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With only about 160 pages The Compound Effect is a very short read but don’t let the size fool you. This book is full of great quotes and practical advice! Here are a few of my favorite takeaways…
18. October 2019

Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad Poor Dad by Robert Kiyosaki – Highly controversial but recommended by many With an estimated 40 million copies sold worldwide since its release in […]
14. March 2019

Living with a SEAL by Jesse Itzler

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22. February 2019

Cadence by Pete Williams

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The Life-Changing Magic of Tidying by Marie Kondo

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25. October 2018

Reading multiple books at the same time

Reading multiple books at the same time [Read time: 3-4 minutes]   Today I want to talk about something that a lot of people have asked […]


Rich Dad Poor Dad by Robert KiyosakiHighly controversial but recommended by many

With an estimated 40 million copies sold worldwide since its release in 1997, “Rich Dad Poor Dad” by Robert Kiyosaki is amongst the best-selling books of all time. It’s probably also one of the most controversial personal finance books out there. That’s mainly caused by one contentious statement of Kiyosaki, but more on that later.

It’s very likely that you have heard about this book before, as it is recommended by many highly influential people like Will Smith, Oprah Winfrey or Daymond John. The impulse for me to read this book came from Patrick Bet-David’s YouTube channel “Valuetainment”. Rich Dad Poor Dad was actually the book that got me into the personal development space. After reading it for the first time I was overwhelmed with all the tips and tricks provided. I was a complete novice to this whole topic, so everything was new to me. It felt great to learn about finances and making money and I got really hyped up for a while. Now, two years later, I still like going through my notes and reminding myself of the most important lessons from the book. 

Robert Kiyosaki’s story starts with him introducing us to his two dads. One who is well-educated and intelligent, his poor dad. The other, who dropped out of school in eighth grade, his rich dad. Throughout the book Kiyosaki teaches the reader lessons about personal finance, investing and financial intelligence, through the words of his two dads. Their opinions and what they told the young Kiyosaki couldn’t be more contrary. For that reason, some people accused Kiyosaki of making up the whole story. 

Here are some of the allegories used in the book:

Poor Dad: “The love of money is the root of all evil.”
Rich Dad: “The lack of money is the root of all evil.”

Poor Dad: “Study, so one day you can find a great company to work at.”
Rich Dad: “Study, so one day you can find a great company which you can buy.”

Poor Dad: “When it comes to money, don’t take any risks.”
Rich Dad: “Learn to deal with risks.”

Poor Dad: “Money is not important.”
Rich Dad: “Money is power.”

As you can see, the mindsets of his two dads were highly opposing. However, Kiyosaki saw that as a chance to make his own choice on which dad he believes and follows. 

Is your House a Liability or an Asset?

Now, let’s talk about the most contentious statement of the entire book, which is this: Poor Dad believes that his house is his biggest investment and his biggest asset. Rich Dad on the contrary believes that his house is a liability and if your house is your biggest investment, then you are in serious trouble. To understand this concept, you need to know Kiyosakis definition of assets and liabilities. According to the book an asset is something that generates income, while a liability is anything that has costs. So, is your house a liability or an asset? If you live in your house yourself, then it’s a liability. You have to pay your bills, such as energy, mortgage or internet & telephone on a monthly basis, which creates a negative cash flow. However, your house can be an asset too, if you don’t live in it yourself, but rather rent it out. This creates a positive cashflow, as you have income through rent. Yet, there are many people who would consider their house an asset, even if they live in it. That is because for most people an asset is simply something you own that has value. I personally think that Kiyosaki’s understanding of liabilities and assets is more beneficial, as you’re always trying to create a positive cash flow. Of course, you got to live somewhere, so to conclude the whole issue I will refer to Grant Cardone’s advice, which is this: Rent where you live, own where you can rent to others.”

The Magic of Cashflow

Let’s talk about cash flow some more. In the book Robert Kiyosaki uses some very simple illustrations to explain the fundamental principle of how the rich get richer and why the poor keep struggling. All of the cash flow illustrations consist of an income statement including income and expenses and a balance sheet including assets and liabilities. 

The cash flow pattern of the poor looks like this: they make barely enough money to cover their monthly expenses, so the income they earn from their job goes directly into covering their expenses, and it’s gone. 

For the middle class it looks a little bit different. These people earn more money than the poor and buy toys and other liabilities with it. Ultimately, these liabilities are expenses and your money is gone again. According to Kiyosaki, the problem with this cash flow pattern is that the middle class build a lifestyle that must be maintained by increasing income through working more or getting a higher paid job. This is what he calls the Rat Race. 

Now, the pattern of the rich looks a lot different. In this pattern the income doesn’t come from a job but rather from assets. Of course, you can’t just start buying assets without money. So, a clever way to transition from the middle class to the rich would be to use your income to buy assets instead of liabilities. By buying more and more assets your income increases, which allows you to buy more and bigger assets. 

What are assets?

Here are some examples for assets as mentioned in “Rich Dad Poor Dad”: 

  • Businesses that can operate without you. 
  • Stocks
  • Bonds
  • Mutual funds
  • Real Estate / Properties
  • Royalties

Main Takeaways:

  1. Know the difference between liabilities and assets.
  2. The rich don’t work for money, they let money work for them. 
  3. Give first, so you get something in return. 
  4. The words “I can’t afford this.” shut down your mind. Instead ask yourself: “How can I afford this?”


  1. Pay yourself first.
  2. Cut down your expenses.
  3. Use your income to buy assets.
  4. Ask yourself “How can I afford this?”
  5. Work on your financial literacy and educate yourself.

Financial Literacy:

Throughout the book Robert Kiyosaki puts a lot of emphasis on education and financial intelligence. According to Kiyosaki it consists of these four pillars: 

  1. Bookkeeping
  2. Investing
  3. Understand the economy and markets
  4. Law

Further reading: 

  • Rich Dad’s Guide to Investing by Robert Kiyosaki
  • Money by Tony Robbins
  • The Intelligent Investor by Benjamin Graham
  • The Richest Man in Babylon by George S. Clasen
  • Think & Grow Rich by Napoleon Hill
  • The Barefoot Investor by Scott Pape
  • The Total Money Makeover by Dave Ramsey
  • Cashkurs by Dirk Müller (for my German readers)

My Rating:
18. October 2019

Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad Poor Dad by Robert Kiyosaki – Highly controversial but recommended by many With an estimated 40 million copies sold worldwide since its release in […]