Excerpt from Rich Dad's Guide to Investing by Robert Kiyosaki, Sharon L. Lechter, plus links to reviews, author biography & more

Mike left the table for his office and returned with a three-ring binder that was about two inches thick filled with pages, pictures, figures, and maps.

"This is an example of something we would consider investing in," said Mike as he sat down. "It is known as a non-registered security. This particular investment is sometimes called a private placement memorandum."

My mind went numb as Mike flipped though the pages and showed me the graphs, charts, maps, and pages of written text that described the risks and rewards of the investment. I felt drowsy as Mike explained what he was looking at and why he thought it was such a great investment opportunity.

Rich dad, seeing me begin to fade away with the overload of unfamiliar information, stopped Mike and said, "This is what I wanted Robert to see."

Rich dad then pointed to a small paragraph at the front of the book that read "Exemptions from the Securities Act of 1933."

"This is what I want you to understand," he said.

I leaned forward to be better able to read the fine print his finger was pointing to. The fine print said,

"This investment is for accredited investors only. An accredited investor is generally accepted to be someone who:

• has a net worth of $1 million or more; or

• has had an annual income of $200,000 or more in each of the most recent years (or $300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same income level in the current year."

Leaning back in my chair, I said, "This is why you say I cannot invest in what you invest in. This investment is for rich people only."

"Or people with high incomes," said Mike.

"Not only are these guidelines tough, but the minimum amount you can invest in this investment is $35,000. That is how much each investment ‘unit,’ as it is called, costs."

"$35,000!" I said with a gasp. "That is a lot of money and a lot of risk. You mean that is the least someone can invest in this deal?"

Rich dad nodded. "How much does the government pay you as a Marine Corps pilot?"

"I was earning about $12,000 a year with flight pay and combat pay in Vietnam. I really don’t know what my pay will be here now that I am stationed in Hawaii. I might get some COLA, cost of living allowance, but it sure isn’t going to be much, and it certainly will not cover the cost of living in Hawaii."

"So for you to have saved $3,000 was quite an accomplishment," said rich dad, doing his best to cheer me up. "You saved nearly 25% of your gross income."

I nodded yet silently I realized how very, very far behind I was from becoming a so-called accredited investor. I realized that even if I became a General in the Marine Corps, I would probably not earn enough money to be considered an accredited investor. Not even the president of the United States, unless he or she were already rich, could qualify on salary alone.

"So what should I do?" I finally asked. "Why can’t I just give you my $3,000 and you combine it with your money and we split the profits when the deal pays off?"

"We could do that," said rich dad. "But I wouldn’t recommend it. Not for you anyway."

"Why?" I asked. "Why not for me?"

"You already have a pretty good financial education foundation. So you can go way beyond just being an accredited investor. If you want, you could become a sophisticated investor. Then you will find wealth far beyond your wildest dreams."

"Accredited investor? Sophisticated investor? What’s the difference?" I asked, actually feeling a spark of renewed hope.

"Good question," Mike said with a smile, sensing that his friend was coming out of a slump.

"An accredited investor is by definition someone who qualifies because he or she has money. That is why an accredited investor is often called a qualified investor," rich dad explained. "But money alone does not qualify you to be a sophisticated investor."

Copyright © 2000 by Robert T. Kiyosaki and Sharon L. Lechter