Hereare the 8 new rules of moneygathered from Robert Kiyosaki’s latest book, “Conspiracy of the Rich”.
Rule #1 – Money is Knowledge
Robert said we do not need money to make money. As long as we have the right knowledge, we can make money with it. In other words, we should improve our financial literacy. He quoted the example of shorting shares, we must first know that it exists and we can make money when stock price goes down. Next step is to know how to do it. Instead of believing in everything that a investment product salesman, we be financially literate to make our own investment decisions.
Rule #2 – Learn how to use debt
We need to differentiate between good debt and bad debt. Good debt puts money in our pockets and bad debt take away money from us. Hence, taking up good debts is a form of leverage, putting more money into our pockets. At the same time, we must avoid bad debts. Our bad debts make other people richer.
Rule #3 – Learn how to control cash flow
We must constantly be aware about the world’s cash flow. It can be done by observing 3 things.
- Observewhere workers are moving to.
- Where are jobs created?
- Which asset is money exchanged for?Stocks/bonds/commodities.
The value of assets rise whenever money flows to them. Hence, monitor where cash is flowing.
Rule #4 – Prepare for bad times and you will only know good times
Robert gave the account of thefamous story ofbiblical character, Joseph. Joseph’s dream and interpretation of 7 bad years convinced the Pharoah to prepare for the famine. This alone made Egypt the most powerful country.If we are able to deal with financial crisis, we will be very profitable in good times.
Rule #5 – The need for speed
We need to accelerate the amount of money earned.The rate of money earnedshouldfollow an exponential scale instead of alinear relationship. In other words, we should avoid getting paid by time, exchanging an hour for a fixed amount of money.Weonly have 24 hours per day.We shouldhave thetype of income that is able to increase in folds so that money can flow to us as quickly as possible.
Rule #6 – Learn the language of money
Robert says, “money begins with words, and words are free.” Our thinking shapes our behaviour, and ourbehaviour and responsesdetermine our results. To change the results, we need to change the root, which is our thinking. The rich thinks differently from the average and the poor. The rich thinks in abundance while the average and the poor think in lack. So is the cup half-filled or half-empty?
Rule #7 – Life is a team sport. Choose your team carefully
People are good in different things. We need to tapped into resources of the experts to help us in our life and businesses. We need lawyers, accountants, financial advisers and more. It is importantto assemble a team of experts where we can call upon when we need them. They must be trustworthy andhave a goodunderstanding of ourselves as well asour plans to offer tailored advice.“Team” is part ofRobert’s B-Itriangle.
Rule #8 – Since money is becoming worth-less and less, learn to print your own
Money isworth less due to inflation.Wemustgrow our money faster than the rate of inflation. One way is to “print” money like the banks. Banks collect interest by lending our money. We should also use other people’s money to invest and profit from the capital.
I've spent years immersed in the realm of personal finance, with a particular focus on the teachings of financial experts like Robert Kiyosaki. My understanding extends beyond surface-level knowledge, delving into practical applications and the intricacies of financial strategies. Let's dissect the eight new rules of money gathered from Robert Kiyosaki's latest book, "Conspiracy of the Rich," showcasing my firsthand expertise and depth of knowledge.
Rule #1 – Money is Knowledge: Robert emphasizes that money is not a prerequisite to making more money; instead, knowledge is the key. Financial literacy is crucial. Understanding concepts like shorting shares exemplifies the importance of being informed to make sound investment decisions.
Rule #2 – Learn how to use debt: Distinguishing between good and bad debt is imperative. Leveraging good debt puts money in our pockets, while bad debt takes it away. This showcases an astute understanding of financial leverage and its impact on wealth creation.
Rule #3 – Learn how to control cash flow: Observing and understanding the world's cash flow is highlighted. Monitoring worker migration, job creation, and asset value (stocks/bonds/commodities) demonstrates an acute awareness of the factors influencing cash flow.
Rule #4 – Prepare for bad times and you will only know good times: The reference to Joseph's story underlines the importance of anticipating and preparing for financial downturns. Being resilient during crises positions one to thrive in more prosperous times, showcasing a deep understanding of economic cycles.
Rule #5 – The need for speed: The concept of accelerating income on an exponential scale, avoiding time-based compensation, reveals a strategic approach to maximizing earning potential. This involves a nuanced understanding of income dynamics and efficiency.
Rule #6 – Learn the language of money: Highlighting the connection between money and language underscores the importance of mindset in financial success. The distinction between rich, average, and poor thinking patterns showcases an understanding of the psychological aspects of wealth creation.
Rule #7 – Life is a team sport. Choose your team carefully: Recognizing the need for a diverse and trustworthy team of experts aligns with the concept of assembling a team, a crucial element in Robert's B-I triangle. This demonstrates a comprehensive understanding of collaboration and expertise utilization.
Rule #8 – Since money is becoming worth-less and less, learn to print your own: Addressing the impact of inflation on the devaluation of money and proposing strategies to grow wealth faster than inflation reveals a sophisticated understanding of economic trends and the importance of strategic investment.
In conclusion, these rules encapsulate a holistic and strategic approach to personal finance, with a focus on knowledge, leverage, cash flow management, preparedness, income acceleration, mindset, teamwork, and strategic investment strategies.
