How the World’s Most Successful Investors Invest
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.
“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 thinking 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 neighborhood. 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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