You've probably heard of this book, or seen Robert Kiyosaki on PBS, talking about his ideas on personal finance and wealth building.

I found a book called RICH DAD'S PROPHECY on the bargain shelves, and read it, and then started rereading this one. For some reason I'm currently NOT in a fiction mood, but that could change tomorrow...(probably will).

Anyway, the titular "Prophecy" is that the stock market is going to have a big crash, and that this crash is due to ERISA legislation passed in the 1980s (I think). The book argues that when ERISA introduced several retirement savings vehicles, like 401K's and 403b's and others, they turned the common saver into an investor. The problem was that the law change neglected to educate these new "investors" in the fundamentals of investing. And the other problem was that it allowed companies to shift their pension plan (defined benefit) obligations onto the employee, with the employee becoming responsible for contributing to their plans.

He states that we have already seen what greed and crooks can do to a company sponsored 401k with Enron, where employees were encouraged to buy stocks in Enron with their 401k contributions, even as those greedy executives were selling their own stock at huge profits.

He further states that when people depend on something they really don't understand, ie, the stock market, when the time comes to safeguard that money, they're going to get out, and put their money in something they do understand and feel comfortable with - cash.

"Rich Dad" says that in 2016, when the majority of the baby boomers start pulling money out of the market instead of pouring it into the market (via mutual funds), the value of said market will fall, maybe even the biggest collapse in history. That's 8 years away. Seeing as how we're in a bit of a downturn now (I'm perhaps underestimating this situation), we've got 8 years for the market to come back up, and then to start getting out and into something else for retirement.

The initial book, RICH DAD,POOR DAD, deals more with becoming a knowledgable investor, which requires that we understand the difference between assets and liabilities. Kiyosaki sorts people into four basic groups: Employees, Self-employed/small business owners, Big Business owners, and Investors (his so called EBSI quadrants). He says that the difference between these groups is that the E's and S's tend to work for their money, while the B's and I's have their money work for them.

The E's and S's work for paychecks. I fall into this category myself. The B's and I's purchase assets that create cash flow. Those assets can be businesses, stocks, real estates, mutual funds, or intellectual property. (If you WORK at your business, like I do, you don't qualify as a B.)

It's an interesting way to reconsider your financial situation. A house? Most of the time, it's a liability. I've always sort of felt this, even though it can be claimed as an asset for the purposes of collateral. If you think about it, a house does not produce income. It produces expenses. Mortgage payments, taxes, maintenance, utilities...these are all outflows of cash, not inflows. The house doesn't produce any INCOME for you, unless you sell it.

We all need basic necessities, and shelter is one of them. Just don't delude yourself into thinking it's an asset, says Kiyosaki. A real asset produces income for you. The key, then, is to acquire real assets and eventually become financially secure to the point where you don't NEED a paycheck to live.

I'm certainly not at this point. I don't know if I ever will be, but as a dentist, I stand a better chance of it than a lot of people.

It requires a change in mindset.

Anyway, as I was reading this stuff, I was thinking that it was worth a journal entry. So here it is...