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Chapter 4

Word Count: 2584    |    Released on: 20/11/2017

: Mind Your

ar friend of mine, Keith Cunningham, was a student in that MBA class. After a powerful and inspiring talk, the class adjourn

ay asked, once the group h

"Most of the MBA students thou

d the question again. "What

ve soul yelled out, "Ray, who in the world does

paused and then quickly said, 'ladies and gentlemen, I'm

franchises, but what he never lost sight of was the location of each franchise. He knew that the real estate and its location was the most significant factor in th

en more than the Catholic Church. Today, McDonald's owns some of the most valuable

in his life. Today, Keith owns car washes, but his

everyone else but themselves. They work first for the owners of the company, then

as responsible for teaching Mike and me the same lesson that Ray Kroc t

n directly the result of people working all their life for someone

re is a diagram of the income statement and bal

peo

ssion -> Y

e

ets -> Y

escribed earlier, their income column. And after developing scholastic skills, they go on to higher levels of schooling to enhance their professional abilities. They st

sk people, "What is your business?" And they will say, "Oh I'm a banker." Then

on the difference between his profession and his business. His profession was always the same. Me was a salesman. At one time he sold mixers for milkshakes, and soon th

law, you become an attorney, and a study of auto mechanics makes you a mechanic. The mistake in becoming what you study is that to

, as opposed to your income column. As stated earlier, the No. 1 rule is to know the difference between an asset and a li

back to school to get more training so I can get a better job." "I am going to work overtime.

ng your own business. These ideas all still focus on the income column and will only help a person

ervative-which means. "I can't afford to take risks"-is that they have no fina

alled a house, still cost them money every month. Their car, another "asset," was eating them alive. The golf clubs in the garage that cost $1,000 were not worth

uy a car. It is always interesting to look at the "net worth'1 section. It is interesting

new golf clubs, my art collection, books, stereo, television, Armani suits, wrist

de so much money off of apartment houses. They wanted to know why I did not have a normal job, with a salary. They did not

or $100,000 dollars or whatever. One of the main reasons net worth is not accurate i

onal assets can generally be sold for only a fraction of the value that is listed in their personal balance sheet. Or if there is a gain on the sale

omeone's net worth is often

real value once you get them home. A new car loses nearly 25 percent of the price you pay for it the moment you drive it off the lot.

ference between an asset and a liability. Get them to start building a solid asset column before they leave home, get married, buy a house, have kids and get stuck in a risky financial position, cli

adequately prepared for retirement and they begin to scramble to put some money away.

u or your children acquire? In my world, real

m, but they are managed or run by other people. If I ha

Sto

Bon

tual

enerating r

tes (

ectual property such as

value, produces income or appr

u don't love it, you won't take care of it." I collect real estate simply because I love buildings and land. I love shopping for them. 1 could look at them a

starting companies, not running them. So my slock buys are usually of small companies, and sometimes I even start the company and take it public. Fortunes are made in new-stock issues, and I love the game. Many people are afraid of small-cap companies and call them risky, and they are. But risk is always diminished if you love what the investment is, understand it

s. I was active in my asset column. I traded real estate and small stocks. Rich dad always stressed the importance of financial literacy. The better I w

ears. Of those that survive the first five years, nine out of every 10 of those eventually fail, as well. So only if you really have the desire to own your own company do I recommend it. Otherwise, keep your daytime job and mind your own business. When I say mind your own business, 1 mean to build and keep your asset column s

ten buy luxury items such as big houses, diamonds, furs, jewelry or boats because they want to look rich. They look rich, but in reality they just get deeper in debt on credit. The old-money people, the long-

her part because the apartment house bought the car. She did, however, have to wait for it for four years while the real estate investment portfolio grew and finally began throwing off enough extra cash flow to pay for the car. But

They may feel bored and just want a new toy. Buying a luxury on credit often causes a person to so

d the magic touch-the biggest secret of the rich. The secret that puts the rich way ahead of the

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