In Chapter 6 of Rich Dad Poor Dad, Robert Kiyosaki explains how the rich can legally “invent money” while the poor and middle class have to work for it. The problem with having to work for all your money is the fact that you are vulnerable to being “let go” due to company downsizing or off-shoring to places like China. In addition to the risk of being let go, an employee doesn’t have the option to play by the same set of rules that the rich play by.
One of the top ways that the rich essentially “create money” is through the usage of borrowing investment money. Robert explains how someone with the right financial skills can create money and avoid most taxes through upward real estate investing. One can borrow the money to purchase the property, then rent the property out to a tenant with a price margin that allows for passive residual income. The passive residual income or in other words “CashFlow” can then be used to invest in more properties and avoid taxes through an upward investing real estate tax loophole.
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