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Financial Friday #62: Financial Lessons that Stand the Test of Time

Friday, May 14, 2021   /   by Mario Daniel Sconza

Financial Friday #62: Financial Lessons that Stand the Test of Time

Financial Lessons that Stand the Test of Time
Last month we hosted a webinar highlighting lessons from the personal finance classic, "
Rich Dad, Poor Dad" by Robert Kiyosaki. The book has sold over 30 million copies and juxtaposes the story of two dads, one who gained wealth through saving and investing, and one who “worked hard” all his life but never became financially secure. We highly recommend reading the book for yourself or checking out last month’s webinar, but if you just want the short story on the lessons, here they are:

1. Keeping your money beats working more
Most of us believe that the key to being rich is making more money, but Kiyosaki argues that learning how to hang on to your money is the key. The amount of time available for work in your lifetime is limited, so you need to make your money do the work.

Prioritize living within your means and saving and accumulating assets over spending. Even if you can only manage to save 5% of your income in the beginning, as your wealth grows you will be able up that percentage.

2. 
Know your assets from your liabilities
Objects like cars or buildings owned by a business are assets, they help the business earn money. However, Kiyosaki points out that a car or a house held by an individual is not really an asset. In fact, these things actually take cash away from other income-generating opportunities.

Despite
 the rapid appreciation we have in some housing markets, Kiyosaki would remind us to keep a few things in mind about owning a house; they have a lot of associated costs (mortgage interest, repairs, taxes, utilities) which dramatically lessens their return, you have to sell it in order to realize any income, rapid or even “normal” appreciation is not guaranteed, and there is a tendency to strip out equity and acquire more debt.

3. Build
 financial knowledge
Kiyosaki goes into detail on the balance sheet, income statement, compound interest, assets, liabilities, evaluating investments and risk and return.  He believes the ideas and principles needed to become a successful investor are not overly difficult and anyone can learn them. Learning from experience is also a big part of the equation and he claims as long as you take time to analyze your missteps, you will continue to be successful.

We couldn’t agree more and we live by the motto, “the more you learn, the more you earn”. Why not check out our 
Wealth Mastery program if you are looking to up your financial acumen and take control of your financial future.

4.  Get in the right mindset
Kiyosaki states that financial literacy is key, but he also warns that fear, self-doubt and plain old laziness can easily overcome knowledge.

There is risk to investing, and even though financial knowledge will help you understand and rationalize risk based on return, some of us are still hesitant to take that first step for fear of failure. In short, Kiyosaki’s message is that a little bit of boldness will go a long way. The right mindset is critical and you need to constantly ask yourself, what would the “rich dad” do in this situation?


"Rich Dad, Poor Dad" was written in the late 1990’s but still delivers valuable financial principles that haven’t aged a day. It does so in a relatable, easy to understand, motivational story that is well worth a read, especially for those just getting started with managing their financial life.

Academy Award nominee and 4-time Grammy winner Will Smith made his teenagers read Kiyosaki's bookNot a bad idea, or you could learn how to get your kids on the right financial track by attending next week’s free webinar: “How to Raise Money-Smart Kids”

?? Resources

How much is the spike in house prices really going to cost you?
The average home in Canada now costs $172,544 more than it did last year according to the CREA. With interest rates at record lows there are still plenty of buyers out there, but what are they giving up to fund their purchase and will it come back to haunt them in retirement?

The "Millionaire Teacher" says retirees need not fear market volatility

The data shows the last decade was one of the least volatile for markets in the last 50 years. So why do they seem so volatile and what, if anything do we need to do to stay ahead of the game?

Is your house really an investment?
House prices have gone ballistic in Canada and FOMO (fear of missing out) is one of the main drivers. If you are still on the sidelines or have been priced out of the market, don't worry... some believe that FOMO to be completely unfounded.

Where are mortgage rates going to be in 5 or 10 years?
We don't have a crystal ball, but if you believe history is any indicator, this chart may just terrify you!
eXp Realty of Canada
Mario Daniel Sconza
4711 Yonge St 10th Floor
Toronto, ON M2N6K8
416-230-3476

Information is provided exclusively for consumers’ personal use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®.
Information is provided exclusively for consumers’ personal, non-commercial use and may not be used for any purpose other than to identify prospective properties consumers may be interested in purchasing. Data is deemed reliable, but is not guaranteed accurate by the MLS®. Copyright 2021 Last Updated June 22, 2021
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