Automatic Wealth

• Hardcover: 288 pages
• Publisher: Wiley (February 28, 2005)
• Language: English
• ISBN-10: 047171027X
• ISBN-13: 978-0471710271

There are 6 steps in this book in order to achieve automatic wealth:

1. Face facts – start now!
2. Plan to be wealthy
3. Develop wealthy habits
4. Increase income radically
5. Have additional streams of income
6. Invest

Masterson advocates that wealth should not be an end in itself but rather a by-product of doing what we love to do. Thus it is important to love what you do by asking (i) what (ii) where and (iii) with whom.

The chapter on planning to be wealthy is a good aid to help structure one’s lifetime goals into smaller and more manageable parts. This way, we can relate the little things we do now with the bigger picture. We split our lifetime goals into 7-15year portions, then yearly, then monthly, then weekly then daily. Tasks are split and ranked according to their urgency and importance.

Time can be streamlined by

1. Check email 2 times a day only (important stuff should be met over or discussed verbally)
2. Track time
3. Have agendas for meetings and jobs
4. Delegate
5. Hire great people and fire bad ones
6. Group similar tasks in blocks

Masterson makes it a point that we should get up early as a habit as we do more and that we should make healthy-lifestyle (diet, aerobic, strength, flexibility, mental) as one of our lifetime goals.

A way to supercharge income is to

1. Work hard
2. Be good at what you do (learn by telling, showing, involving and teaching)
3. Multiple streams of income
4. Live in an inexpensive home
5. Spend moderately
6. Save extraordinarily
7. Pay yourself first
8. Count your money

To be a great employee and supercharge your income

1. Worker longer, smarter and harder
2. Understand your responsibilities
3. Help your boss to do better
4. Be noticeably good
5. Let the right people know how good you are
6. Be invaluable
7. Learn a financially valued skill (marketing, sales for starters)
8. Know the company’s core profit strategy (and be the critical factor in this)
1. Primary benefits of products/services
2. Secondary benefits (psychological)
3. Competitive advantages and how they are employed

Masterson also highlights the essentials of marketing. His notes on multiple streams of income is split into income-generating businesses and equity businesses. There’s a huge focus on real estate as well.

Much of the information here can be found in his other book “Automatic Wealth for Grads” as well.

Automatic Wealth for Grads

Mainly the book tells us that wealth is dependent on what we want in life. Wealth is about how long your assets can last and not how much you have. This focuses on income minus expenses instead of real absolute amount of wealth.

Masterson advocates increasing income and savings for the reasons of compounding them. Compounding depends on time, amount of wealth and the ROI (rate of investment) A ROI of 18% is recommended. Always pay yourself first.

Ways to increase one's income:
1) Become an extraordinary employee
- Get in early
- Understand your responsibilities
- Focus on important things
- Never say NO
- Improve one's skills
- Communicate your progress
2) Be in a fast growing company
3) Be indispensible

He also gave some good career advice. Career choice is character dependent and we should do something that suits our personality and gives us fulfillment.

Some notes on certain sectors are:
1) Retail (difficult to be rich unless there is expansion)
2) Service (Increasing wage is met my increasing hours. A good entry level to learn trade)
3) Wholesale
4) Manufacturing
Important thing is to research on which industry is booming and how it suits one's character. Masterson advises that to be a top-earner, we have to focus on profit-generation instead of administrative or technical positions. We ought to learn how the company generates profits (1. Learn how your job contributes to this. 2. Make sure that the top knows how well you do so.) It is always almost necessary to develop one's sales skills (which can be applied in many areas) He also gave some good interview skills and suggestions.

Key points on Marketing
You have to know the difference between
1. Wants and needs
2. Features and benefits
3. Benefits and deeper benefits

Steps to develop one's own business
1. Take small steps
2. Develop expertise and niche
3. Find the right environment (especially motivational)
4. Learn whatever in one's current job first
5. Make sure the business benefits others

9 points to take note of in one's business
1. Make the first step
2. Lower price in a new market
3. It's all about selling
4. Business must be growable without personal involvement
5. Know your stop loss
6. Improve your strengths then eliminate your weaknesses
7. Focus and not diversify
8. Let winners run and cut losses
9. Follow Pareto's Law

Masterson shows that real estate is one of the better investment options (in America) and to reap benefits from the stock market, one must be:
1. Modest
2. Humble
3. Consistent
With this, he advocates Index Funds.

He wraps up his book by advising us to be cautiously optimistic always and finally, on how to enjoy life which was ultimate aim of us trying to accumulate wealth in the first place.

A pretty good book on a general overview on investment strategies. He gives some insightful views on career management and guides readers to decide what can be the best for each individual for any given career.

Rich Dad's Guide to Becoming Rich...Without Cutting Up Your Credit Cards review

Paperback: 88 pages

Publisher: Warner Business Books (December 2003)

Language: English

ISBN-10: 0446697524

ISBN-13: 978-0446697521

This book focuses more than financial literacy rather than the know-hows to be rich. Kiyosaki mentions that there are many ways one person can be rich. The key issue is the 'price of getting rich'. There can be a lot more sacrifices involved when one becomes rich by being stingy than being poor and enjoying life. The price of being rich is not measured in money terms but rather in time.

The book elaborates on the "prices" of the following:

1. Of being cheap
2. Of making a mistake – always see this as a stepping stone to learn
3. Of education – focus more on financial than academic education as "bankers ask not for report cards but financial statements". Of course, ignorance is worse.
4. Of change – "Change is the only constant in life" and we should use it to our advantage.

Kiyosaki, with focus on education mentioned that there are 2 sides of the coin in everything – Newton's Law e.g. to be a good policeman, one must learn to be a good crook. Understanding all facets are important to financial education. We cannot be "financial losers who cannot afford to lose".

Last but not least, not all debts are bad and we should make use of debts to our advantage.

Rich Dad's Prophecy

Paperback: 304 pages

Publisher: Warner Business Books; Reprint edition (January 2004)

Language: English

ISBN-10: 0446690341

ISBN-13: 978-0446690348

Robert Kiyosaki’s book links the impending US market crash to the nation’s 401(K) law. Within the next 20 years, the law encouraging the current way of preparing for retirement would be unsustainable. As the baby-boomers get older and retire, they would withdraw their investments from the stock market, causing a huge demand deficit and hence causing a crash. Kiyosaki also relates well to the changing demographics with the coming crash.

Kiyosaki urges us to start ‘building our arks’ for the future. His safest bet is on financial education. Paper-assets-diversification is for people who don’t have time to educate themselves financially. But if you are a savvy investor, the way to go is concentration. Concentration amplifies the returns due to the risk but education reduces the risk. The only diversification we should do is education and between asset classes. Kiyosaki also advises us to learn to start small and to build our own businesses.

He challenges our financial assumptions and draws our attention to the CASHFLOW Quadrant.

The trends are predicted to occur in the near future are:

1. Millions will be destitute in their old age.
2. Increasingly expensive medical care
3. Increased terrorism
4. Japan will be on the brink of collapse and depression due to demographics and culture.
5. China will become the largest economy
6. The world population will continue to age.
7. Wall Street obsolescence
8. Decline of the huge corporations

The controls over one’s Ark

1. Self – know your financial status and be educated
2. Emotions – the 3 levels of controlling thought
3. Excuses
4. Vision – lookout for emerging technologies and declining (huge, existing and replaceable) technologies
5. Rules
6. Advisors
7. Time (ultimately self)
8. Destiny

This book is a good read and is simple for any beginner who is interested in embarking on a quest for his/her own ark.