Chapter 2: Why Teach Financial Literacy?
The second chapter of Rich Dad Poor Dad explains the difference between an asset and a liability. Chapter 2 drives home the point that it’s not about how much money you make, but about how much money you keep.
An asset is something that has value, that produces income or appreciates, and has a market where the asset can easily be bought and sold:
Assets produce income
Assets appreciate
Assets do both
Conversely, liabilities take money out of your pocket because of the costs associated with them. When Rich Dad Poor Dad was first published back in 1997, Kiyosaki created a lot of controversy with this statement.
That’s because by definition, a personal residence isn’t an asset unless it appreciates enough to offset the costs of ownership. On the other hand, rental property is an asset because it can generate enough passive income to exceed the expenses of operating and financing the real estate.
As Kiyosaki writes in Chapter 2 of Rich Dad Poor Dad, “Want to grow rich? Concentrate your efforts on buying income-producing assets – when you truly understand what an asset is. Keep liabilities and expenses low. You’ll deepen your asset column.”
Reyaan
15-Apr-2022 04:05 PM
Nice 👌
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Sachin dev
15-Apr-2022 02:20 PM
Very nice
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