Rich dad would regularly review the various levels of investors with me. He wanted me to understand the various ways investors made their fortunes. My rich dad had become wealthy by first investing as an inside investor. He had started small and learned the tax advantages available to him. He quickly gained confidence and became a truly sophisticated investor at an early age. He had built an incredible financial empire. My real dad, on the other hand, had worked hard all his life as a government employee and had little to show for it.
As I got older, the gap between my rich dad and my poor dad was increasingly evident. I finally asked my rich dad why he was becoming wealthier while my real dad was working harder and harder.
In the introduction this book I related the story of walking along the beach with my rich dad looking at the large piece of ocean front property he had just purchased. During that walk on the beach, I realized that my rich dad had just purchased an investment that only a rich person could acquire. The problem was my rich dad was not really a rich man, yet. That is why I asked him how he could afford such an expensive investment when I knew my real dad, a man who made more money than my rich dad, could not.
It was during this walk on the beach that my rich dad shared the basis of his investment plan. He said, "I can't afford this land either, but my business can." As I stated in the introduction, this was when my curiosity about the power of investing began and when I became a student of the profession. During that walk on the beach, at the age of 12, I was beginning to learn the secrets of how many of the very richest people in the world invest and why they are the 10% that control 90% of money.
Again, I refer to Ray Kroc, founder of McDonald's, saying virtually the same thing to my friend's MBA class. Ray Kroc said to the class, "My business is not hamburgers. My business is real estate." That is why McDonald's owns the most valuable real estate in the world. Ray Kroc and rich dad understood that the purpose of a business was to buy assets.
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