Cash Flow Quadrant summary

Recomended : Read Rich Dad, Poor Dad before read this CashFlow Quadrant

In Robert Kiyosaki's, The Cashflow Quadrant, the author states that there are four kind of workers: Employees, Self-Employed workers, Business Owners, and Investors. Kiyosaki also states that there are seven different kind of investors. Furthermore, Kiyosaki finally states the seven steps to financial prosperity. There are four kind of workers: Employees, Self-Employed workers, Business Owners, and Investors. Employees believe that "uncertainty does not make them happy."(Kiyosaki, Cashflow Quadrant pg. 21) As a result, employees have a huge trade off for their job security by "losing" their chance to become rich quickly. Employees are paid the least and taxed the most. A man working as a cashier at Vons, is an employee. He wakes up every morning and work long hours each day. The cashier is a hard worker. However, he is only making the owner rich. Self-Employed workers are people who have their own business. "Self-employed people are often hard-core 'perfectionists.'"(Kiyosaki, Cashflow Quadrant pg. 22) They are people who own small hair salons and hobby shops. It is true that self-employed workers are their own boss. The only problem is that they have to manage their business, manage their taxes, work, and fight off building inspectors. As a result, most self-employed workers will quit in five years. Business owners are different from self-employed workers. While a self-employed business owner must be present, a business owner "likes to delegate"(Kiyosaki, Cashflow Quadrant pg. 23) In other words, the owner does not show up for work. Instead, he hires a manager to handle his business for him. When we go to Mc. Donald's, we hardly see the owner. When we have a complaint we only get to resolve a dispute with the manager. "Investors make money with money."(Kiyosaki, Cashflow Quadrant pg. 29) I have a friend who had withdrawn $20000 from his credit card. Instead of buying a new car, he have re-invested the same $20000 in high interest off-shore Certificate of Deposits. In one year, he payed back all his debts and currently earns $6000-$20000 in passive income every month. In other words, he never works for money. My friend's money works for money, even though he plays golf and plays pool for hours. Kiyosaki suggests that everybody be satisfied with their own quadrants. He also suggests that employees and self employed workers are the worst position to be in. On the other hand, Kiyosaki suggests that business owners and investors are bound to have both the freedom of time and money. There are seven levels of investors:

Level 0: Those With Nothing To Invest-They are people who make money and blow it all out on fancy cars and toys.

Level 1: The Borrowers-These people always say, "just charge it." They love to take "0 down/Easy monthly payment" offers. In Las Vegas, the borrowers are wealthy man with no money. As a result, they borrow, borrow, borrow. Soon, they find themselves homeless.

Level 2: Savers-While savers are better off than borrowers, they are not aware that their money is being depreciated by inflation. Inflation usually averages at 4% per year. Unfortunately, most savings account only pay at 2% interest per year. The solution? Invest in CDs, stocks, bonds, or mutual funds.

Level 3: "Smart" Investors-They are the middle class with 401(k), SEP, Superannuation, IRAs, and pension plans. When they retire, the "smart" investors believe that the government will pay for their retirement. Today, it is not possible. As their expenses go down, health care costs for the elderly skyrockets. It is a good idea to have CDs, stocks, bonds, and mutual funds to back pension plans.

Level 4: Long-Term Investors-These people have a plan to follow. They have laid some cash for CDs, stocks, bonds, mutual funds, and real estates. Level 4 is a turning point for most people. At this point, people realize the difference of working for money and the difference of having money working for money. Reading books and listening to audio tapes on investing, is a major step of being a long-term investor.

Level 5: Sophisticated Investors-These investors are in the "fast track." They are savvy and bold to take on bigger risks. Sophisticated investors buy ancres of lands, houses, and apartments at "whole sale" prices. They then fix up the property and resell the same property at "retail" prices. Most real estate investors fit the criteria of a sophisticated investor.

Level 6: Capitalists-These people are masters of being an investor and being a business owner. "These are the Fords, Rockefellers, Paul Gettys, Ross Perots, and the Kennedys."(Kiyosaki, Cashflow Quadrant pg. 93) They are talented and strive to change the world by creating jobs and donating huge sums of money to charity. *This concept have been simplified from pg. 83 of Cashflow Quadrant If you want to be rich, ask yourself, "why am I poor?" Chances are that you will have to fight your urge to live in "first class" and educate yourself by reading more books on finance and investments. By starting small, you will decide if it is safe to invest more later on a particular CD, stock, or a mutual fund. Remember that education comes first before you invest. The seven steps to financial prosperity are:

1. Mind Your Own Business-Ignore people who say, "You can't do that!" "It is impossible!" or "You will fail!" The only way to fail is for you to accept and admit that you have failed. Only you know more about yourself than anyone in the world. The world is full of "limits." In truth, limits and failures are nothing but states of human emotion.

2. Take Control Of Your Cashflow-Take the time to sit down and write down how much you pay in mortgage, car payments, credit cards, and other expenses. Your job is to see where you are today. You are starting from point A, to get to point B.

3. Know What Is Safe And What Is Risky-I thought that stocks were initially risky. However, I played Kiyosaki's Cashflow 101 game and realized that stocks were actually profitable. WHen you see risk, you have two options: Reduce risks by educating yourself about the risk or stepping out.

4. Know Where You Want To Invest-Do you want to invest in stocks? CDs? Real Estates? Choose your investment wisely. If you do not know anything about electronics, do not buy electronic stocks. It's that simple.

5. Seek Mentors-You become who you hang with. Friends have the power to make you feel good or feel bad. Pick mentors with a proven track record of who he is. A lawyer is not a doctor and a real estate investor can not be your CPA.

6. Make Disappointment Your Strength-Always look for the good in every problems. Turn failures into success. Whenever you have a problem, don't say, "I can't." Say, "how can I solve this problem?" For every problem comes every answers. Never give up!

7. The Power Of Faith-If you think you can, you can do it! If a problem is gargantuan(huge), do everything in your power to solve it! For me I feel comfortable to have God as my partner. Whenever I feel hopeless, I always put my problems on the hands of God's. I have faith in God to give me the strength while my duty is to execute my plan. *This concept have been simplified from pg. 199 from Cashflow Quadrant Know where you are today and imagine where you want to be. Prove others that you have the power to make your dreams, a reality. Never give up and have faith on God and yourself. Continue to educate yourself on finance. Have the right mentor to encourage you to push yourself over the limits. Kiyosaki's Cashflow Quadrant is more in depth than his first book Rich Dad, Poor Dad. Employees and self-employed worker are taxed the most and earn the least. Business owners and investor are taxed the least and earn the most. Learn to invest before you begin to invest. Follow your dreams and let your actions speak louder than words.

Think And Grow Rich Overview

( BTW, This is Dale Carnegie not Napolean Hill )

The Big Idea

This book is a collection of principles for the attainment of wealth and financial independence. It was written by Napoleon Hill at the behest of American steel magnate Andrew Carnegie, who was fascinated with success and wanted to understand why some men became successful while others in very similar circumstances did not.

Over two decades, Hill interviewed 504 people, including such luminaries as Ford, Wrigley, Wanamaker, Eastman, Rockefeller, Thomas Edison, Woolworth, Darrow, Burbank, Morgan, Firestone, and three United States Presidents. Most of those interviewed began in poverty, with little education and influence. Yet, they all managed to become very successful at amassing staggering amounts of wealth. Hill distilled his findings into a 13-step formula that begins and ends with very basic principles.

Why You Need this Book

The process painstakingly outlined by Napoleon Hill in this enduring book, despite all the care that went into its creation, is simple and basic. Out of the life lessons learned by some of the wealthiest and most successful men in history, Hill has derived 13 basic principles for the attainment of lasting wealth, and in this book he expounds on them using simple, clear and evocative language.

Step One - Desire: The Starting Point of All Achievement

Desire truly is the starting point of all achievement. To achieve any goal in life, first you must want it so much so that you can practically taste it.

Choose a definite goal and place all your energy, all your willpower and all your effort to the achievement of that goal. Leave yourself no way of retreat. Think to yourself that you have to win, or perish in the attempt. Only by doing so will you attain a burning desire to win and that is essential for success at anything.

Wishing alone will not bring riches. You must desire riches with a state of mind that becomes an obsession. You must then plan definite ways and means to acquire riches, and back those plans with persistence. Lastly, you should not recognize the possibility of failure.

The method by which the desire for riches can be transmuted into actual riches consists of six steps:

* Fix in your mind the exact amount of money you desire. It is insufficient merely to say, “I want plenty of money”.
* Determine exactly what you intend to give in return for the money you desire. “Something for nothing” is a misconception.
* Establish a definite date when you intend to possess the money.
* Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.
* Write out a clear, concise statement of the amount of money you intend to acquire, name the time limit for its acquisition, state what you intend to give in return for the money, and describe clearly the plan through which you intend to accumulate it.
* Read your written statement aloud, twice daily, once just before retiring at night and once after arising in the morning. You must believe that you are already in possession of that money.

If it seems impossible for you to see yourself in possession of money before you actually have it, here is where a burning desire comes to your aid. If you truly desire money so keenly that your desire is obsessive, you will have no difficulty convincing yourself that you will acquire it. You become so determined to have it that you convince yourself you will have it.

The successful application of these steps calls for sufficient imagination. All who have accumulated great fortunes first dreamed, hoped, wished, desired and planned before they acquired their wealth.

Step Two - Faith: Visualization of, and Belief in Attainment of Desire

Faith is a state of mind which may be induced or created by affirmation or repeated instructions to the subconscious mind through the principle of auto-suggestion. In a nutshell, think you can win, and you will win. It is the “eternal elixir” which gives life, power and action to the impulse of thought, and the starting point of all accumulation of riches.

How to Develop Faith
The method by which one develops faith where it does not already exist is extremely difficult to describe. Faith is a state of mind which may be developed at will after these thirteen principles have been mastered. It is a well-known fact, though, that repetition of affirmation of orders to the subconscious mind helps you develop faith. In other words, repetition helps you believe. To develop faith with the end of attaining a goal, you must constantly repeat that which you wish to come true.

Developing faith is truly vital because all thoughts that have been given feeling translate to reality. Any order given to the subconscious mind with faith and positive emotions will be met with success, because thoughts attract other similar or related thoughts.

A word of warning here: it is not only the positive emotions that may influence the subconscious mind, but also the negative ones. You must resist negative emotions.

Here are some techniques to help you:

* Demand of yourself persistent, continuous action towards the attainment of your purpose.

* Think, for thirty minutes daily, about the person you intend to become. Create a clear mental picture of that person.

* Demand of yourself the development of self-confidence for ten minutes daily.

* Clearly write down a description of your definite chief aim in life.

* Resolve never to engage in any transaction that would not benefit all concerned, and by this you attract to yourself the positive forces you mean to use. Eliminate negative attitudes toward others.

Step Three - Auto-Suggestion: The Medium for Influencing the Subconscious Mind

Auto-suggestion is, put simply, self-suggestion. This is a term that applies to suggestions and self-administered stimuli that reach one’s mind through the senses. No thought, whether positive or negative, can enter the subconscious mind without the aid of this principle.

This means that man has absolute control over what reaches his subconscious mind through his five senses. However, he does not always exercise this control, which explains why so many people go through life impoverished.

When the written statements of desire for money are read and when one sees and feels oneself in possession of the money, the object of desire is directly communicated to the subconscious mind in a spirit of absolute faith. When repeated, this procedure creates thought habits favorable to one’s efforts.

It is best to mix your thoughts with emotions so that the subconscious mind can propel action. Without feelings, no positive results will be experienced. Another thing to remember: the price of ability to influence one’s subconscious mind is everlasting persistence. So one’s ability to use the principle of auto-suggestion will depend very largely on the ability to concentrate upon a desire until it becomes a burning obsession.

Here are concrete instructions in connection with the six steps regarding desire:

* Go to a quiet spot and repeat aloud to yourself the amount of money you want, the time limit for accumulation, and the service or merchandise you intend to give in exchange. See yourself in possession of the money already.

* Repeat this night and morning until you can clearly imagine the money you want.

* Place a written copy of the statement where you can see it night and morning and read it twice daily (morning and night) until it has been memorized.

Step Four - Specialized Knowledge: Personal Experiences or Observations

Two kinds of knowledge exist: general knowledge and specialized knowledge. In itself, general knowledge will not attract money unless it is organized and intelligently directed to that definite end. Knowledge only becomes true power if and when organized into definite plans of action.

Before you can be sure of your ability to transform desire into money, you require specialized knowledge of the service, merchandise or profession that you intend to offer in return for the fortune you desire. If you need more specialized knowledge, you may choose to establish a group or a resource from which you can draw this knowledge from.

You must decide what sort of specialized knowledge you need, as well as its purpose. Some dependable sources of knowledge include one’s own experience and education; that available through cooperation with others; colleges and universities; public libraries; and special training courses. It definitely pays to know how to purchase knowledge.

As knowledge is acquired, it must be organized and put to use for a definite purpose. It doesn’t end there. To be successful, you must continuously pursue specialized knowledge.

Step Five - Imagination: The Workshop of the Mind

The imagination is literally the workshop where all plans created by man are fashioned. The desire is given shape, form and action through the imagination.

There are two forms of imagination, namely:

* Synthetic imagination, through which one may arrange old concepts or ideas in new combinations.

* Creative imagination, through which all basic or new ideas are handed to man.

Through creative imagination, you can attain direct communication with Infinite Intelligence. It functions only when the conscious mind is vibrating at a very rapid rate. Rather, when it is being stimulated through the emotion of a strong desire. Lastly, the more it is used the more alert and functional it becomes, just as any muscle or organ develops through use.

Synthetic imagination is the faculty you will use more often to convert intangible desire into tangible money. Plans must be made in order for this conversion to take place, and these plans are mainly formed with this particular faculty.

Step Six - Organized Planning: The Crystallization of Desire into Action

No one can succeed in accumulating money or achieve any other undertaking without organized plans that are practical and workable. To be sure of success, you must have plans that are as faultless as possible, and must have access to the experience, ability, education and imagination of other minds.

You may find it necessary to:

* Ally yourself with a group of as many people as is necessary for you to create and carry out your plan.

* Decide what you may offer the members of your group, if any is needed, in return for their cooperation.

* Arrange to meet regularly and often with your group until you have perfected the plan or plans.

* Maintain perfect harmony between yourself and every member of the group.

If plans fail, keep in mind that it is only temporary defeat and not permanent failure. No man is ever whipped, until he quits all together. Failure may only mean that your plans were not very sound. You must build other plans and start all over again until you find a sound, workable plan.

Step Seven - Decision: The Mastery of Procrastination

An analysis of the cases of 25,000 men and women who experienced failure show that lack of decision is near the head of the major causes of failure. Procrastination, the opposite of decision, is an enemy every man must conquer.

Another study, this time of several hundred people who have accumulated fortunes, disclosed the fact that every one of them habitually reached decisions promptly and changed these decisions slowly, if at all.

Most of those who fail to earn enough money are easily influenced by others’ opinions. If you permit yourself to be influenced by these opinions when you reach decisions, you will not succeed in any undertaking. If you let yourself be influenced by the opinions of others, you will have no desire of your own.

Keep your counsel by reaching your own decisions and following them. Take no one into your confidence except the members of your group. You must also take care in selecting the members of the group.

You have a brain and mind of your own. Use it to make your own decisions. Those who reach decisions promptly and definitely know what they want in life and generally get it. These leaders decide quickly and firmly. The habit of being indecisive must be avoided all together.

Step Eight - Persistence: The Sustained Effort Necessary to Induce Faith

Persistence is an essential ingredient in the transformation of desire into its monetary equivalent. The basis of persistence is the power of will.

If willpower and desire are properly combined, they make an irresistible pair. Those who accumulate great wealth are generally known as cold blooded and sometimes ruthless. Often, however, they are misunderstood. What they have is willpower.

Most people are ready to give up when they encounter opposition or misfortune. A select few, however, carry on despite all opposition. These successful ones push on until they attain their goals. Lack of persistence is a weakness common to the majority of men, but it may be overcome by effort.

Developing persistence requires:

* A definite purpose backed by burning desire.
* A definite plan expressed in continuous action.
* A mind closed tightly against negative influences.
* An alliance with friendly and encouraging people.

You may find it necessary to snap out of mental inertia. You may have to move slowly at first and then work faster and faster until you get complete control of your will. You must be persistent no matter how slowly you may need to go at the outset.

Remember, with persistence comes success. Keep this in mind to hearten yourself when the going is difficult.

Step Nine - Power of the Master Mind: The Driving Force

Power, in this sense, is organized and intelligently directed knowledge. It is required for both the accumulation of money and the retention of accumulated money. Organized effort is produced through the combined and harmonious efforts of two or more people.

If power is organized knowledge, it may be derived from the sources of knowledge (infinite Intelligence, accumulated experience, and experiment and research).

The Master Mind may be defined as coordination of knowledge and effort, in a sprit of harmony, between two or more people, for the attainment of a definite purpose. No individual may have great power without availing himself of the Master Mind. Economic advantages may be created by people who surround themselves with a harmonious group of qualified men who lend him wholehearted aid. Psychic advantages accrue to the people whose minds are coordinated in a spirit of harmony.

Step Ten - The Mystery of Sex Transmutation

To transmute, in simple language is to change or transfer one element, or form of energy, into another.

Sexual desire is the most powerful of human desires. When driven by this desire, men develop keenness of imagination, courage, will power, persistence and creative ability unknown to them at other times. The emotion of sex contains the secret of creative ability.

Sex transmutation, then, means the switching of the mind from thought of physical expression, to thoughts of some other nature. When harnessed and redirected along better lines, this motivating force maintains all its attributes of keenness of imagination, courage etc.

It goes without saying that this calls for the exercise of willpower. The rewards are definitely worth the effort. The desire for sexual expression is inborn and natural and thus should not be submerged or repressed. It should be given an outlet through forms of expression that enrich body, mind and spirit.

Scientific research has proven that the great achievers are men who have learned this art, and furthermore, that these men were motivated by the influence of a woman. All of whom have learned to transmute sexual energy to creative purposes.

Step Eleven - The Subconscious Mind: The Connecting Link

The subconscious mind receives and files sense impressions and thoughts, regardless of their nature. You may voluntarily plant in your subconscious mind any plan, thought or purpose which you desire to translate into its physical or monetary equivalent. The subconscious mind acts on dominating desires that have been mixed with emotional feeling, such as faith.

You cannot entirely control your subconscious mind, but you can voluntarily hand over to it any plan, desire, or purpose that you want concretized. As has already been mentioned only emotionalized thoughts have any action influence upon the subconscious mind.

The possibilities of creative effort connected with the subconscious mind are truly stupendous and awe-inspiring.

Step Twelve - The Brain: A Broadcasting and Receiving Station for Thought

Every human brain is both a broadcasting and receiving station for the vibration of thought. Every human brain is capable of picking up vibrations of thought that are being released by other brains.

When stimulated or “stepped up” to a high rate of vibration, the mind becomes more receptive to thoughts that reach it through the ether from outside sources. This stepping up process takes place through positive emotions or negative emotions.

Vibrations of an exceedingly high rate are the only vibrations picked up and carried by the ether from one brain to another. Thought which has been stepped-up by emotions vibrates at the highest rate of all. The emotion of sex is the most intense and driving emotion.

The operation of your mental broadcasting station is a relatively simple procedure. You have but three principles to bear in mind and to apply:

1. The subconscious mind.
2. Creative imagination.
3. Auto-suggestion.

For all his vaunted intelligence, man understands little or nothing of the intangible forces at work in the world. The greatest of which is the force of thought. That said, though, efforts are underway to unravel the mysteries of this realm. At any rate, it is still very much usable by mankind, whether or not we understand its intricacies.

Step Thirteen - The Sixth Sense: The Door to the Temple of Wisdom

The sixth sense is that portion of the subconscious mind that was referred to earlier as creative imagination. It is the receiving set through which ideas, plans, and thoughts flash into the mind. These thoughts are sometimes called hunches or inspirations. True understanding of the sixth sense, however, can only come by meditation through mind development from within.

The sixth sense probably is the medium of contact between the finite mind of a man and infinite intelligence. For this reason, it is a mixture of both the mental and the spiritual. It is believed to be the point at which the mind of man contacts the Universal Mind.

Through the aid of the sixth sense, you will be warned of impending dangers in time to avoid them. You will also be notified of opportunities in time to embrace them. In addition with the development of the sixth sense, a “guardian angel” will come to you that will open the door to the Temple of Wisdom.

The sixth sense defies description to someone who has not mastered the other principles of this philosophy.

How to Outwit the Six Ghosts of Fear

Before any portion of this philosophy can be used successfully, the mind must be prepared to receive it. The preparation begins with study, analysis, and understanding of three enemies, which need clearing out - indecision, doubt and fear.

Where one is found, the other two are close at hand. Indecision crystallizes into doubt; the two mix and become fear. These three enemies are so dangerous because they can take root and grow without their presence being observed.

There are six basic fears, a combination of which every human suffers at one time or the other. Most people are fortunate if they do not suffer from the entire six.

They are:

* The fear of poverty.
* The fear of criticism.
* The fear of ill health.
* The fear of the loss of a loved one.
* The fear of old age.
* The fear of death.

Fears are nothing but states of mind. A state of mind is subject to control and direction. Also, as we have already discussed, man’s thought impulses begin immediately to translate themselves into physical equivalents, whether said thoughts are voluntary or involuntary.

Since everyone has the ability to completely control his or her own mind, people can choose to become open to these fears, or shut their doors completely on them.

The Seventh Basic Evil
In addition to the six basic fears, this is another evil by which people suffer. For want of a better term, it is referred to as susceptibility to negative influences. Without doubt the most common weakness of all men is the habit of leaving their minds open to other people’s negative influences.

We have absolute control over only one thing - our thoughts! And that is why we must protect their sanctity.

So much can begin with our thoughts and also end with them. Our minds are our spiritual estates!

Blue Ocean Strategy Overview

Why you should read Blue Ocean Strategy

This breakthrough book provides an organized framework for identifying and implementing out-of-the-box "blue ocean strategies" in all industries. The blue ocean strategy explains how to sail your business into new markets with less competition and greater profitability. Disarmingly written by W. Chan Kim and Renée Mauborgne, the book is energized with fresh research about the impact of innovative ideas on old industries. The compelling business examples alone are worth taking this cruise. Even the appendices make interesting reading and contain more detailed examples about products ranging from the Model T to movie theaters (the authors explain how innovators reinvented theaters and created their own blue ocean phenomena). While the book provides its share of rules and principles for intrepid strategists to follow, complete with its own jargon, managers easily can navigate right to the authors' key strategic advice. getAbstract.com considers this book essential for any strategist or entrepreneur who wants to move out of intensively competitive shark-infested waters and into the relative tranquility of the open blue ocean. Getting there isn't risk-free, but great adventure awaits the intrepid executive who makes the voyage.

In Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant, authors Renee Mauborgne and W. Chan Kim assert that the innovations which enabled several successful companies which have dominated their competition by entering previously neglected market space did NOT depend upon a new technology, but on their strategy to be free from industry boundaries.

The “ocean” refers to the market or industry. "Blue Ocean” is a market space that is created by identifying an un-served set of customers and delivering to them a compelling new value proposition. This is done by determining what offer will better balance the customer's needs with the economic costs of doing so. A "red ocean", on the contrary, refers to a saturated market where there is fierce competition. It is already crowded with companies providing the same type of services or producing the same type of goods. Goods turn into supplies, and increasing competition turns the water bloody.

There are two ways to create blue oceans. One is to launch a completely new industry, as eBay did with online auctions. It is more common, however, to create a blue ocean from within a red ocean by expanding the boundaries of an existing industry. The authors use such examples as Southwest Airlines, who did not go head to head with the competition with better meals or incentives, but captured a customer base of 'car drivers' by providing minimal amenities but convenient, low cost, short flights. On the other end of the scale, they put forth Virgin Atlantic Airways which upgraded its amenities to capture high-end business and luxury travelers. Both companies moved out of the red ocean of competition by succoring specific and uncontested customer bases by providing for their specific needs.

Based on a study of 150 strategic moves spanning more than a hundred years and thirty industries, Kim and Mauborgne argue that tomorrow’s leading companies will succeed not by battling competitors, but by creating “blue oceans” of uncontested market space ripe for growth. Such strategic moves are termed “value innovation”.

According to Kim and Mauborgne “Value without innovation tends to focus on value creation on an incremental scale” and, “Innovation without value tends to be technology driven, market pioneering, or futuristic, often overshooting what buyers are ready to accept and pay for."

They assert that “Value innovation occurs only when companies align innovation with utility, price, and cost positions” and, “value innovation defies one of the most commonly accepted dogmas of competition-based strategy: the value-cost trade-off.”

Value innovation is focused on customers, but not completely so. It balances the costs of delivering the value proposal with what the buyer values, and then resolves the barter dilemma. Instead of compromising the value desired by the customer because of the high costs associated with delivering it, a Blue Ocean company simultaneously uses the the strategies of low cost and differentation. The combination of these two is the catalyst of Blue Ocean market creation.

The Blue Ocean strategy is all about avoiding head-to-head competition. Because established markets in the developed world are saturated, head-to-head competition cannot bring attractive returns.

Kim and Mauborgne break the Blue Ocean strategy into three major points:

• Stop benchmarking the competition. Focusing on your competition stifles your innovation potential. You become just one of the crowd.

• Stop being content to swim in the red ocean. If you are caught up in the competition, you cannot see the horizon of possibility.

• Don’t count on your customers for growth. Look to non-customers; they provide the most insights into how you can create new, uncontested opportunities—new demand for your products or services.

Poor Dad Rich Dad

Character Summaries

Rich Dad, Poor Dad revolves around three main characters: poor dad, rich dad (Kiyosaki’s second father) and the son (the author himself as narrator of the book). The essence of each character is:

* Poor dad – educated but lacking the street smarts
* Rich dad – very little education (eighth grade), tons of street smarts
* Kiyosaki – the spectator who learns lessons from both but internalizes only rich dad’s traits


Poor Dad

The author compares his poor dad to the millions of fathers who encourage their sons to do well in school so they could get a good job with a good company. Poor dad believed in the traditional principles of working hard, saving money, and not buying material things that one cannot afford. He believed that having a good job with a solid company is what one should aspire for; hence he expresses disappointment when his son leaves the employ of a large, reputable corporation.

Poor dad looks to education as the passport to success. He held a doctorate degree, went to Ivy League universities, but was always struggling financially. He believed he would never be a rich man and the author points out that this became a self-fulfilling prophecy. Poor dad was more interested in a good education than the subject of money. The author wrote that his poor dad would always say things like, “I’m not interested in money” or “money doesn’t matter.”

The author points out that poor dad was preoccupied with things like job tenure and security, Social Security, vacation and sick leaves, company insurance and salary raises and promotions. The author felt that his poor dad was more interested in these factors rather than on the job itself. This is what the author calls being trapped in the Rat Race. His poor dad worked hard incessantly but somehow never made it ahead financially. Poor dad’s approach to the subject of money was based on working hard to have enough money to pay the bills (in contrast to rich dad’s approach to make one’s money work for him).
Rich Dad

The author wrote that it was when he was nine years old that he started realizing that his rich dad made much more sense than his poor dad. It was from rich dad that the author learned not to say, “I can’t afford it”, but instead to ask, “how can I afford it?” He explains this principle by relating an incident when he and his best friend Mike went to work for Mike’s father. Rich dad paid them very low wages deliberately so that would stir anger and a sense of injustice in them and eventually for them to realize that in order to get ahead, one must work for himself and not for others. For example, in that part of the book when the author complains to rich dad that he can hardly afford to buy anything with the wages he is paid, rich dad tells him that he shouldn’t dwell on the fact that his wages are low, but instead ask “how can I make more money” because this stimulates the brain to take action. His rich dad says that when someone says, “I can’t afford it”, his brain stops working. It therefore kills initiative and promotes passivity.

The author adds that while his poor dad invested time and effort in education, he did not have any knowledge on investing. His rich dad, by contrast, was very skilled in the investment game because that’s all he did. The attitude of his rich dad about money was manifested in the saying “the lack of money is the root of all evil” (his poor dad, on the other hand, believed that the love of money is the root of all evil).

According to the author, rich dad also nurtured the idea that taxes punished producers and rewarded the non-producers. He was the type who encouraged money talk at the dinner table and was portrayed by the author as someone who learned to manage risk, instead of not taking risks.


The Son (Robert T. Kiyosaki)

The author begins his book, Rich Dad, Poor Dad, by saying that he is fortunate in having had two fathers. He learned valuable lessons from both of them, but in Chapter One it becomes evident which father had the more sensible approach towards money. He compares and contrasts both fathers’ views about working hard, getting an education, saving and investing and realizing how habits of the rich and poor significantly differ. He attributes his financial acumen through the many conversations he carried out with his rich dad.

The author takes a common sense approach to the subject of money and emphasizes the need for accounting knowledge so that the reader clearly understands what assets and liabilities are. He makes simple diagrams that show the inflow and outflow of money and how the rich build up the asset column and the poor build up the liability column (expenses). It is obvious that the author places much importance on accounting knowledge – no matter how boring it is - because he says it is “the most important subject in your life.”

By using numerous examples and anecdotes, the author drives home his messages effectively, revealing his pro-capitalist stance.

The author also shows his understanding of the mechanisms employed by the government and the tax man and concludes that it is the middle class that actually pay for the poor. The rich are the ones who are hardly taxed because they have the knowledge to use tax legislation to their advantage.
Chapter Summaries
Chapter 1: Rich Dad, Poor Dad

The story of Robert Kiyosaki and Mike starts in 1956 Hawaii, when both boys were a nine years old. Their first get-rich scheme was a counterfeit nickel making company. They made plaster molds of the nickels and melted lead toothpaste tubes and filled the molds to produce the nickels. Their plan was foiled by Mike's father, who informed the boys of their illegal activity. After that day, the boys dedicated their free time to leaning about finance and economics from Mike’s father, the rich dad. The first lesson Mike’s dad made the boys experience was hatred of the “Rat Race”. He was able to achieve this by making the boys work in one of his grocery stores for three hours for ten cents an hour pay. Within a few weeks, Kiyosaki, tired of being exploited for labor, demanded that he receive a raise, but instead, Mike’s father cut his pay and told him to work for free. Eventually, both boys tired of being under appreciated (and unpaid) and they met individually with Mike's father. In their meetings with rich dad, he apologized for lack of pay and he offered them either the moral of the lesson or a pay raise. Both boys chose to learn the moral of the lesson, while rich dad offered them pay raises. He started at twenty-five cents, a dollar, two dollars, and even five dollars, which would have been considered a large amount of money for an hourly wage, but the boys still remained strong with their decision to learn the moral of the lesson. The lesson to get out of the “Rat Race” and instead of spending your whole life working to put a little money in your pocket and a bunch of money in someone else’s pocket, have people work hard to put money in your pocket. Out of all the lessons that were taught to the boys, this one was the most important. (Kiyosaki and Lechter 28-35)
Chapter 2: The Rich Don’t Work for Money

The author tells his readers to forget the notion that life teaches. He says “the only thing that life does is push you around.”

This chapter talks about people who are more comfortable in playing it safe because they were not taught early to take risks. The author develops the ideas that the poor and the middle class work for money, fear and greed cause ignorance and poverty, and the importance of using one’s emotions versus thinking with emotions. The author also stresses that opportunities in life come and go; the rich recognize them instantly and turn them into gold bullions. Others do not see these opportunities because they’re too busy seeking money and security. As the author says, well “that’s all they’re going to get.”
Chapter 3: Why Teach Financial Literacy

The story of Kiyosaki and Mike continues later in life, 1990, and both of the now adults have made incredible leaps and bounds with regards to their finances and their socioeconomic status. Mike was able to take the lesson from his father and apply them to his life. He took control of his father’s large business and increased every aspect of the empire and he is currently raising his son to take control of the company once he retires. As for Kiyosaki, he was able to retire at the age of 47 with his wife Kim. At a business meeting at the Edgewater Beach Hotel in Chicago, Charles Schwab, Samuel Insull, Howard Hopson, Ivar Kreuger, Leon Frazier, Richard Whitney, Arthur Cotton, Jesse Livermore and Albert Fall met to talk about different investments and money schemes. Twenty-five years later, a report stated that a large majority of those extremely wealthy people that met in Chicago either ended up in jail, dead or penniless. The major idea to take from the results of these unfortunate entrepreneurs is that you need financial literacy to be and stay safe. The idea that was represented with the big 1920’s entrepreneurs is still prevalent today with some of the professional athletes making poor financial decisions and ending up with next to nothing. This specific lesson is meant to teach people not to be wise with your money once you have it, but rather be smart with your money before you have it. In a way, don’t try to build a skyscraper or even a house without building a strong foundation first. According to Kiyosaki, there is one rule, and only rule that can help a person to build a strong foundation; know the difference between an asset and a liability, and make sure that you only control assets. (Kiyosaki and Lechter 56)

When it comes to beliefs about money buying freedom and the ability to enjoy retirement without fear of outliving one’s money, this chapter catches the essence of the author’s advocacy for financial independence. He says, “Intelligence solves problems and produces money. Money without financial intelligence is money soon gone.”

The author believes that financial literacy begins with a working knowledge of accounting. It is essential to know the difference between assets and liabilities. To make these two terms understandable to readers, the author makes a rudimentary diagram of these two concepts to motivate them to purchase assets in order to solidify the asset column, while keeping the liabilities (expenses) to a bare minimum. The author states that poor people remain poor because they do the opposite. They pile up on their liabilities and have zero assets so that their balance sheets and income statements look out of kilter. People have to understand that it’s not how much they make, but how much they keep according to the author, and this is an essential principle that this chapter focuses on.
Chapter 4: Mind Your Own Business

In this chapter, the author slowly introduces the concept of real estate investing and uses McDonald’s as an example. He points out that McDonald’s may not make the best hamburgers in the world, but owns the “most valuable intersections and streets in America.” The author remarks that individuals need to mind their own business if they wish to become financially self-sufficient. They shouldn’t mind their employer’s business, they should strive for ways to become their own boss and nurture their own businesses.

The author continues his discussion on building assets. To him, real assets are anything with value – stocks, bonds, mutual funds, income-producing real estate, notes, royalties from intellectual property, etc.

This chapter also reveals the author’s investment preferences: real estate and stocks. For real estate, he says he starts small, and trades his properties for bigger ones and then delays paying taxes on capital gains through one IRS mechanism.


Chapter 5: The History of Taxes and the Power of Corporations

The author states that the poor let the big machinery (corporations) manipulate them whereas the rich know how to use big machinery. This means that the rich possess the knowledge and savoir faire to use the power of the corporation to protect and enhance their assets. The advantage of a corporation versus that of the individual lies in how corporations pay taxes, according to the author. He makes this point clearly: individuals earn money, pay taxes on that money, and live with what’s left. The corporation, on the other hand, earns money, spends everything it can, and is taxed on anything that’s left. The author adds that individuals may not be aware of how much they’re being manipulated; they work from January to mid-May to enrich the government by paying taxes on their income. In the meantime, the rich are hardly taxed.

The author recommends developing one’s financial IQ as one way of leaving the humdrum of daily existence. This is accomplished by gaining knowledge of accounting, investing, understanding the markets, and the law. He says being ignorant gets you bullied whereas being informed translates into “you have a fighting chance.”


Chapter 6: The Rich Invent Money

The author develops the concept of self-doubt. He says that each person is born with talent but that talent is suppressed because of self-doubt and fear. He remarks that it’s not necessarily the educated smart people who get ahead but the bold and adventurous. People never get ahead financially even if they have plenty of money because they have opportunities that they fail to tap, he stresses. Most of them just sit around waiting for opportunity to happen. The author’s idea is that people create luck; they should not wait around for it. He says it’s the same with money. It has to be created.

In this chapter, the author discusses the importance of an education (although some critics say that he appears to downplay its importance). The author is clear by saying, “a trained mind is a rich mind.” In his analysis, there are two types of investors, each with a different mind set: those who go for the packaged investment, and those who customize investments to suit their objectives.

The author encourages people to hire people more intelligent than they because by capitalizing on the knowledge of others, an intelligent individual builds his own knowledge base and therefore has more power over those who don’t know.
Chapter 7: Work to Learn, Don’t Work for Money

This is the chapter where the author talks about the skills individuals need to develop for financial success.

The reader is given an example of a young woman who had a Master’s Degree in English Literature and who was offended when it was suggested that she learn to sell and do direct marketing. After all the hard work for her degree, she didn’t think she would have to stoop so low to learn how to be a salesperson, a profession she didn’t think very highly of. The author uses this example to emphasize that there are other skills people need to cultivate to help them on the road towards financial freedom.

The author mentions management skills. He says individuals need to know how to manage cash flow, systems, and people. To that he throws in selling and marketing skills. He puts equal emphasis on communication skills. He says there are many people who have the scientific bent and hence have a powerhouse of knowledge, but they fail miserably in communications. These are the people who are “one skill away from great wealth.”

The author calls attention to one outstanding trait of great wealthy families: they give money away – plenty of it – unlike the poor who feel that charity begins at home.


Chapter 8: Overcoming Obstacles

The opinion of the author is that five personality traits hamper human beings: fear, cynicism, laziness, bad habits, arrogance. He explains that while it’s normal to have fear, what matters is how one handles it. The author shares his sentiment about his particular fondness for Texas and Texans: “When they win, they win big and when they lose, it’s spectacular.”

The author maintains that it’s not merely a question of balance but also FOCUS. He recommends that the Chicken Littles of the world be ignored. They’re only concerned about the sky falling, spending the rest of their lives in pessimism. He says he constantly hears people saying they want to be rich, but when it’s suggested that money can be made from real estate, their initial reaction is “but I don’t want to fix toilets.” The author believes it’s ironic that they’re more concerned about trivia like fixing toilets rather than what lies ahead in real estate. As a final point, the author states that it is healthy to be greedy, so when faced with a decision, a person must always ask, “What’s in it for me?”


Chapter 9: Getting Started

This chapter serves as a section on tips to create and build personal wealth. His first tip is, find a reason greater than reality to motivate you. What he means by this is to wake up the financial genius in oneself by empowering the mind. He says that people must have a strong /purpose for living.

The next tip is to feed the mind. By feeding the mind, the author contends that people acquire power of choice.

The author also advises people to choose friends carefully. He says to avoid people who proclaim incessantly that the sky is falling and instead encourages readers to spend time with people who enjoy talking about money because they may have valuable lessons to share. The author also believes that people should study one field, and then go out and learn a new one, although it is important to choose what one studies.

Here is another tip that the author observes most people don’t practice: pay yourself first. Even if short of cash, people must pay themselves first. This goes in tandem with managing three things efficiently: cash flow, people and personal time.

Another tip the author gives is being generous. He thinks it makes a lot of sense to pay one’s broker well as he’s an ally, and “your eyes and ears to the market.”

The author suggests having heroes. They are indispensable in life because they not only inspire, they also make it seem so easy. They stimulate the human mind into thinking, “If they can do it, why can’t I?”

“Teach and you shall receive” is another tip that the author shares. His words are eloquent concerning this idea: “There are powers in this world that are much smarter than we are. You can get there on your own, but it’s easier with the help of the powers that be. All you need to be is generous with what you have, and the powers will be generous with you.”


Chapter 10: Still Want More? Here are Some To Do’s

This chapter is sort of a supplement to the previous chapter. It gives readers additional tips to help them reach for financial rewards. One tip is to stop doing what you’re doing – that is, if it’s no longer working or viable. The author encourages readers to look for new ideas, to pick the brains of individuals who have the experience and who have already done what one aspires to do. He advises on keeping the learning curve alive, taking courses, buying tapes, attending seminars.

In looking for real estate investment opportunities, the author recommends looking in the right places. One way of doing this is to jog around the neighborhood one is interested in. People can acquire real estate even if they don’t have sufficient funds for the down payment. In fact, with a bit of cleverness, the author says people can even make money with no capital.


Themes in Rich Dad, Poor Dad

One theme that’s apparent in this book is that for an individual to be wealthy, he must aim to own the system or means of production, rather than work for another individual. The author stresses that there is obviously something confining about being an employee; it shuts the mind to other possibilities and it stunts initiative.

Financial intelligence is THE most powerful asset. By studying the precepts of accounting and investing, the author believes that individuals will be able to see the difference between an asset and a liability; in fact it is the more concrete application of learning what’s right and what’s wrong. Generating a string of expenses is wrong, building assets is right.

Unlike individuals who earn and then pay taxes on what they earn, corporations earn, spend what they want to spend, and pay taxes on what’s left. Corporations, therefore, hold a certain degree of power. The rich know how to use this power, the poor don’t.

The author also believes that true luxuries are experienced when they are the outward manifestations of intelligent investing and asset building. He cites the example of his wife purchasing a Mercedes Benz because it was the car she liked and worked hard to be able to purchase it. The author cautions however about keeping up with the Joneses and getting into debt because of this human frailty.

Fear, laziness, cynicism and arrogance are to be blamed for most of human inaction.