Rich Dad's Increase Your Financial IQ_ Get Smarter with Your Money

Does Money Make You Rich?

The answer is No. Money alone does not make you rich. We all know people 

who go to work every day, working for money, making more money, but fail to 

become richer. Ironically, many only grow deeper in debt with each dollar they 

earn. We have all heard stories of lottery winners, instant millionaires, who are 

instantly poor again. We have also heard stories of real estate going into 

foreclosure. Instead of making homeowners richer, more financially secure, real 

estate drives homeowners out of their homes and into the poorhouse. Many of us 

know of individuals who have lost money investing in the stock market. Maybe 

you are one of those individuals. Even investing in gold—the world’s only real 

money—can cost the investor money.

Gold was my first real investment as a young adult. I began investing in gold 

before I began investing in real estate. In 1972, at the age of twenty-five, I began 

buying gold coins when gold was approximately $70 an ounce. By 1980, gold 

was approaching $800 an ounce. The frenzy was on. Greed overtook caution. 

Rumors were that gold was going to hit $2,500 an ounce. Greedy investors 

began piling on, buying gold, even though they had never done so before. But 

instead of selling some of my gold coins and making a small profit, I hung on, 

also hoping that gold would go higher. About a year later, as gold dropped below 

$500 an ounce, I finally sold my last coin. From 1980, I watched as gold drifted 

lower and lower till it finally bottomed out at $250 in 1999.

Although I did not make much money, gold taught me many priceless lessons 

about money. Once I realized that I could lose money investing in real money, 

gold, I realized that it was not gold, the asset, that was valuable. It was the 

information relative to the asset that ultimately made a person rich or poor. In 

other words, it is not real estate, stocks, mutual funds, businesses, or money that 

makes a person rich. It is information, knowledge, wisdom, and know-how, a.k.a.financial intelligence, that makes one wealthy.

Golf Lessons or Golf Clubs

A friend of mine is a golfing fanatic. He spends thousands of dollars a year on 

new clubs and every new golf gadget that comes to market. The problem is, he 

will not spend a dime on golf lessons. Hence his golf game remains the same, 

even though he has the latest and greatest in golf equipment. If he invested his 

money in golf lessons and used last year ’s clubs, he might be a much better 

golfer.

The same nutty phenomenon occurs in the game of money. Billions of people 

invest their hard-earned money in assets such as stocks and real estate, but invest 

almost nothing in information. Hence their financial scores remain about the 

same.

Not a Magic Formula

This book is not a get-rich-quick book or a book about some magic formula. 

This book is about increasing your financial intelligence, your financial IQ. It is 

about getting richer by getting smarter. It is about the five basic financial 

intelligences that are required to grow richer, regardless of what the economy, 

stocks, or real estate markets are doing.

The New Rules of Money

This book is also about the new rules of money, rules that changed in 1971. It is 

because of these changes in the rules that the old rules are obsolete. One of the 

reasons why so many people are struggling financially is because they continue 

to operate according to the old rules of money, old rules such as work hard, save 

money, get out of debt, invest for the long term in a well-diversified portfolio of 

stocks, bonds, and mutual funds. This book is about playing by the new rules of 

money, but to do so requires increasing your financial intelligence and your 

financial IQ.

After reading this book, you will be better able to determine if it is better for 

you to play by the old rules or the new rules of money.