Robert Kiyosaki's Wise Words On What The Rich Buy But The Poor Do Not

A powerful quote, a simple action, and a spark to ensure your continued progress—welcome to Wise Words Weekly!

🤔Every week, we disect, investigate, and unpack a wisdom-packed quote from a wise, successful, and inspirational person. We explore many different self-development topics such as your Personal Growth, Mindset, Well-Being, Relationships, Leadership, and Gratitude. The Wise Words Weekly newsletter is designed to spark your continued progress, one small step at a time. 📈 None of this content should be construed as any type of investment or other professional advice.

This week, we’re diving into Financial Success.

🔥Quote of the Week:

“Rich people acquire assets. The poor and middle class acquire liabilities that they THINK are assets.” - Robert Kiyosaki

🤔Reflection:

This weeks quote from Robert Kiyosaki hits hard because it exposes a fundamental misunderstanding that keeps most people trapped in the financial spin-cycle. Rich people focus on acquiring assets, things like rental properties, dividend-paying stocks, or businesses that generate passive income, putting money back into their pockets without constant effort. In contrast, the poor and middle class often chase what they believe are assets, but these are really liabilities in disguise.

Take a primary residence: while it provides shelter, the ongoing mortgage payments, property taxes, maintenance, and utilities drain your bank account monthly, making it a liability, unless it's producing rental income. Cars, boats, RV’s and many other things fall into this catgory, too. This misperception stems from societal pressures to "keep up with the Jones’s," leading to choices that prioritize status over true wealth building.

In 2019, my uncle passed and left me $70,000. I bought a new vehicle. Had I bought Tesla stock with that money, it would have grown to over a million dollars by now. And, most likely would have morphed into several million dollars in the coming years. I still have that vehicle. Today, it has over 150,000 miles on it and is worth $15,000. I wish I would have bought the stock and kept driving a $10,000 vehicle. Fortunately, I learned from this mistake a few years later and was able to right the ship. I write this in hopes that others (possibly even YOU) can learn from MY mistakes, too.

Knowledge is power. We don’t know what we don’t know. I have learned a lot by reading most of Kiyosaki’s books and other authors such as Peter Lynch, Warren Buffett, Grant Cardone, Chris Camillo, and many others. Feed your head. Change your mindset. Change your world.

But alas, I digress. Reflecting deeper, Kiyosaki's insight reveals how education—or the lack thereof—plays a crucial role. Many grow up learning to work hard for a paycheck, but not how to make money work for them. For instance, buying a luxury car might feel like an achievement, symbolizing success, but it depreciates rapidly while incurring insurance, fuel, and repair costs that erode savings. What seems like an asset is actually a money pit, pulling resources away from real opportunities like investing in index funds or starting a side hustle. This realization can be uncomfortable, forcing us to audit our own spending habits and question whether our "investments" are truly building equity or just creating more obligations.

Ultimately, this quote invites self-examination: Are we accumulating things that appreciate and multiply our wealth, or are we burdened by disguised drains? By shifting focus, we can break free from the rat race. Imagine redirecting funds from a flashy vacation home—often a liability due to upkeep and low usage—to a diversified stock portfolio that compounds over time. This reflection isn't about judgment; it's about empowerment, encouraging us to redefine success through financial freedom rather than fleeting possessions.

🏆Why This Can Be Your Superpower

Understanding the distinction between assets and liabilities can transform your financial trajectory, acting as a superpower that multiplies your efforts exponentially. While the middle class might view a new boat as an asset for leisure, it's typically a liability that requires storage fees, maintenance, and fuel, siphoning money without return. Rich individuals, however, channel resources into assets like stocks and commercial real estate that yields rental income, covering luxuries passively. This mindset shift allows you to build a safety net that grows independently, providing resilience against job loss or economic downturns, and turning everyday income into lasting wealth.

In one his books, Kiyosaki tells a story about findining his dream Porsche. He told his wife, Kim, about it and she reminded him the way to buy it was to create enough passive income to cover the monthly payment. So, he bought a storage unit business that spun off enough cashflow to cover the financed monthly payment of Robert’s dream car. Why don’t they teach us this type stuff in school!?

This superpower amplifies over time through compounding. Instead of upgrading to a larger home that increases your tax and utility burdens—treating it as an asset when it's really a liability—you could invest in peer-to-peer lending platforms or royalty-generating intellectual property. Kiyosaki emphasizes that this awareness frees you from living paycheck to paycheck, enabling strategic decisions that prioritize cash flow. It's like having a secret weapon in negotiations, investments, and even career choices, where you evaluate opportunities based on their potential to create assets rather than immediate gratification.

Moreover, it fosters discipline and foresight, setting you apart in a consumer-driven world. By avoiding liabilities masquerading as assets, such as high-interest credit card purchases for gadgets that lose value, you cultivate habits that attract more opportunities. This can lead to better lives, with reduced stress from debt and more freedom to pursue passions. Embracing this as your superpower isn't just about money—it's about reclaiming control over your future, creating generational wealth, and living the dream, on your terms.

🔬The Science Behind It

Behavioral finance reveals why people often misclassify liabilities as assets, rooted in psychological perceptions of wealth. Studies show that individuals with negative net worth feel wealthier when they have higher assets, even if accompanied by more debt, due to the salience of assets in dire financial situations.

For example, a home or car might be seen as an asset because it boosts perceived status and security, ignoring ongoing costs like mortgages or depreciation that make them liabilities. This misperception leads to increased borrowing, creating a debt cycle that hampers wealth accumulation, as most people prioritize visible "wins" over true net worth.

Key biases like mental accounting and framing exacerbate this issue. Mental accounting causes people to treat money differently based on categories, such as viewing a house as an "investment" while downplaying its expenses, leading to suboptimal decisions that erode savings.

Framing effects influence how financial choices are presented; a luxury vehicle marketed as a "smart buy" might be framed as an asset, but it's a liability that depreciates. These biases result in poor wealth building, as individuals avoid risks needed for real assets like stocks, favoring familiar liabilities that provide immediate emotional satisfaction but long-term financial strain.

The impact on our wealth is profound, with research indicating that such misclassifications actually widen inequality. Overconfidence bias leads to overestimating one's ability to manage liabilities, like taking on excessive home debt thinking it will appreciate enough to offset costs.

Loss aversion makes people cling to these "assets" to avoid admitting mistakes, delaying shifts to true wealth-building strategies. By understanding these sciences, readers can counteract biases, focusing on cash-flow-positive assets to create sustainable prosperity and better lives.

🧬Stories That Bring It to Life

Grant Cardone's journey from rock bottom to real estate mogul exemplifies Kiyosaki's wisdom on prioritizing assets over deceptive liabilities. After battling drug addiction and hitting financial ruin in his early 20s, Cardone entered rehab at 25 and emerged determined to rebuild. He started in car sales, honing skills that led to founding Cardone Training Technologies, a sales education company that generated steady income. But his true breakthrough came from investing in multifamily real estate—assets that produce rental cash flow—rather than splurging on personal luxuries like fancy homes or cars, which he viewed as liabilities draining resources. By scaling to over $4 billion in assets under management through Cardone Capital, he turned nothing into a multi-millionaire empire, emphasizing debt for income-producing properties while avoiding consumer traps that keep the middle class stuck. Today, he lives in a massive $40 million Malibu mansion because it isn’t a financial drain due to the massive amount of wealth he has created.

Chris Camillo transformed modest savings into tens of millions by leveraging everyday observations into stock market assets, sidestepping the pitfalls of mistaking consumption for investment. Starting with just $20,000 in 2007, Camillo, a former market researcher, ditched traditional Wall Street analysis for "social arbitrage"—spotting trends in social media, stores, and conversations before they hit the news. He invested in companies like Crocs and Chipotle early, based on real-world buzz, growing his portfolio to $2 million in three years and eventually over $42 million by 2025. Unlike many who buy depreciating gadgets or oversized homes thinking they're assets, Camillo focused on equities that compounded value, living frugally to reinvest profits and build passive wealth without incurring unnecessary liabilities. Today, he lives in a $4 million dollar home because it’s easy to do so and still maintain a massive level of wealth.

Another compelling example is Barbara Corcoran, who rose from waitressing to real estate tycoon by mastering the art of asset acquisition. Growing up in a large, low-income family, Corcoran borrowed $1,000 from a boyfriend in 1973 to start The Corcoran Group, flipping it into a $66 million sale in 2001. She avoided liabilities like excessive personal spending, instead channeling earnings into New York City properties that appreciated and generated rental income. This asset-focused approach, honed through Shark Tank investments, turned her from an everyday waitress into a multi-millionaire real estate investor, proving that recognizing true wealth builders—like revenue-producing businesses and real estate—over status symbols creates lasting financial freedom.

🏃‍♂️How to Start Today

DISCLAIMER: Nothing in this newsletter should be considered financial advice. Consult a professional. This content is for entertainment purposes only.

Begin by auditing your current finances to identify true assets versus hidden liabilities. List everything you own and ask: Does this put money in my pocket or take it out? For example, if your primary home requires hefty payments without rental income, recognize it as a liability and consider options like renting a room to offset costs. Track expenses for a month using apps like Mint or YNAB, categorizing them to spot patterns where you're funding depreciating items like gadgets or vehicles instead of income producers.

Educate yourself on asset classes that align with your risk tolerance and goals. Start small with low-barrier options, such as opening a brokerage account for index funds or ETFs that pay dividends, which act as assets by growing over time. If real estate appeals, research house hacking—buying a multi-unit property where tenants cover your mortgage—or REITs for passive exposure without direct ownership. Avoid impulse buys by implementing a 30-day rule for major purchases, evaluating if they could be redirected to assets.

Build habits that reinforce this mindset, like automating savings into investment accounts before paying bills. Network with like-minded individuals through online communities or local meetups focused on financial independence. Remember, consistency is key; even contributing $100 monthly to assets can compound significantly. By starting today, you'll gradually shift from liability accumulation to asset-driven wealth, paving the way for a more secure and fulfilling life.

I started by doing a vast amount of due dilligence (today, I still study my chosen investment three hours per day, seven days per week), finding the investment I was interested in and selling my house I had built 17 years previously. I bought Tesla stock with the equity in my home. Today, I rent a small house and live a modest retired life, from that investment. My investment is still growing as I shave a bit off each month to live on. I’m quite comfortable and thoroughly enjoying life. Perhaps I will build a house like Grant Cardone or Chris Camillo down the road. Or, I could be happy here, forever.

🎇A Challenge to Spark Change

This week, I challenge you to conduct a "liability purge" in your life. Go through your possessions and finances, identifying three items or habits you once thought were assets but now recognize as liabilities—perhaps a subscription service draining your account, a car with high maintenance costs, or even a hobby that requires expensive gear without return. For each, calculate the annual cost and brainstorm how reallocating that money to a true asset, like a high-yield savings account, rental house, or stock investment, could benefit you long-term.

Take action by eliminating or mitigating one of these liabilities immediately. Sell the unused item on eBay or Craigslist, cancel the subscription, or downsize the car to free up funds. Then, invest the proceeds into an asset: Perhaps you open a Roth IRA, or add to an existing one with low-cost funds. Track the impact over the next month, noting how this shift affects your cash flow and mindset.

Share your experience in the comments or with an accountability partner—what did you purge, and what asset did you acquire? This challenge isn't about deprivation; it's about intentionality, sparking the change needed to build wealth and create a better life step by step.

📖 📙A Great Book To Read On This Topic":

If this quote resonates with you, dive deeper with "Rich Dad, Poor Dad" by Robert Kiyosaki. This timeless book unpacks the very principles behind distinguishing assets from liabilities, drawing from Kiyosaki's contrasting experiences with his two "dads"—one biologically his, educated but financially struggling, and the other his friend's father, a savvy entrepreneur.

Through engaging anecdotes, Kiyosaki explains why the rich get richer by focusing on cash-flow-generating assets, while others remain stuck, acquiring liabilities like oversized homes or luxury items. It's packed with practical advice on financial literacy, mindset shifts, and starting small to build empires.Whether you're new to investing or refining your lifes’ strategy, this read will equip you with tools to transform your finances. Grab a copy, take notes, and apply one lesson immediately to see real change in your life.

If you enjoy Rich Dad, Poor Dad, his book, The Cashflow Quadrant is equally good, too.

And, a great way to teach yourself these concepts is to play his free, online game called Cashflow. I’ve been playing it for twenty-five years and I still play it several times per week. You can find it at his website, www.RichDad.com.

🗣️Let’s Connect:

🤔What’s Next?

Next week, expect another dose of wisdom (maybe we will touch on Leadership or Gratitude?) to keep your momentum going. Stay tuned for exclusive insights you won’t find on my X feed!

If you enjoyed this content, please be sure to share it with your friends and family. Thank you. 🙏😊

Here’s to your constant progress!

Your friend,

Grant

Find me on 𝕏: @WiseWordsIQ

P.S. Want to dive deeper into learning? Check out Mindset by Carol Dweck—a game-changer for growth!

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