Rich Dad Poor DadPeople who hate risk put their money in the bank. In the long run,
safe savings are better than no savings. But it takes a long time to get
your money back and, in most instances, you don’t get anything for
free with it.
On every one of my investments, there must be an upside,
something for free—like a condominium, a mini-storage, a piece
of free land, a house, stock shares, or an office building. And there
must be limited risk, or a low-risk idea. There are books devoted
entirely to this subject, so I will not talk about it here. Ray Kroc, of
McDonald’s fame, sold hamburger franchises, not because he loved
hamburgers, but because he wanted the real estate under the franchise
for free.
So wise investors must look at more than ROI. They look at
the assets they get for free once they get their money back. That is
financial intelligence.
- Use assets to buy luxuries: the power of focus
A friend’s child has been developing a nasty habit of burning a
hole in his pocket. Just 16, he wanted his own car. The excuse: “All his
friends’ parents gave their kids cars.” The child wanted to go into his
savings and use it for a down payment. That was when his father called
me and then came to see me.
“Do you think I should let him do it, or should I just buy him a car?”
I answered, “It might relieve the pressure in the short term, but what
have you taught him in the long term? Can you use this desire to own a
car and inspire your son to learn something?” Suddenly the lights went
on, and he hurried home.
Two months later I ran into my friend again. “Does your son have
his new car?” I asked.
“No, he doesn’t. But I gave him $3,000 for the car. I told him to
use my money instead of his college money.”
“Well, that’s generous of you,” I said.
“Not really. The money came with a hitch.”