l the years of my rich dad's advice make total sense。 I could see the future if I followed my educated dad's advice。
Many employers feel that advising their workers to mind their own business is bad for business。 I am sure it can be for certain individuals。 But for me； focusing on my own business； developing assets； made me a better employee。 I now had a purpose。 I came in early and worked diligently； amassing as much money as possible so I could begin investing in real estate。 Hawaii was just set to boom； and there were 4 fortunes to be made。 The more I realized we were in the beginning stages of a boom； the more Xerox machines I sold。 The more I sold； the more money I made； and； of course； the more deductions there were from my paycheck。 It was inspiring。 I wanted out of the trap of being an employee so badly that I worked harder； not less。 By 1978；I was consistently one of the top five salespeople in sales； often No。 1。 I badly wanted out of the rat race。
In less than three years； I was making more in my own little corporation； which was a real estate holding pany； than I was making at Xerox。 And the money I was making in my asset column； in my own corporation； was money working for me。 Not me pounding on doors selling copiers。 My rich dad's advice made much more sense。 Soon the cash flow from my properties was so strong that my pany bought me my first Porsche。 My fellow Xerox salespeople thought I was spending my missions。 I wasn't。 I was investing my missions in assets。
My money was working hard to make more money。 Each dollar in my asset column was a great employee； working hard to make more employees and buy the boss a new Porsche with before…tax dollars。 I began to work harder for Xerox。 The plan was working； and my Porsche was the proof。
By using the lessons I learned from my rich dad； I was able to get out of the 〃proverbial rat race〃 of being an employee at an early age。 It was made possible because of the strong financial knowledge I had acquired through these lessons。 Without this financial knowledge； which I call financial IQ； my road to financial independence would have been much more difficult。 I now teach others through financial seminars in the hope that I may share my knowledge with them。 Whenever I do my talks； I remind people that financial IQ is made up of knowledge from four broad areas of expertise。
No。 1 is accounting。 What I call financial literacy。 A vital skill if you want to build an empire。 The more money you are responsible for； the more accuracy is required； or the house es tumbling down。 This is the left brain side； or the details。 Financial literacy is the ability to read and understand financial statements。 This ability allows you to identify the strengths and weaknesses of any business。
No。 2 is investing。 What I call the science of money making money。 This involves strategies and formulas。 This is the right brain side； or the creative side。
No。 3 is understanding markets。 The science of supply and demand。 There is a need to know the 〃technical〃 aspects of the market； which is emotion driven； the Tickle Me Elmo doll during Christmas 1996 is a case of a technical or emotion…driven market。 The other market factor is the 〃fundamental〃 or the economic sense of an investment。 Does an investment make sense or does it not make sense based on the current market conditions。
Many people think the concepts of investing and understanding the market are too plex for kids。 They fail to see that kids know those subjects intuitively。 For those not familiar with the Elmo doll； it was a Sesame Street character that was highly touted to the kids just before Christmas。 Most all kids wanted one； and put it at the top of their Christmas list。 Many parents wondered if the pany intentionally held the product off the market； while continuing to advertise it for Christmas。 A panic set in due to high demand and lack of supply。 Having no dolls to buy in the stores； scalpers saw an opportunity to make a small fortune from desperate parents。 The unlucky parents who did not find a doll were forced to buy another toy for Christmas。 The incredible popularity of the Tickle Me Elmo doll made no sense to me； but it serves as an excellent example of supply and demand economics。 The same thing goes on in the stock； bond； real estate and baseball…card markets。
No。 4 is the law。 For instance； utilizing a corporation wrapped around the technical skills of accounting； investing and markets can aid explosive growth。 An individual with the knowledge of the tax advantages and protection provided by a corporation can get rich so much faster than someone who is an employee or a small…business sole proprietor。 It's like the difference between someone walking and someone flying。 The difference is profound when it es to long…term wealth。
1。 Tax advantages： A corporation can do so many things that an individual cannot。 Like pay for expenses before it pays taxes。 That is a whole area of expertise that is so exciting； but not necessary to get into unless you have sizable assets or a business。
Employees earn and get taxed and they try to live on what is left。 A corporation earns； spends everything it can； and is taxed on anything that is left。 It's one of the biggest legal tax loopholes that the rich use。 They're easy to set up and are not expensive if you own investments that are producing good cash flow。 For example； by owning your own corporation … vacations are board meetings in Hawaii。 Car payments； insurance； repairs are pany expenses。 Health club membership is a pany expense。 Most restaurant meals are partial expenses。 And on and on … but do it legally with pre…tax dollars。
2。 Protection from lawsuits。 We live in a litigious society。 Everybody wants a piece of your action。 The rich hide much of their wealth using vehicles such as corporations and trusts to protect their assets from creditors。 When someone sues a wealthy individual they are often met with layers of legal protection； and often find that the wealthy person actually owns nothing。 They control everything； but own nothing。 The poor and middle class try to own everything and lose it to the government or to fellow citizens who like to sue the rich。 They learned it from the Robin Hood story。 Take from the rich； give to the poor。
It is not the purpose of this book to go into the specifics of owning a corporation。 But I will say that if you own any kind of legitimate assets； I would consider finding out more about the benefits and protection offered by a corporation as soon as possible。 There are many books
written on the subject that will detail the benefits and even walk you through the steps necessary to set up a corporation。 One book in particular； Inc。 and Grow Rich provides a wonderful insight into the power of personal corporations。
Financial IQ is actually the synergy of many skills and talents。 But I would say it is the bination of the four technical skills listed above that make up basic financial intelligence。 If you aspire to great wealth； it is the bination of these skills that will greatly amplify an individual's financial intelligence。
In summary
The Rich People With Corporations The People Who Work for Corporations
1。 Earn 1。 Earn
2。 Spend 2。 Pay Taxes
3。 Pay Taxes 3。 Spend
As part of your overall financial strategy； we strongly remend owning your own corporation wrapped around your assets。
CHAPTER SIX
Lesson Five：The Rich Invent Money
Last night； I took a break from writing and watched a TV program on the history of a young man named Alexander Graham Bell。 Bell had just patented his telephone； and was having growing pains because the demand for his new invention was so strong。 Needing a bigger pany； he then went to the giant at that time； Western Union； and asked them if they would buy his patent and his tiny pany。 He wanted 100；000 for the whole package。 The president of Western Union scoffed at him and turned him down； saying the price was ridiculous。 The rest is history。 A multi…billion…dollar industry emerged； and AT&T was born。
The evening news came on right after the story of Alexander Graham Bell ended。 On the news was a story of another downsizing at a local pany。 The workers were angry and plained that the pany ownership was unfair。 A terminated manager of about 45 years of age had his wife and two babies at the plant and was begging the guards to let him talk to the owners to ask if they would reconsider his termination。 He had just bought a house and was afraid of losing it。 The camera focused in on his pleading for all the world to see。 Needless to say； it held my attention。
I have been teaching professionally since 1984。 It has been a great experience and rewarding。 It is also a disturbing profession； for I have
taught thousands of individuals and I see one thing in mon in all of us； myself included。 We all have tremendous potential； and we all are blessed with gifts。 Yet； the one thing that holds all of us back is some degree of self…doubt。 It is not so much the lack of technical information that holds us back； but more the lack of self…confidence。 Some are more affected than others。
Once we leave school； most of us know that it is not as much a matter of college degrees or good grades t