Page 79 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

lawyers. There are lawyers whose sole purpose in life is to take you to court
and take your money.

Knowing these predators are lurking, there are three things a financially
intelligent person must do:

1. Keep nothing of value in your name. It was my poor dad who

proudly said, “My house is in my name.” Financially smart people
would not have their houses in their names.
2. Buy personal liability insurance immediately. Remember, you
cannot buy insurance when you need it. You must buy it before you

need it.
3. Hold assets of value in legal entities. In the U.S., the good legal
entities are C-corporations, S-corporations, limited liability
corporations (LLCs), and limited liability partnerships (LLPs). There

are also bad legal entities. These are sole proprietorships and general
partnerships. Ironically, most small business owners are in bad
entities.

The Rules Have Changed

Today, I continue to hear people say, “Work hard, save money, get out of
debt, invest for the long term in a well-diversified portfolio of mutual
funds.” This is old advice, and it’s bad advice from the financially ignorant.
It’s playing the game of money by the old rules.

In America today, workers who work hard to earn more money just pay
more and more in taxes. They save money and lose because the dollar is no
longer money, but rather a currency that is constantly declining in value.
Instead of learning to use debt as leverage to become richer, they work hard

to get out of debt. Millions of American workers put money away in a
401(k) retirement plan filled with mutual funds. Due to a lack of financial
education in school, workers’ wallets are picked clean by schools of
financial piranhas.

A Look at History