For years； even while I was with the Marine Corps and Xerox； I did what my rich dad remended。 I kept my daytime job； but I still minded my own business。 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 was at understanding the accounting and cash management； the better I would be at analyzing investments and eventually starting and building my own pany。
I would not encourage anyone to start a pany unless they really want to。 Knowing what I know about running a pany； I would not wish that task on anyone。 There are times when people cannot find employment； where starting a pany is a solution for them。 The odds are against success： Nine out of 10 panies fail in five years。 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 pany do I remend 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 strong。 Once a dollar goes into it； never let it e out。 Think of it this way； once a dollar goes into your asset column； it bees your employee。 The best thing about money is that it works 24 hours a day and can work for generations。 Keep your daytime job； be a great hard…working employee； but keep building that asset column。
As your cash flow grows； you can buy some luxuries。 An important distinction is that rich people buy luxuries last； while the poor and middle class tend to buy luxuries first。 The poor and the middle class often 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…term rich； built their asset column first。 Then； the ine generated from the asset column bought their luxuries。 The poor and middle class buy luxuries with their own sweat； blood and children's inheritance。
A true luxury is a reward for investing in and developing a real asset。 For example； when my wife and I had extra money ing from our apartment houses； she went out and bought her Mercedes。 It did not take any extra work or risk on 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 the luxury； the Mercedes； was a true reward because she had proved she knew how to grow her asset column。 That car now means a lot more to her than simply another pretty car。 It means she used her financial intelligence to afford it。
What most people do is they impulsively go out and buy a new car； or some other luxury； on credit。 They may feel bored and just want a new toy。 Buying a luxury on credit often causes a person to sooner or later actually resent that luxury because the debt on the luxury bees a financial burden。
After you've taken the time and invested in and built your own business； you are now ready to add the magic touch…the biggest secret of the rich。 The secret that puts the rich way ahead of the pack。 The reward at the end of the road for diligently taking the time to mind your own business。
CHAPTER FIVE
Lesson Four：The History of and The Power of Corporation
I remember in school being told the story of Robin Hood and his Merry Men。 My schoolteacher thought it was a wonderful story of a romantic hero； a Kevin Costner type； who robbed from the rich and gave to the poor。 My rich dad did not see Robin Hood as a hero。 He called Robin Hood a crook。
Robin Hood may be long gone； but his followers live on。 How often I still hear people say； 〃Why don't the rich pay for it？〃 Or 〃The rich should pay more in taxes and give it to the poor。〃
It is this idea of Robin Hood； or taking from the rich to give to the poor that has caused the most pain for the poor and the middle class。 The reason the middle class is so heavily taxed is because of the Robin Hood ideal。 The real reality is that the rich are not taxed。 It's the middle class who pays for the poor； especially the educated upper…ine middle class。
Again； to understand fully how things happen； we need to look at the historical perspective。 We need to look at the history of taxes。 Although my highly educated dad was an expert on the history of education； my rich dad fashioned himself as an expert on the history of taxes。
Rich dad explained to Mike and me that in England and America originally； there were no taxes。 Occasionally there were temporary taxes levied in order to pay for wars。 The king or the president would put the word out and ask everyone to 〃chip in。〃 Taxes were levied in Britain for the fight against Napoleon from 1799 to 1816； and in America taxes were levied to pay for the Civil War from 1861 to 1865。
In 1874； England made ine tax a permanent levy on its citizens。 In 1913； an ine tax became permanent in the United States with the adoption of the 16th Amendment to the Constitution。 At one time； Americans were anti…tax。 It had been the excessive tax on tea that led to the famous Tea Party in Boston Harbor； an incident that helped ignite the Revolutionary War。 It took approximately 50 years in both England and '？the United States to sell the idea of a regular ine tax。 ；
What these historical dates fail to reveal is that both of these taxes were initially levied against only the rich。 It was this point that rich dad wanted Mike and me to understand。 He explained that the idea of taxes was made popular； and accepted by the majority； by telling the poor and the middle class that taxes were created only to punish the rich。 This is how the masses voted for the law； and it became constitutionally legal。 Although it was intended to punish the rich； in reality it wound up punishing the very people who voted for it； the poor and middle class。
〃Once government got a taste of money； the appetite grew；〃 said rich dad。 〃Your dad and I are exactly opposite。 He's a government bureaucrat； and I am a capitalist。 We get paid； and our success is measured on opposite behaviors。 He gets paid to spend money and hire people。 The more he spends and the more people he hires； the larger his organization bees。 In the government； the larger his organization； the more he is respected。 On the other hand； within my organization； the fewer people I hire and the less money I spend； the more I am respected by my investors。 That's why I don't like government people。 They have different objectives from most business people。 As the government grows； more and more tax dollars will be needed to support it。〃
My educated dad sincerely believed that government should help
people。 He loved John F。 Kennedy and especially the idea of the Peace Corps。 He loved the idea so much that both he and my mom worked for the Peace Corps training volunteers to go to Malaysia； Thailand and the Philippines。 He always strived for additional grants and increases in his budget so he could hire more people； both in his job with the Education Department and in the Peace Corps。 That was his job。
From the time I was about 10 years old； I would hear from my rich dad that government workers were a pack of lazy thieves； and from my poor dad I would hear how the rich were greedy crooks who should be made to pay more taxes。 Both sides have valid points。 It was difficult to go to work for one of the biggest capitalists in town and e home to a father who was a prominent government leader。 It was not easy knowing who to believe。
Yet； when you study the history of taxes； an interesting perspective emerges。 As I said； the passage of taxes was only possible because the masses believed in the Robin Hood theory of economics； which was to take from the rich and give to everyone else。 The problem was that the government's appetite for money was so great that taxes soon needed to be levied on the middle class； and from there it kept 〃trickling down。〃
The rich； on the other hand； saw an opportunity。 They do not play by the same set of rules。 As I've stated； the rich already knew about corporations； which became popular in the days of sailing ships。 The rich created the corporation as a vehicle to limit their risk to the assets of each voyage。 The rich put their money into a corporation to finance the voyage。 The corporation would then hire a crew to sail to the New World to look for treasures。 If the ship was lost； the crew lost their lives； but the loss to the rich would be limited only to the money they invested for that particular voyage。 The diagram that follows shows how the corporate structure sits outside your personal ine statement and balance sheet。
How the Rich Play the Game
Is reduced/diminished by expenses
Assets 》 Ine
（through personal corporation）
It is the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor and the middle class。 Having two fathers teaching me； one a socialist and the other a capitalist； I quickly began to realize that the philosophy of the capitalist made more financial sense to me。 It seemed to me that the socia