man or woman today via the world wide web. Never have we in the history of mankind has such a myriad of data and information been available to us right at our fingertips. And the only way for us to change our results is in fact, to change our actions.

Please, please don’t misunderstand my point. There are (still) a few good money managers out there today. However, the magic elixer is YOU. You are the best manager your finances will ever have. There is only one person who’s going to take care of your money like it really matters and that is you. 

Many people had no clue what there precious dollars were invested in. They knew nothing about the myriad of “investments” or the background of the companies. This is a cardinal sin and one of the first and most basic rules of investing. You should never invest in an industry you are intimately familiar with….ever.  

And at the end of the day you should be directing the money manager to a large extent, not he or she selling you on the latest hot stock tip. It’s time to take charge of your finances again. Otherwise we may as well prepare ourselves for a few more Bernie Madoffs to be uncovered in the years to come.

I’d like to suggest it’s time to get back in the driver’s seat and take the wheel of your financial future. One thing i can say for Bernie is that he opened our eyes! You can choose to make a change or do nothing at all. The choice is up to you!

~ Jerry King.  Jerry King is an Examiner from Charlotte.

Wealth creation is probably a new term for most people.

It is hard enough to create something useful for ourselves. Yet, do people really think that creating wealth is possible?

As we can see, in today’s educational system it is rare for universities to teach wealth creation even in business schools. Thus, it might as well be an abstract idea as world peace.

However, inspirational giants and self-made millionaires like Robert Kiyosaki, Tony Robbins and Jamie McIntyre are people who have perfected wealth creation skills.

As the term implies, skill is an action to produce tangible results. One cannot say that he has the skill to do something if he cannot demonstrate it. Thus, developing wealth creation skills is not only a tangible part of reality, but also something that people can develop and enhance.

Following a path towards developing wealth creation skills will definitely help you achieve financial freedom.

Do not Sell Yourself Short

The first step in developing your wealth creation skills is acknowledging your value.  Having the self-confidence to move forward with your strengths will allow you to be valuable to other people.

When this happens, do not undervalue yourself. When you undervalue yourself you project an image where people can manipulate you. Feeling that you do not get equal value for your work is the biggest individual letdown.

In order to develop your wealth creation skills, you must design your launch pad to success by feeling good with your work.

By pushing yourself to live up to your perceived value, you also give yourself the incentive to become a better person and raise your value even higher. Then you can become a critical creator of your wealth.

Millionaires are not cheap

Most successful people will tell you that success comes with a price. Sometimes the price tag for success is something that we can afford.

However, we still don’t have the will to spend it anyway. Self-made millionaire’s spends on things that they can’t afford because they know that they can be better off with it.

Remember that the world millionaire and cheap will not come together. If you want to be a millionaire someday, start getting rid of the word cheap.
Remember that every benefit always comes with a cost. Go for things that you feel will benefit you the most and be daring enough to supply the necessary effort for it.

Finding your craft – then get paid for it

People find confidence if they do what they really love doing. However, people tend to leave the things that they love in order to work hard for money. When this happens, one finds it harder to become confident.

They end up forgetting their dreams while they fall into pitch black.
To find enthusiasm, people should start asking a different question instead. Why can’t I do the things that I love to do and get paid for it?

Developing sound wealth creation skills involves putting passion in your work. Invest in yourself first and you will see the dividends pay off.

There is Wealth

Finally developing wealth creation skills is acknowledging that wealth abounds. Traditional education has been talking about a world of scarcity.

As defined, economics exists because we need to find ways to distribute scarce resources. How about the other way around? Jamie McIntyre said that if we divide the world’s wealth to all the six billion people in the planet, we would get $3,000,000 each. It is our job to get our equal share of world wealth.

True wealth creation knows that the world is abundant. This way, we can develop ourselves to look at different trials and come up with different opportunities. Knowing that there is wealth will put your wealth creation skills to good use.