Rich Dad Poor Dad, By Robert Kiyosaki

Question 1

Asset

Answer 1

an asset puts money in my pocket (whether I work or not).

Question 2

Liability

Answer 2

a liability takes money out of my pocket.

Question 3

Income Statement

Answer 3

aka Profit and Loss Statement, it measures money in and money out

Question 4

Balance Sheet

Answer 4

balances assets against liabilities

Question 5

401(k)

Answer 5

A U.S. retirement plan developed by the ERISA Act of 1974 when companies realized they could not provide for retirees’ health care.

Question 6

Cash Flow

Answer 6

Cash coming in (as income) and cash going out (as expenses). It is the direction of cash flow that determines whether something is income, expense, asset, or liability. Cash flow tells the story.

Question 7

Financial Aptitude

Answer 7

What you do with the money once you make it, how to keep people from taking it from you, how to keep it longer, and how to make that money work hard for you.

Question 8

Income

Answer 8

The money that is received as a result of the normal business activities of an individual or business.

Question 9

Mutual Fund

Answer 9

A variety of stocks, bonds, or securities grouped together, managed by a professional investment company and purchased by individual investors through shares. The shares possess no direct ownership value in the various companies.

Question 10

Social Security

Answer 10

A social welfare or social insurance program commonly funded through automatic payroll deductions to subsidize persons in their old age.

Question 11

Bond

Answer 11

A debt security in which the authorized issuer owes the holders a debt and is obliged to repay the principal and interest at a later date, termed maturity.

Question 12

Entrepreneur

Answer 12

Someone who creates a system to offer a product or service in order to obtain a profit. Entrepreneurs are willing to accept a level of risk to pursue opportunity and are viewed as fundamentally important in the capitalistic society.

Question 13

Financial Statement

Answer 13

A statement of your income, expenses, assets, and liabilities. Your “report card” when you leave school and what your banker wants to see before lending you money.

Question 14

Stock

Answer 14

The capital raised by a corporation through the distribution of shares.

Question 15

The following are REAL ASSETS…

Answer 15

-Businesses that do not require my presence
-Stocks
-Bonds
-Income-generating real estate
-Notes
-Royalties from intellectual property
-Anything else that has value, produces income or appreciates, and has a ready market

Question 15

Financial IQ is Made Up of the following 4 Items

Answer 15

1.- Accounting: Accounting is financial literacy or the ability to read numbers. This is a vital skill if you want to build businesses and investments.
2.-Investing: Investing is the science of “money making money.”
3.-Understanding Markets: the science of Supply and Demand.
4.-The Law: The law is the awareness of accounting corporate, state, and federal regulations.

Question 16

To be a successful investor, learn these 3 skills:

Answer 16

1.-Find an opportunity that everyone else missed
2.-Raise Money
3.-Organize smart people

Question 17

Tax Advantages of Corporations

Answer 17

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.

Question 18

1031

Answer 18

Jargon for Section 1031 of the Internal Revenue Code, which allows a seller to delay paying taxes on a piece of real estate that is sold for a capital gain through an exchange for a more expensive piece of real estate.

Question 19

Corporation

Answer 19

Merely a legal document that creates a legal body without a soul. It’s not a big building or a factory or a group of people. Using it, the wealth of the rich is protected.

Question 20

Financial IQ

Answer 20

Financial intelligence that comes as a result of financial education. People with high financial IQ learn to use other people’s money to become rich.

Question 21

Financial Literacy

Answer 21

The ability to read and understand financial statements, which allows you to identify the strengths and weaknesses of any business.

Question 22

3 Main Management Skills Needed for Success

Answer 22

1.Management of Cash Flow
2.Management of Systems
3.Management of People

Question 23

5 Main Reasons Why Financially Literate People Do Not Become Wealthy

Answer 23

1.Fear
2.Cynicism
3.Laziness
4.Bad Habits
5.Arrogance

Question 24

10 Steps to Develop Your God-Given Powers

Answer 24

1.Find a reason greater than reality: the power of the spirit (you must have a strong WHY)
2.Make daily choices: the power of choice (choose to be rich through your daily choices & spending habits)
3.Choose friends carefully: the power of association (surround yourself with wealthy people you admire)
4.Master a formula and then learn a new one: the power of learning quickly (Learn investing formulas that work)
5.Pay yourself first: the power of self-discipline (Read “Profit First)
6.Pay your brokers well: the power of good advice (Pay good advisors well)
7.Be an Indian giver: the power of getting something for nothing (Get your initial investment back quickly)
8.Use assets to buy luxuries: the power of focus (Use cashflow from investments to buy the things you want)
9.Choose heroes: the power of myth (Have heroes that have achieved what you want to achieve)
10.Teach and you shall receive: the power of giving. (When you want something, give first, and it will come back to you)

Question 25

To successfully pay yourself first, keep the following in mind…

Answer 25

1.Don’t get into large debt positions that you have to pay for. Keep your expenses low. Build up assets first.
2.When you come up short, let the pressure build and don’t dip into your savings or investments. Use the pressure to inspire your financial genius to come up with new ways of making more money, then pay your bills

Question 26

ROI

Answer 26

Return on Investment

Question 27

To-Do List on How to Get Started

Answer 27

-Stop doing what you’re doing
-Look for new ideas
Find someone who has done what you want to do
-Take classes, read, attend seminars
-Make lots of offers
Jog, walk, or drive a certain area once a month for 10 minutes (looking for real estate)
-Shop for bargains in all markets
-Look in the right places
-Look for people who want to buy first. Then look for someone who wants to sell.
-Think big
-Learn from history
-Action always beats inaction

Question 28

3 Types of Income

Answer 28

Ordinary earned
Portfolio
Passive