Most never become what the investment world calls...
Most never become what the investment world calls a "sophisticated investor And the best investments are usually first sold to "sophisticated investors," who then turn around and sell them to the people playing it safeI am not saying don't buy a houseI am saying, understand the difference between an asset and a liabilityWhen I want a bigger house, I first buy assets that will generate the cash flow to pay for the house
My educated dad's personal financial statement best demonstrates the life of someone in the rat race His expenses seem to always keep up with his income, never allowing him to invest in assetsAs a result, his liabilities, such as his mortgage and credit card debts are larger than his assets The following picture is worth a thousand words:

Educated Dad's Financial Statement

Income=Expense
Asset < Liability

My rich dad's personal financial statement, on the other hand, reflects the results of a life dedicated to investing and minimizing liabilities:

Rich Dad's Financial Statement

Income > mens brushed steel and gold cartier watch Expense
Asset > Liability

A review of my rich dad's financial statement is why the rich get richerThe asset column generates more than enough income to cover expenses, with the balance reinvested into the asset columnThe asset column continues to grow and, therefore, the income it produces grows with it
The result being: The rich get richer!

Why the Rich Get Richer

Income -> Assets -> More Income
Expenses are low, Liabilities are low

The middle class finds itself in a constant state of financial struggleTheir primary- income is through wages, and as their wages increase, so do their taxesTheir expenses tend to increase in equal increments as their wages increase; hence the phrase "the rat race They treat their home as their primary asset, instead on investing in income-producing assets

Why the Middle Class Struggle

Income goes up, Expenses go up
Assets do not increase, Liabilities do increase

This pattern of treating your home as an investment and the philosophy that a pay raise means you can buy a larger home or dior saddle spend more is the foundation of today's debt-ridden societyThis process of increased spending throws families into greater debt and into more financial uncertainty, even though they may be advancing in their jobs and receiving pay raises on a regular basisThis is high risk living caused by weak financial education
The massive loss of jobs in the 1990s-the downsizing of businesses-has brought to light how shaky the middle class really is financially Suddenly, company pension plans are being replaced by 401k plansSocial Security is obviously in trouble and cannot be looked at as a source for retirementPanic has sei in for the middle classThe good thing today is that many of these people have recognized these issues and have begun buying mutual fundsThis increase in investing is largely responsible for the huge rally we have seen in the stock marketToday, there are more and more mutual funds being created to answer the demand by the middle class
Mutual funds are popular because they represent safetyAverage mutual fund buyers are too canvas gucci bags busy working to pay taxes and mortgages, save for their children's college and pay off credit cards They do not have time to study to learn how to invest, so they rely on the expertise of the manager of a mutual fundAlso, because the mutual fund includes many different types of investments, they feel their money is safer because ii is "diversified
This group of educated middle class subscribes to the "diversify" dogma put out by mutual fund brokers and financial planners
The real tragedy is that the lack of early financial education is what creates the risk faced by average middle class peopleThe reason they have to play it safe is because their financial positions are tenuous at best Their balance sheets are not balancedThey are loaded with liabilities, with no real assets that generate incomeTypically, their only source of income is their paycheckTheir livelihood becomes entirely dependent on their employer
So when genuine "deals of a lifetime" come along, those same people cannot take advantage of the opportunityThey must play large gucci bag it safe, simply because they are working so hard, are taxed to the max, and are loaded with debt
As I said at the start of this section, the most important rule is to know the difference between an asset and a liability Once you understand the difference, concentrate your efforts on only buying income-generating assets That's the best way to get started on a path to becoming rich Keep doing that, and your asset column will growFocus on keeping liabilities and expenses downThis will make more money available to continue pouring into the asset columnSoon, the asset base will be so deep that you can afford to look at more speculative investments Investments that may have returns of 100 percent to infinityInvestments that for $5,000 are soon turned into $1 million or moreInvestments that the middle class calls "too risky The investment is not risky It's the lack of simple financial intelligence, beginning with financial literacy, that causes the individual to be "too risky,"
If you do what the masses do, you get the following omega replica watch picture