Keep On Learning

Not much has been happening lately. I've just been constantly reading books about money and real estate to get me ready for my jump into real estate investing and business. The two books I recently finished are:



How A Second Grader Beats Wall Street is about portfolio investing, mostly about mutual funds. It is an interesting and easy read. I knew nothing about mutual funds before I read this book and now I feel like I know more than the average person. It explains a lot of the myths and hype around mutual fund investing, and why many retirees are not where they hoped they would be at 40 years ago. Now I know why so many rich celebrities, such as Nicholas Cage, can be almost broke because of bad investments through their investment broker.



Increase Your Financial IQ is not a book that will actually increase your financial intelligence or help you pass a CPA test, but rather a book that tells you why and what you need to learn and do to increase your financial competence in this debt ridden economy. Like the other Rich Dad books, this does not teach you the "How to" but rather tells you the "Why" you want to be rich and hopes to inspire you to think about where you are at now financially and to do something about it to get you where you want to be financially.

Interestingly, although both are about money and being financially competent, these two book preach opposing ideas. One of the concepts How A Second Grader Beats Wall Street teaches is that diversification is the least riskiest way to invest and can guarantee an average annual growth of funds. Rich Dad on the other hand believes diversification is the poor man's way of investing. Rather than diversify, increase your financial IQ on what you are focusing on so you can make the right investments. Like Warren Buffett once said, "Diversity is protection against ignorance. It makes very little sense for those who know what they’re doing." If you think about that quote, it makes perfect sense because a second grader can beat Wall Street without knowing what the hell is going on. Although diversification can get you to where you want to be, it will not make you filthy rich. Rich Dad wants you to be filthy rich.

I was lucky to have read these two books preaching opposing ideas. This shows me both sides of the coin and gives me the choice of choosing which path I want to take. Or maybe I can use both ideas. Who knows? But the one common and very important concept both books talk about is probably the single most important reason why the rich are rich:

Its not how much you make that's important but how much you keep that makes you rich! -Rich Dad