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Book Reviews : RICH DAD POOR DAD

Posted by blogpmm on November 10, 2009

Robert T. Kiyosaki, Sharon L. Lechter (2000). Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money – That the Poor and Middle Class Do Not ! United State of America. Business Plus. 207pp. Reviewed by Mohd Zaidil Adha bin Mat Hussin.

Rich Dad, Poor Dad revolves around three main characters: poor dad, rich dad and the son (the author himself as narrator of the book). The essence of each character is; Poor dad – his biological father, educated but lacking the street smarts, Rich dad – the father of his childhood best friend, Mike, very little education (eighth grade), tons of street smarts and The Son, Kiyosaki, the spectator who learns lessons from both but internalizes only rich dad’s traits. Both fathers taught the author how to achieve success but with very dissimilar approaches. It became evident to the author which father’s approach made more financial sense. Throughout the book, the author compares both fathers – their principles, ideas, financial practices, and degree of dynamism and how his real father, the poor and struggling but highly educated man, paled against his rich dad in terms of asset building and business acumen.

His Poor Dad, who is perpetually scampering in the Rat Race, helplessly trapped in a vicious cycle of needing more but never able to satisfy their dreams for wealth because of one glaring lack: financial literacy. They spend so much time in school learning about the problems of the world, but have not acquired any valuable lessons about money, simply because it is never taught in school. The author points out that poor dad was preoccupied with things like job tenure and security, Social Security, vacation and sick leaves, company insurance and salary raises and promotions. The author felt that his poor dad was more interested in these factors rather than on the job itself. This is what the author calls being trapped in the Rat Race. Poor dad was more interested in a good education than the subject of money. The author wrote that his poor dad would always say things like, “I’m not interested in money” or “money doesn’t matter.”

His Rich Dad, by contrast, represents the independently wealthy core of society who deliberately takes advantage of the power of corporations and their personal knowledge of tax and accounting (or that of their financial advisers) which they manipulate to their advantage. The author adds that while his poor dad invested time and effort in education, he did not have any knowledge on investing. His rich dad, by contrast, was very skilled in the investment game because that’s all he did. The attitude of his rich dad about money was manifested in the saying “the lack of money is the root of all evil” (his poor dad, on the other hand, believed that the love of money is the root of all evil). According to the author, rich dad also nurtured the idea that taxes punished producers and rewarded the non-producers. He was the type who encouraged money talk at the dinner table and was portrayed by the author as someone who learned to manage risk, instead of not taking risks.

The author presents six major lessons which he discusses throughout the book:
The rich don’t work for money
The importance of financial literacy
Minding Your own business
Taxes and corporations
The rich invent money
The need to work for learn and not to work for money

The author also shows his understanding of the mechanisms employed by the government and the tax man and concludes that it is the middle class that actually pay for the poor. The rich are the ones who are hardly taxed because they have the knowledge to use tax legislation to their advantage. The book’s theme reduces to two fundamental concepts: a can-do attitude and fearless entrepreneurship. The author highlights these two concepts by providing multiple examples for each and focusing on the need for financial literacy, how the power of corporations contribute to making the wealthy even wealthier, minding your own business, overcoming obstacles by not fostering laziness, fear, cynicism and other negative attitudes, and recognizing the characteristics of humans and how their preconceived notions and upbringing hamper their financial freedom goals.

By
MOHD ZAIDIL ADHA BIN MAT HUSSIN
Lecturer
Department of Mathematics, Science and Computer
Polytechnic Merlimau, Melaka

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