Excerpt from Rich Dad's Guide to Investing by Robert Kiyosaki, Sharon L. Lechter, plus links to reviews, author biography & more

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Rich Dad's Guide to Investing

What the Rich Invest in That the Poor and the Middle Class Do Not

by Robert Kiyosaki, Sharon L. Lechter

Rich Dad's Guide to Investing
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    Jun 2000, 405 pages

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"Are you OK?" asked rich dad gently.

"Yeah, I’m OK," I replied, doing my best to hide the hurt that came from feeling sorry for myself and for my family. "I’m just doing some deep thinking and some soul searching," I said, mustering a brave grin.

The room was silent as we listened to the waves and as the cool breeze blew through the beautiful home. Mike, rich dad, and I sat there while I came to terms with the message and its reality.

"So I can’t invest with you because I’m not rich," I finally said as I came out of my trance. "And if I did invest in what you invest in, it would be against the law?"

Rich dad and Mike nodded. "In some instances," Mike added.

"And who made this law?" I asked.

"The federal government," Mike replied.

"The SEC," rich dad added.

"The SEC?" I asked. "What is the SEC?"

"The Securities and Exchange Commission," rich dad responded. "It was created in the 1930s under the direction of Joseph Kennedy, father of our late President John Kennedy."

"Why was it created?" I asked.

Rich dad laughed. "It was created to protect the public from wild unscrupulous dealmakers, businessmen, brokers, and investors."

"Why do you laugh?" I asked. "It seems like that would be a good thing to do."

"Yes, it is a very good thing," rich dad replied, still chuckling a little. "Prior to the stock market crash of 1929, many shady, slippery, and shoddy investments were being sold to the public. A lot of lying and misinformation was being put forth. So the SEC was formed to be the watchdog. It is the agency that helps make–as well as enforce–the rules. It serves a very important role. Without the SEC, there would be chaos."

"So why do you laugh?" I persisted.

"Because while it protects the public from the bad investments, it also keeps the public out of the best investments," replied rich dad in a more serious tone.

"So if the SEC protects the public from the worst investments and from the best investments, what does the public invest in?" I asked.

"The sanitized investments," rich dad replied. "The investments that follow the guidelines of the SEC."

"Well, what is wrong with that?" I asked.

"Nothing," said rich dad. "I think it’s a good idea. We must have rules and enforce the rules. The SEC does that."

"But why the chuckle?" I asked. "I’ve known you too many years and I know you are holding back something that is causing you to laugh."

"I’ve already told you," said rich dad. "I chuckle because in protecting the public from the bad investments, the SEC also protects the public from the best investments."

"Which is one of the reasons the rich get richer?" I asked tenuously.

"You got it," said rich dad. "I chuckle because I see the irony in the big picture. People invest because they want to get rich. But because they’re not rich, they’re not allowed to invest in the investments that could make them rich. Only if you’re rich can you invest in a rich person’s investments. And so the rich get richer. To me, that is ironic."

"But why is it done this way?" I asked. "Is it to protect the poor and middle class from the rich?"

"No, not necessarily," Mike responded. "I think it is really to protect the poor and the middle class from themselves."

"Why do you say that?" I asked.

"Because there are many more bad deals than good deals. If a person is not aware, all deals–good and bad–look the same. It takes a great deal of education and experience to sort the more sophisticated investments into good and bad investments. To be sophisticated means you have the ability to know what makes one investment good and the others dangerous. And most people simply do not have that education and experience," said rich dad. "Mike, why don’t you bring out the latest deal we are considering?"

Copyright © 2000 by Robert T. Kiyosaki and Sharon L. Lechter

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