Personal Finance » Books

Conspiracy of the rich

Chee Keong — Sat, 09 Jan 2010 14:18:02 +0000

I had just finished reading the book “Rich Dad’s Conspiracy of The Rich“, written by Robert Kiyosaki.

Robert writes about, among other things, the founding of the Federal Reserve (which was under a high level of secrecy) and the fiat monetary system. Until today the Federal Reserve continues to operate in a highly secretive manner.

What caught my attention is Robert’s contention that the public school system is designed by the rich for their own benefits.

According to Robert, the public school system trains people to be employees and self-employed rather than to be entrepreneurs and investors. In other words, financial education has been deliberately left out of the school system and we are being brainwashed and conditioned to “submissively surrender our hard-earned money” to the rich.

I do not know whether the school system is indeed part of the “conspiracy of the rich” but I have to agree with the author that it is strange that the subject of “money” or financial literacy is not being taught in school.

Many years ago I read Robert’s best-selling book “Rich Dad, Poor Dad” and it helped me look at the world from the perspective of the rich. I began to see the world in a different light and it stirred in my heart a desire to be financially free.

Since then I had read dozens of books on economics, personal finance and investing. The more I learn, the more I find it unbelievable that the public schools do not teach financial literacy. Like Robert, I believe that financial management should be made a compulsory subject to be taught in every school.

The Money Game

The Money Game

Chee Keong — Tue, 29 Dec 2009 14:22:45 +0000

“Money is a game. If you know the rules, you win; if you don’t know the rules, you don’t win”

- Robert Allen

Income can be categorised into 3 broad types:

1) Active (earned) income;

2) Passive income and;

3) Portfolio income.

Most people are familiar with only one type of income, that is, active income.

However, it is often the second and third types of income, passive income and portfolio income, that will help us accumulate wealth. That is perhaps one of the reasons there is a widening rich-poor divide? The rich knows the rules of the money game and concentrate their efforts on building passive and portfolio income streams.

In his book “Multiple Streams Of Income”, Robert Allen says that in order to be financially secure, a person needs to build multiple income streams, in the form of passive and portfolio income.

What are the differences between these 3 types of income?

Active income:

This is the type of income we earn as employees or self-employed (eg. a hawker). We exchange our efforts and time for money. The moment we stop working, our income stream gets cut off (aka. the rat race).

Passive income:

This is the type of income we get when we do the work once but get paid many times over. For example:

i) An author writes a book once and get paid royalties for many years, for every book that is being sold (eg. Robert Allen);

ii) An artiste performs once and have the performance recorded and made into CDs and VCDs, screened in cinemas and televisions, and get paid royalties for many years (eg. Michael Jackson);

iii) An entrepreneur builds a business system and, instead of doing all the work himself, he hires others (employees or other small business owners) to work for him.

Portfolio income:

This is the type of investment income we earn when we own securities, such as stocks and bonds. We get paid interests or dividends. There is also a potential for capital gains.

Have you been building your passive and portfolio income?

The Richest Man In Babylon

Chee Keong — Tue, 01 Dec 2009 14:31:30 +0000

“If a man be lucky, there is no foretelling the possible extent of his good fortune. Pitch him into the Euphrates and like as not he will swim out with a pearl in his hand”

- Babylonian Proverb, P.55, The Richest Man In Babylon.

The Richest Man In Babylon, authored by George Samuel Clason, is by far the most important personal finance book I’ve read.

It’s written in the form of parables set in ancient Babylon. It espouses thrift, hard work and prudent investing.

The book addresses issues such as:

1) Why most people don’t seem to have enough money to spend even though they are hardworking, while others are able to accumulate wealth even though they are neither more hardworking nor more intelligent than average;

2) Why most people lost money whenever they invest, while a relatively few people are able to make money in whatever they invest in;

3) Why are some people always lucky? Is there a way to attract good luck?