Books On Practical Money Management

sh50

Active Member
#1
RICH DAD POOR DAD BY ROBERT KIYOSAKI www.richdad.com
THE MILLIONAIRE NEXT DOOR by Thomas .J. Stanley and William.D. Denko.

The word Rich would mean different things to different people. Many if most people are not able to tell what being really rich is all about. According to this book, the word Rich literally means that being a successful investor who through his investments( Stocks and Bonds) is able to earn enough dividends and interests to cover his monthly expenses so that can avoid working if he wants to. To be able to put this in practice however, one needs to be financially astute at a very young age.

The story is about two boys- the author and his friend. The authors father is a teacher who is tremendously qualified but financially in a bad shape but his friends father has not even passed high school but is a multi millionaire. On being refused entry in a snobbish party, the two boys at the tender age of 9 seek the rich mans advice on wanting to become like him.. That is how he becomes the rich dad and it is shown in the book how a concept like Balance sheet is explained to a 9 year old child. The rich man teaches practical money management-saving, investment and tax planning to both the boys. The average middle class couple does the exact opposite by building consumption assets in the early years of their marriage/career and some of them pay a heavy price for it.

The same concept is explained even better in a book called The millionaire next door (A study on American millionaires by two phd on millionaires) This book basically is about how a persons status should not be judged by his consumption assets but his investment assets(stocks and bonds) and goes on to explain in detail how a the former without the latter is being hollow. There are numerous examples of two people starting out at the same time in life- the high earner/ spender tries to have a ball from the beginning, the low earner saves and invests. After a few years when the net worth is compared, the slow earner is way ahead much like the hare and the tortoise story.

I can vouch for this because I was lucky to be trained by my father who being a chartered accountant followed the same principles from early in his career and was very successful.

It would not be out of place to mention here that knowing about money is equally if not more important than knowing about the stock market. Foolish notions about money lead to foolish actions in the stock market. Therefore reading such books is as important as reading on Technical Analysis and Trading strategies.

An American intellectual had one said Money is not the right measure of ones worth . Two years ago, I came across an article which stated that cricketer Sachin Tendulkar at Rs 20Crores a year earned 80 times than hockey superstar Dhanraj Pillays 25 lakhs a year. That does not make Pillay any less a superstar- it is just his bad luck that hockey does not have a good market profile.

No matter how much money one earns in the stock market, one can never match in stature to an Industrialist who earns the same amount of money by creating real assets and generating employment. The status maybe the same but the stature is different.

If such things are kept in mind, foolish mistakes in the market can be minimized if not eliminated.

I hope that this is a good guideline for young people.
 
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CreditViolet

Guest
#2
I read RDPD some time back.It does tackle with lots of myth about monetary issues.
Good Read

Thanks sh50
 
#3
I am a newbie but Rich Dad was the book that changed my perspective about money and status. Glad you talked about it here.

thanks
 
#4
i left my job after reading "RDPD" i started believing in working for "myself" rather than working for "wipro" and i am much happy on my decision. i am the boss of myself.
 

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