Page 127 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Assets such as a business or real estate require more financial
intelligence, allow for more financial control, and permit a higher degree of

leverage with very low risk. The key to low risk is higher financial
intelligence. This is why I recommend that people start small and stay
small, as they allow their financial intelligence to increase. With an increase
in financial intelligence, their returns on their investments increase. If

financial intelligence is low, then leverage may deliver a blow to financial
IQ, the measured returns on the investments.

Point #4: Most financial advisors are not investors. Financial advisors are
simply salespeople. Most financial advisors, even many real estate brokers,
invest only in paper assets, if they invest at all. Most have very little
leverage professionally and financially. In many cases, their professional

and financial leverage ratios are 1:1. A 1:1 professional ratio means they get
paid for their work, and only their work—a day’s pay for a day’s work.
As a business owner, I have thousands of people working to assist me.
As an investor, like in the example of the Tulsa apartment house, I have 300

tenants helping me pay for my investment, the bank lending me four dollars
for every one of my dollars, and the tax department giving me tax breaks on
my income. These are examples of different types of leverage.

Point #5: Financial education increases financial intelligence. Most
people invest in paper assets such as savings, stocks, bonds, and mutual and
index funds because they do not need or want control. All they want is to

turn their money over to an investment advisor who hopefully does a good
job. Out of sight, out of mind. If people want more control, the first thing
they need to control is their financial education, which increases their
financial intelligence and hopefully increases their financial controls and
leverage ratios.

Point #6: Leverage can work in two ways. Leverage can make you rich and
leverage can make you poor. This is why leverage requires financial

intelligence and financial controls.