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

20 Years Later

By 1993, rich dad’s wealth was split between his children, grandchildren, and their future children. For the next hundred years or so, his heirs would not have to worry about money. Mike received the primary assets of the business and has done a magnificent job of growing the balance of rich dad’s financial empire, a financial empire that rich dad had built from nothing. I had seen it start and grow during my lifetime.

It took me 20 years to achieve what I thought I should have been able to do in 10 years. There is some truth to that saying, "It’s the first million that is the hardest."

In retrospect, making $1 million was not that difficult. It’s keeping the million and having it work hard for you that I found to be difficult. Nevertheless, I was able to retire in 1994 at the age of 47, financially free with ample money with which to enjoy life.

Yet, it was not retirement that I found exciting. It was finally being able to invest as a sophisticated investor that was exciting. To be able to invest alongside Mike and rich dad was a goal worth achieving. That day back in 1973, when Mike and rich dad said I was not rich enough to invest with them, was a turning point in my life and the day I set the goal to become a sophisticated investor.

The following is a list of some of the investments in which so-called "Accredited Investors and Sophisticated Investors" invest:

1. Private placements

2. Real estate syndication and limited partnerships

3. Pre-initial public offerings (IPOs)

4. IPOs (while available to all investors, IPOs are not usually easily accessible)

5. Sub-prime financing

6. Mergers and acquisitions

7. Loans for startups

8. Hedge funds

For the average investor, these investments are too risky, not because the investment itself is necessarily risky, but because all too often, the average investor lacks the education, experience, and excessive capital to know what he or she is getting into. I now tend to side with the SEC that it is better to protect unqualified investors by restricting their access to these types of investments because I made some errors and false steps along the way.

As a sophisticated investor today, I now invest in such ventures. If you know what you’re doing, the risk is very low while the potential reward can be huge. Investments such as these are where the rich routinely invest their money.

Although I have taken some losses, the returns on the investments that do well have been spectacular, far exceeding the few losses. A 35% return on capital is normal, but returns of 1,000% and more are occasionally achieved. I would rather invest in these investments because I find them more exciting and more challenging. It’s not simply a matter of "Buy me 100 shares of this or sell 100 shares of that." Nor is it "Is the p/e high or is the p/e low?" That is not what being a sophisticated investor is about. Investing in these investments is about getting very close to the engine of Capitalism. In fact, some of the investments listed are venture capital investments, which for the average investor are far too risky. In reality, the investments are not risky, it’s the lack of education, experience, and excessive cash that makes the average investor risky.

This Book is not about investments.

This Book is about the investor.

The Path

This book is not necessarily about investments. This book is about the investor specifically, and the path to becoming a sophisticated investor. It is about you finding your path to acquiring the 3-Es: education, experience, and excessive cash.

Rich Dad Poor Dad is a book about my educational path as a child. CASHFLOW Quadrant is Rich Dad Poor Dad part II and is my educational path as a young adult between the years 1973 and 1994. This book, Rich Dad’s Guide to Investing, builds on the lessons from all previous years with my real life experiences and converts the lessons into the 3-E’s in order to qualify as a sophisticated investor.

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