Rich Dad’s Guide to Investing
By Robert T. Kiyosaki

Sample Pages

Chapter 2
Pouring a Foundation of Wealth

Returning to the dingy gray officers’ quarters on base that night was very difficult. They had been fine when I left earlier that day, but after spending the afternoon in Mike’s new home, the officers’ quarters seemed cheap, old, and tired.

As expected, my three roommates were drinking beer and watching a baseball game on television. There were pizza boxes and beer cans everywhere. They did not say much as I passed through the shared living area. They just stared at the TV set. As I retired to my room and closed the door, I felt grateful that we all had private rooms. I had much to think about. 

At 25 years of age, I finally realized things that I could not understand as a kid of 9, the age at which I first began working with rich dad. I realized that my rich dad had been working hard for years pouring a solid foundation of wealth. They had started on the poor side of town, living frugally, building businesses, buying real estate, and working on their plan. I now understood that rich dad’s plan was to become very wealthy. While Mike and I were in high school, rich dad had made his move by expanding to different islands of the Hawaiian chain, buying businesses and real estate. While Mike and I were in college, he made his big move and became one of the major private investors in businesses in Honolulu and parts of Waikiki. While I was flying for the Marine Corps in Vietnam, his foundation of wealth was set in place. It was a strong and firm foundation. Now he and his family were enjoying the fruits of their labor. Instead of living in the poorest of neighborhoods on an outer island, they lived in one of the wealthiest neighborhoods in Honolulu. They did not just look rich on the surface as many of the people in that neighborhood did. I knew that Mike and his dad were rich because they allowed me to review their audited financial statements. Not many people were given that privilege.

My real dad, on the other hand, had just lost his job. He had been climbing the ladder in the state government when he fell from grace from the political machine that ran the State of Hawaii. My dad lost everything he had worked to achieve when he ran against his boss for governor and lost. He had been blacklisted from state government and was trying to start over. He had no foundation of wealth. Although he was 52 and I was 25, we were in exactly the same financial position. We had no money. We both had a college education and we could both get another job, but when it came to real assets, we had nothing. That night, lying quietly on my bunk, I knew I had a rare opportunity to choose a direction for my life. I say rare because very few people have the luxury of comparing the life paths of two fathers and then choosing the path that was right for them. It was a choice I did not take lightly.

Investments of the Rich

Although many things ran through my mind that night, I was most intrigued by the idea that there were investments only for the rich, and then there were investments for everyone else. I remembered that when I was a kid working for rich dad, all he talked about was building his businesses. But now that he was rich, all he talked about was his investments . . . investments for the rich. That day over lunch, he had explained, “The only reason I built businesses was so I could invest in the investments of the rich. The only reason you build a business is so that your business can buy your assets. Without my businesses, I could not afford to invest in the investments of the rich.”

Rich dad went on to stress the difference between an employee buying an investment and a business buying an investment. He said, “Most investments are too expensive when you purchase them as an employee. But they are much more affordable if my business buys them for me.” I did not know what he meant by that statement, but I knew this distinction was important. I was now curious and anxious to find out what the difference was. Rich dad had studied corporate and tax law and had found ways to make a lot of money using the laws to his advantage. I drifted off that night excited about calling rich dad in the morning and saying softly to myself, “investments of the rich.”

The Lessons Resume

I had spent many hours as a child sitting at a table in one of rich dad’s restaurants as rich dad discussed the affairs of his business. At these discussions, I would sit and sip my soda, while rich dad talked with his bankers, accountants, attorneys, stockbrokers, real estate brokers, financial planners, and insurance agents. It was the beginning of my business education. Between the ages of 9 and 18, I spent hours listening to these men and women solve intricate business problems. But those lessons around the table ended when I left for four years of college in New York, followed by five years of service with the Marine Corps. Now that my college education was complete and my military duty nearly over, I was ready to continue the lessons with rich dad.

When I called him the next day, he was ready to begin my lessons again. He had turned the businesses over to Mike and was now semiretired. He was looking for something to do rather than play golf all day.

When I was young, I did not know which dad to listen to when it came to the subject of money. Both were good, hard-working men. Both were strong and charismatic. Both said I should go to college and serve my country in the military. But they did not say the same things about money or give the same advice about what to become when I grew up. Now I could compare the results of the career paths chosen by my rich dad and my poor dad.

Note: the rest of this chapter is omitted