Why the Rich Control 90% of the World’s Wealth by Robert Kiyosaki

Why the Rich Control 90% of the World’s Wealth

It’s no secret that cash-flowing assets are the path to financial freedom

You’ve been hearing it everywhere. In the stores. In your car. At work. Maybe even the doctor’s office. Curious yet?

It’s “All I Want for Christmas Is You,” Mariah Carey’s popular Christmas song. And if it seems like you’re hearing it earlier and earlier every year, it’s because you are. According to Quartz:

  • Come holiday times, Carey’s Christmas anthem shoots up the Billboard Hot 100—the American music industry’s standard for ranking the most popular songs in a given week. Since 2012, when Billboard changed their rules to allow older songs to appear on the charts, it has arrived a little sooner each year. In 2018, the song charted earlier than ever, appearing at number 29 on the rankings for Nov. 16–22.

  • Before we know it, “All I Want for Christmas is You” will be the song of summer.

Like it or not, Carey’s song is a tremendous success, and a great example of the power of creating money out of thin air with assets.

Since she launched the song over the airwaves, it has made an amazing $60 million in royalties for the singer. Yes, you read that right. One song, $60 million in royalties.

Money out of thin air

What is a royalty? Nothing more than money that comes out of thin air. In Carey’s case literally from airwaves. In short, people make an artifact like a song, book, or movie, and then they make money each time it is used. They never have to do anything with it again. The work is done and it makes money into perpetuity.

I do the same thing with my books. For instance, Rich Dad, Poor Dad was published was published in 1997. Since then it has sold over 32 million copies. It still is in the top ten charts on Amazon. Each time the book sells, I get paid. Of course, I have many other books and assets that continue to do this for me.

It doesn’t just have to be a book or a song either. Real estate, business, and many other investments allow you to collect cash flow and get paid, even when you’re not working.

Best yet, it’s the lowest taxed for of income (passive income), and the money made from those investments allow you to invest in in even more assets, a concept called the velocity of money. Velocity of money means that you use the money your assets make for you to purchase more cash-flowing assets, so your wealth grows exponentially.

Let’s explore how making money out of thin air works with something as simple as comic books.

The value of making something from nothing

When I was a young boy, I worked at rich dad’s convenience store for three hours each Saturday with my friend Mike, rich dad’s son. The work was mind numbing. Since there was no air conditioning, we had to leave the store doors open to try to keep the store cool. This meant we had to dust the shelves every time a car drove through the parking lot.

In return for this work, rich dad had agreed to pay us $0.30 per week—along with a promise to teach us how to be wealthy.

Every week, I’d collect my money, buy some comic books, go home, and wonder when rich dad was going to teach us how to be wealthy. As the weeks went on, I always got my money in exchange for my work, but I never got the lessons on how to become wealthy. Tired of getting paid poorly, I decided I was going to quit.

When I told rich dad, he said, “Now you’re ready to learn.”

He went on to explain that our desire for more money had the effect of blinding us. Rather than see opportunity, we let our lack of money give us tunnel vision. The only option was to have him pay us more. We were working for money.

The 90/10 riddle

Rich dad sat Mike and me down and drew a financial statement.

Simplified income statement and balance sheet

“Have you heard of the 90/10 riddle?” rich dad asked. “Ten percent of the world’s population holds 90 percent of the world’s wealth. Do you know the riddle they ask themselves each time they look at a financial statement like this?”

Mike and I answered that we did not.

“They ask, ‘How can I fill my asset column without any money?’”

Don’t work for money

A while back, I was working with some brilliant students in the entrepreneurship program at the Thunderbird School of Global Management. During the sessions, I asked one of the students, “What is your investment plan?”

Without hesitation, he replied, “When I graduate, I will find a job that pays me at least $150,000 a year and will put aside at least $20,000 a year to buy investments.”

This student, while offering a plan that was better than most peoples’, was still think-ing like the 90 percent of people who will never see the money that the 10 percent of investors who make 90 percent of the money see.

My challenge to him was, “Is the idea of buying assets with money a 90/10 idea, or is it an average investor idea?”

We both agreed it was an average investor idea. I went on to explain one of my rich dad’s important financial lessons: “The rich don’t work for money.”

Making something from nothing

After rich dad's lesson at the convenience store about the 90/10 riddle, Mike and I worked at his store for a couple weeks and noticed that the store manager would take the older comics, cut the covers in half, and give them to the distributor for a credit. This gave us an idea.

When the distributor came in to pick up the old comic books, we asked him if we could have them. Because we worked at the store, he said yes, but only if we didn't resell them.

Keeping our end of the bargain, we didn't sell them—we rented them out. Using a spare room in Mike's basement, we stockpiled hundreds of free comic books, and each Saturday we opened our library from 2:30 to 4:30 p.m. to the kids in the neigh-borhood. Admission was $0.10 a day, a steal since each book was $0.10 and you could read five or six in the two hours we were open.

As things got rolling, we averaged $9.40 per week—a lot more than the $0.30 we were making each week at the store. But we would never have had the opportunity had we not worked there and had our eyes open to opportunity. The best part of our new venture was that we made this money even if we weren't there at the comic library.

As I shared this with the student from Thunderbird School of Global Management, I asked, “Were those comic books assets?”

Wisely, he answered, “Not until you turned them into assets. You took something that was being thrown out as trash and turned it into an asset.”

What this student recognized was that my ability to recognize opportunity and to make something into an asset was the real asset; that’s how successful investors know how to make something from nothing.

So, what will you make today?

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