Review: Rich Dad Poor Dad

I recently read a book on personal finance titled "Rich Dad Poor Dad" by Robert T. Kiyosaki.  It tells things about personal finance which should be common sense.  It is worth reading the book because it does get you thinking.  Here is what I found useful in the book:

Work to Learn: When you choose a job, do not choose it on the basis of money, rather choose it on the basis of what it will teach you.

Active income is what you work for as an employee or self-employed person.

Passive/portfolio income is generated by your investments or businesses you own.

Invest: You should systematically invest your active income in order to grow your passive/portfolio income.  At the same time avoid buying stuff that will increase your recurring expenses.

Financial independence: When your passive/portfolio income becomes more than your expenses, you become financially independent.  Once you get there, you may choose to retire or do whatever you want.

Buy luxuries last:  First invest then buy luxuries from investment income after you achieve financial independence.

To manage your investments (i.e., shares, mutual funds, deposits, real-estate, businesses run by others, etc.) you should learn the following:

1. Accounting: You should be able to read balance sheets and other financial reports.
2. Investing: Learn about basic principles of investing.
3. Markets: Learn about markets (Stock market, real-estate markets, etc.).
4. Laws: Learn about taxes and other relevant laws and take advantage of them.

Take some risks:  Most of us play too safe because of fear and hence lose out on big gains.  You can take more risks if you have the power of knowledge.  The more you know the more investment opportunities you will be able to identify.  And thus create more assets that generate passive/portfolio income for you.

The book is a nice read.  English is very simple.  You rarely get bored.  I would say it is rather entertaining.  It is also reasonably short which is nice.  However there are caveats.

Caveat 1: At many places the author presents his ideas in such a manner that they sound controversial.  For example, the book seemingly ridicules the idea of getting a good education and working hard throughout your life to get rich.  But if you read it carefully, the author is not saying don't get a good education, or don't work hard.  He is merely saying that these two things may not be enough to get rich.  Getting rich also requires financial education is what he points out throughout the book.  Stating things in a controversial tone probably attracts attention and sales.  However, I would say that it also gets reader's attention to something that should be common sense and yet ignored by many.

Caveat 2: Some specific advice in the book may be dangerous for some one who doesn't know what s/he is doing.  For instance, the author gives examples of how he bought real-estate at a bargain price and resold them quickly to make a small fortune in a short span of time.  However, it took him years of  learning and experience in real-estate market before he was able to make such deals.  In other examples where he did well, he may simply have been lucky.  So my suggestion is to take specific advice in this book with a big grain of salt and focus on overall ideas.

Caveat 3: The book has its own definitions of the terms "assets" and "liabilities" which are different from definitions commonly understood in accounting.  This however does not create much of a problem.

I wish I had read this book a decade or two earlier because that would have strengthened some of my ideas and I would have become financially independent sooner.  Saying that I independently had some of the ideas in the book is not saying much because there is no rocket science in the book.  It is all common sense or rather simple arithmetic.

Rating: ****

Just read

Just read the following article:

What does it take to be a Tiger?

Nice.  Thought provoking.

A visit to Bapu kuti at Sevagram

On the 16th and 17th day of December 2006, I and shrimatiji visited the Mahatma Gandhi ashram at Sevagram. Since our marriage in January, we have been touring a lot. Most of our trips have been hectic. But that weekend we were looking for some peace and relaxed time together. So we thought of Sevagram.

We woke up early on Saturday and managed to get to Nagpur railway station a little after 8am. We had packed an extra pair of clothes and a couple of books. We boarded the next available train and arrived at Sevagram railway station a little before 10am. An auto took us to the ashram for Rs.50.

Right opposite to the ashram is the "Yatri Nivas". People visiting the ashram can stay here. Rooms are simple but comfortable. Due to load shedding, electric supply is limited: at that time available between 1pm and 1am daily. Blankets are available on request. Check-out time is 9am. We booked a double room for Rs.80.

After dumping our bags at Yatri Nivas, we entered the ashram. The ashram has an old time village like environment. It is usually very quite except when a busload of school children come visiting. It is full of trees, two of them planted by Bapu and Baa. All the mud-huts are clean and well-maintained. There are many informative boards in Hindi and English. There is an open praying-area in the middle. You can see and even touch some of the household articles used by Gandhiji. I knew M. K. Gandhi as a character we read in books of history. Visiting his ashram made him more real to me.

Five or six people live in the ashram. They still follow the daily schedule from the times when Mahatma Gandhi lived here. We decided to do the same to get a complete experience. The ashram has a small kitchen which serves inmates and visitors. Visitors need to request meals ahead of time. It was too late to request lunch, so we left the ashram to look for some restaurant.

We walked about a kilometer to get to the nearest chowk with some commercial establishments. There was just one restaurant called "Madras restaurant" with some sort of food. After lunch we came back to Yatri Nivas for some rest.

We returned to the ashram at around 4pm. There is a book shop and a khadi-bhandar near the entrance. It was the last day for getting some special discount that started on Gandhi Jayanti. We bought a couple of books, a good bargain kurta, and a saree.

Dinner time at the ashram is 5pm. The food is very simple and bland. No mirchi in anything. There was roti, sabzi, khichadi, and sugarless milk. Although sugarless the milk tasted really good. The milk is from the ashram gaushala and the vegetables are grown in ashram itself. Everyone cleans their own utensils after meals using ash.

Evening prayer starts at 6pm. A white cushion is placed where Gandhiji used to sit. Others sit in front on satranjis placed on the ground. Prayer includes prayers from all religions. A couple of people were spinning khadi during the prayer. I saw a charkha in action for the first time. It was interesting to see how a very simple process converts cotton into thread.

After prayers a young woman who lives in the ashram read a passage from Gandhiji's writing. The passage narrated the following incident. Once, Gandhiji was called aside by shri X to talk about something personal. Shri Y approached them and asked whether it would disturb the two if he joined. Shri X told shri Y that nothing personal is being discussed and he may join. Gandhiji wrote on this incident that although he understands that shri X was just being polite, he still considers what he said to be a lie. He felt that with politeness shri X should have been able to say that "yes, at this time it will disturb us".

After a brief chat with ashram inmates, we walked to the chowk to buy some candles in preparation for the scheduled power outage. We got a pair of blankets from Giri sahab who manages the Yatri Nivas. It was pretty cold and the blankets were really useful.

Wake up time at the ashram is 4:30am. We managed to reach the prayer-place a couple of minutes past the designated time of 4:45pm and quietly joined the on going prayer. There is one and a half hour of free time after prayer followed by an hour of ashram cleaning. We used our free time to get some more sleep and spent the cleaning hour gathering fallen leaves around Gandhiji's hut.

The breakfast bell rang at 7:30am sharp. After enjoying our poha and milk, we went back to the Yatri Nivas to bathe. One of the ashram inmates provided us hot water from her home. Refreshed, we came back to the ashram and tried our hand at making chane ki dal from black grams using a chakki that was also used by Gandhiji. We also walked to a Gandhi Chitra Pradarshani across the road. The chitra pradarshani is not nearly as well kept as the ashram.

We had lunch at the ashram at 11am. On enquiry we found that the ashram accepts money for meals and also accepts donation. Lunch and dinner are rupees fifteen and breakfast is rupees six. The ashram is run by a trust which doesn't accept any government help. Expenses are met by donations and by sale of khadi spun by ashram inmates.

We left the ashram after lunch. The journey back to Nagpur was uneventful. We boarded a train and were back at Nagpur in an hour or so. Both of us felt that it was a good trip, and we also enjoyed it more because it had a different flavor from our usual sight-seeing tours. We will probably do this one more time with our parents.

First post

This will be my blog in English.  I have another blog at http://jingapoleji.blogspot.com which is primarily a hindi blog.