[Music] there's lots of Education the sex education music education physical education stuff like that but to be successful in the world of business there's three basic types of education you must have one academic education that's reading writing arithmetic I didn't do very well here you know it's very important I'm not saying it's not important two extremely important so academic is very important second is professional when they become a doctor a lawyer secretary in my case I had two professions my first profession was a sailor I was a third mate on boards oil tankers again it was good profession and the second profession was as heir as a pilot and most of my friends went on to become airline pilots I just didn't want to fly anymore and the third is financial education and what would be covering is this as a young boy I realized that I could beat my friends over here if I understood this in other words I can make a lot more money here than these guys here the beauty of the world today is that you know like if when I went to work for Standard Oil of California I got paid by the month and if I was a pilot flying for the airlines I got paid by the month and when I worked on straight Commission's with Xerox I got you know basically commissions but I realized from my Rich Dad talking to me if I understood financially I could make money 24/7 without working that was a difference so what you'll be learning about this today is how we make money 24/7 without working ok to me that makes a lot more sense than working hard all the time the basics of financial education begins with this with literacy is it begins with an income statement and a balance sheet this is the fundamental if you are going to be wealthy if you look over here after mission its cash flow this is basically accounting CFO's auditing departments so as a young boy that's what my rich dad started me on this he says if you can manage this you'll always be a rich man no matter what happens to you so this here is income expense asset liability where people get mixed up is they call their house and asset and he says that's the problem they call their car and asset by gap general accounting accepted accounting principles I can actually count this suit as an asset and that's where that's what my Rich Dad said that's where people get messed up see so this this form is called an income statement in America this is called a balance sheet there's a third form is called a statement of cash flow okay so when you look at this here this here is the real game board from the from my cash flow game this is income this income statement balance sheet statement of cash flow okay so it's the game is teaching you as a kids version intermediate version advanced is teaching while you're having fun so the mist so very simply my Rich Dad said assets put money in your pocket so this is the cash flow pattern of an asset because from the asset it could be my house I rent out okay boom so assets put money in your pocket whether you work or not so what's the different asset assets what put money in your pocket whether you work or not one more time assets what put money in your pocket whether you work or not now I asked somebody as on Singapore and I said can you can you name an asset you have this little Chinese woman raised her hand she says oh yes yes yes my husband my husband I said I'm talking about inanimate objects he says oh he doesn't do anything anyway you know and so a liability takes money from your pocket what's definite liability takes money from your pocket so the reason people are afraid of losing their job it's because they have liability to think are assets so they have to keep going to work does that make sense you guys here so the other mistake that people make is that what they do is because they think their house is an asset so they go and buy a big house because it aprietale going to appreciate but what they have is a mortgage and a mortgage stands for death Mort here dead kills you I'm not against mortgages so then buy a more big house and Sicily here often they're the big boat you know then they have the BMW it Alexis like this and so this is the cash they have a job money comes in cash flows out I called this financial diarrhoea they make a non stop it flows out constantly 24/7 again this is this is the real game sheet for the cash flow games this was this is the piece de resistance this is a patent was awarded by the US Patent Office basic on a financial statement which I thought was pretty interesting you know but when I look at somebody's financials people like ease and s's employees and self-employed they think this line here salary is the most important that's not what my Rich Dad that I was taught me look for he wanted me look at these lines here interest dividends real estate businesses it's this here that makes people rich not this here so the purpose of the cash flow board game was to train people to take this money coming in here to come down this way and come back up here that's it okay so the assets there's four basic asset classes that make people rich number one is a business and it's a business on this side so you look at guys like Bill Gates he founded Microsoft jobs created Apple you know Murdoch has broadcasting so business is the number one asset that's why I went to learn how to sell because you have to learn herself good in business second is real estate my wife in 1989 started with one rental unit now she is fourteen hundred ken has ten thousand my wife and I my wife has fourteen hundred and we have two houses we caught honest liabilities we have one house in Arizona one house in Hawaii so we call those liabilities we don't call them assets the third asset class is paper stocks bonds mutual funds you know trust stuff like that now in in Malaysia is when I warned you when I talked about unit trusts or mutual funds I talked about real estate we had Realtors and financial planners leave the room they were very upset with what I said because it's not that I don't invest in unit trusts don't trust them so that that's the reason but we'll explain why later on they're there for a certain class of people but it's probably the riskiest of all investment savings are included in here and the third asset class are commodities so me personally I have gold I took a gold mine public in China I have a silver mine out of South America I took public I have a copper mine now I'm an oil company stuff like that but I also hold physical gold physical silver and Michael company explain why that's probably the best investment today is right here because a dollar is crashing all right so basic a moment and disk and and every month these things whether I work or not put money in my pocket one of the problems of an S business is in most cases like a doctor if they stop working income stops because it that they stopped working so these things here 24/7 incomes coming in and that's what I was trained to do [Music] 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