Since I do not have a magic wand nor can I tell you what to do, the best thing I can do is tell you what I did.

Diet and exercise may make sense mentally, but most people who are overweight do not eat because they are hungry. They eat to feed an emptiness in their emotions and their soul.

For people in this group, money isn’t the most important thing about their work. Their independence, the freedom to do things their way, and being respected as experts in their field are much more important than mere money. When hiring them, it’s best to tell them what you want done and then leave them alone to do it. They don’t need or want supervision. If you meddle too much, they’ll simply walk off the job and tell you to hire someone else.

Rich dad said that financial intelligence determined, not so much how much money you make, but how much money you keep, how hard that money works for you, and how many generations you can keep it.

The more frazzled he got, both at home and at work, the more he seemed to depend on job security. The more emotionally attached he got to his job and to a paycheck to pay the bills, the more he encouraged his kids to “get a safe, secure job.”

The reason so many people struggle financially is because, every time they make more money, they also increase their two biggest expenses: taxes and interest on debt.

To top it all off, the government often offers you tax breaks to get you deeper into debt.

The B quadrant is much different from the I quadrant. I’ve seen many successful B’s sell their businesses for millions, and their new-found wealth goes to their head. They tend to think that their dollars are a measure of their IQ, so they swagger on down to the I quadrant and lose it all. The game and rules are different in all of the quadrants, which is why I recommend education over an ego trip.

The reality is that your boss’s job is not to make you rich. Your boss’s job is to make sure you get your paycheck.

The reality is that investing is capital- and knowledge-intensive. Sometimes it takes lots of capital and requires a lot of time to gain the necessary knowledge.

A mentor is someone who has already done what you want to do and is successful at doing it. Don’t find an advisor. An advisor is someone who tells you how to do it but may not have personally done it.

Managers often see their subordinates as inferiors. Leaders must direct people who are often smarter.

By buying the franchise system, instead of trying to create your own system, you can focus on developing your people. Buying the system removes one big variable when you’re learning how to be a B. Many banks will loan money for a franchise, but not for a small start-up business, because they recognize the importance of systems and how starting with a good system lowers their risk.

Wall Street is the only place that people ride to in a Rolls Royce, to get advice from those who take the subway.

Remember, all con men are nice people. If they were not being nice by telling you what you want to hear, you would not listen to them.

To drive a car, I must have insurance in case there is a crash. When I invest in real estate, I have insurance in case of fire or other losses. Yet the 401(k) investor has no insurance to prevent losses from market crashes.

Keep in mind that it’s not the asset class that makes a person rich or poor. For example, when a person asks, “Is real estate is a good investment?” I reply, “I don’t know. Are you a good investor?” Or if they ask, “Are stocks a good investment?” again my answer is the same, “I don’t know. Are you a good investor?”

My point is that it is never the investment or asset class that is important. Success or failure, wealth or poverty, depends solely on how smart the investor is.

Today, savers are the biggest losers. Since 1971, the U.S. dollar has lost 95 percent of its value when compared to gold. It will not take another 40 years to lose its remaining 5 percent.

China could be the biggest loser of all. China holds a trillion dollars in U.S. bonds. Every time the U.S. government devalues the dollar by printing more money and issuing more bonds, the value of China’s trillion-dollar investment in the United States goes down. If China stops buying U.S. government bonds, the world economy will stop and crash.

Municipal bonds are IOUs issued by states, cities, hospitals, schools, and other public institutions. One advantage of municipal bonds is that many are tax-free income. The problem is that municipal bonds are not risk-free.

There are legal Ponzi schemes and illegal Ponzi schemes. Social Security is a legal Ponzi scheme, as is the stock market. In both instances, the scheme works as long as new money flows into the scheme. If new money stops flowing in, the scheme—be it Madoff’s scheme, Social Security, or Wall Street-collapses.

Due diligence simply means doing your homework and finding out which statements are opinions and which are facts.

School days, I believe, are the unhappiest in the whole span of human existence. They are full of dull, unintelligible tasks, new and unpleasant ordinances, and brutal violations of common sense and common decency.

An investment must make economic sense outside of the tax benefit for me to invest in it. Any tax benefit only makes the investment more attractive.

For example, if you make the rules, you can write into the bylaws of your company that child care is part of your employment package. The company may pay $400 per month for child care out of pre-tax dollars. If you pay for it with after-tax dollars, you have to effectively earn almost $800 to pay for that same child care. The list is long and the requirements are specific as to what an owner of a corporation can write off that an employee cannot. Certain travel expenses can be written off with pretax dollars as long as you can document that you conducted business, such as a board meeting, on the trip.

Today in America there are thousands upon thousands of pages of tax law. That’s just for the IRS alone. The federal laws come to more than 1.2 million pages of laws. It would take the average reader 23,000 years to read the entire U.S. IRS Code. Every year more laws are created, repealed, or amended. It would be more than a full-time job just to keep up with the amend-ments.

As the deficit grows, retirement funds (401(k) plans in America or superannuation funds in many other countries) will begin to shrink because they are subject to market fluctuations. Mutual funds will begin to liquidate their stocks in order to pay for the sell orders from baby boomers who need to use the money for retirement. Baby boomers will suddenly be stuck with huge capital-gains taxes from the gains accrued by these mutual funds and taxable to them on withdrawal. The capital gains will come from selling these overvalued stocks at higher prices, which the funds pass on to its members. Instead of cash, many baby boomers will be stuck with a tax bill for capital gains they never received. Remember, the tax man always gets the money first.

If your neighbor loses his job, it’s a recession. If you lose your job, it’s a depression.

And when greed and fear collide and a person loses badly, the next human emotion is depression. Depression is made up of anger and sadness: anger with one’s self, and sadness over the loss.

In America, we are, thankfully, free to pursue those ambitions if we have the determination. Yet, every time somebody does better than we do, some people say it’s unfair-the same people who think it would be more fair if the rich shared with the poor. Well, nobody said it was fair. And the more we try to make things fair, the less free we become.

While governments would like to take more money from corporate bodies, they realize that if they pass abusive tax laws, the corporate bodies will take both their money and their jobs to some other country. In the Industrial Age, people talked about offshore as a country. The rich have always sought tax havens where their money would be treated kindly.

In 1943, the United States began taxing all working Americans via payroll deductions. In other words, the government got paid before people in the E quadrant got paid. Anyone who was purely an E had little escape from the government.

The 1986 Tax Reform Act also appears to have had the intention of shutting down the smaller community banks in America and shifting all banking to large national banks. I suspect that this was done so America could compete with the large banks of Germany and Japan. If that was the intent, it was successful. Today in America, banking is less personal and purely by the numbers. The net result is that it is harder for certain classes of people to qualify for home loans. Instead of a small-town banker knowing you personally, a central computer spits your name out if you don’t meet its impersonal qualification requirements.

  1. They maintain a long-term vision and plan.
  2. They believe in delayed gratification.
  3. They use the power of compounding in their favor.

The study found that these people thought and planned for the long term and knew that they would ultimately achieve financial success by holding to a dream or a vision. They were willing to make short-term sacrifices to gain long-term success, which is the basis of delayed gratification.

I think people like the word “challenges” more than “problems” because they think one word sounds more positive than the other. But I think that the word “problem” has a positive meaning. I know that inside every problem lies an opportunity, and opportunities are what real investors are after.

Rich dad encouraged me to always have a coach or mentor. He constantly said, “Professionals have coaches. Amateurs do not.”