Why RICH are getting RICHER - with Audio

 Why RICH are getting RICHER

 

Introduction

 

Hey guys!, How are You today, I am misbah And today will well be talk about Why RICH are getting RICHER, So Let’s  get started.

 

Why RICH are getting RICHER, According to the report of World INEQUALITY Report 2022,  India is in those top countries,  in which the difference between the rich and poor,  is highest in the world. 

 

If you tell you some data,  India's top 10% people  represent 57% of total national income.  Whereas top 1% in those top 10%,  are the owner of 22% income.  Whereas on the other hand,  bottom 50% people hold 13% income. 

 

And it's not about just India.  If we consider world's population,  50% population of world own just 2% of total income. 

 

Whereas top 10% population of the world,  they have 75% of the total wealth.  And id doesn't end just here. 

 

And the top 1% in those people,  they have 38% of the total wealth.  And this inequality is increasing.  So, this question should come in your mind. 

 

Why rich are becoming richer,  and poor are becoming poorer? 

Why is there extreme polarity?  Why 20% people have 80% or more wealth?  Why a rich person earn so much money in a day,  that a poor person can't earn in his whole life.

 

Robert Kiyosaki is telling all these answers in book 'Why The Rich are Getting Richer?' 

Which if you understand, than it will definitely help you!  According to Robert Kiyosaki,  there is only one difference in Poor, Middle Class and Rich person.  What's that difference?  The difference is of 'Education'. 

 

Not just formal education,  but also financial education.  Robert Kiyosaki says, rich people are financially educated.  They keep giving this education to their children since childhood! Due to which rich people's kids become rich, most of the time. 

 

Now, what comes in financial education? 

Well, Robert Kiyosaki focuses on three important things,  about which if you learn,  then you also can become financially educated. 

 

What are those three things? 

First is 'Taxes'.  Second is 'Debt'.  And third is 'Phantom Income'.  Let's understand all three things one by one.  First is Taxes.  You know, there is a boy in my gym,  who has a trainer same as my trainer. 

 

So, my trainer was telling me,  how that boy buys iPhone every year.  The most expensive one, like iPhone 14 Pro,  he bought that.  And similarly, he buys the latest and expensive iPhone every year. 

 

When I came to know about it for first time,  I thought he is the one who do unnecessary purchases.  But actually, it was not 100% true.  Then my trainer also told me one more thing,  who was actually smart. 

 

You know what that person does? 

That new mobile which is not a year old,  he sells that iPhone before the launch of new iPhone.  Due to which he get good return! 

 

Now, he got that money!  When he buys new iPhone, he has to give 18% GST,  but because he is a businessman,  he gets 18% GST benefit.  And sometimes, he gets things in offer.  Due to which, he gets that mobile almost free. 

 

Similarly, if you see,  when a businessman buys something by showing it as an expense,  he gets a huge benefit,  which normal people can't get most of the times.  And this is what author is telling.  The thing that creates difference between rich and poor's money is Taxes. 

 

Even after earning more money,  a rich man pays less tax than poor and middle class people!  That too legally!  Recently I did a podcast with a famous personality, who is known as 'chaiwala'. 

 

In which he told me frankly,  that 'I am not fond of living in 5 star hotels,  but my financial advisors say, 'Spend money here,  due to which you can show your expenses here,  can show office expenses,  due to which you'll get tax benefit.  Similarly, rich people do all their expenses first,  and then they pay tax on the money left. 

Whereas, middle class people  usually, they pay tax on the money they earn,  and then do expenses on the money left.  Because of which they are not able to save much money! 

 

So, if you want to pay minimum tax,  again, one thing you can do is 'you can open your own company'.  Obviously, government wants business to prosper,  due to which the economy will boost. 

 

Due to which they give a lot of advantage to businesses,  the benefit which many times the middle class people do not get!  Because they don't have businesses.  Second thing is 'Debt'. 

 

Have you ever wondered how Dhirubhai Ambani built such a big business? 

Where did he get the huge amount of money they needed to set up the business?  In 1950s, he started the first business of spices,  for which he needed money.  That's why, he saved a lot of money and started also.  But still he needed more money. 

 

He raised a little more money by partnering with his wife!  And gradually, company became profitable.  But then, Dhirubhai Ambani had to face extreme competition.  So, he decided to take a gutsy move. 

 

He decided to make his company public.  After which in 1978, with the help of 50k middle class investors,  he bade 28 lakh shares at the face value of 10 rupees.  And if we do simple maths,  28 lakh * 10 is equals to  2 crore 80 lakh... he raised this money from public. 

 

It seems interesting in listening,  but obviously, when 58k people are trusting you and giving you money,  it put a lot of pressure.  Dhirubhai Ambani took this risk,  and till his death,  he increased the value of 1 crore 80 lakh rupees to 75 crores.  That's why, you can say, Ambanis are the one of the richest family in India. 

 

Debts are usually seen with very dirty eyes!  I myself do not believe much in taking loan,  but author says,  that nowadays people take loan to buy car, house and iPhone,  they swipe credit card to buy liabilities,  while rich people take loan to make assets. 

 

For example,  Mukesh Ambani who is the richest man in India,  despite being the richest person,  he took the loan of 12,850 crore rupees for Jio,  to do business.  Now, how is the relationship of debt with rich people?  Sometimes, middle class people save in their bank,  on 4%-6% interest rate. 

 

But what a rich businessman does? 

He takes the loan on 10%-12% interest rate,  he invests the same money in his business,  where he gets better return than 10%.  For example, suppose he earn 25%-30% profit.  In which he gives 10%-12% profit to the bank. 

 

Out of 12%, the bank returns 6% to those people.  You can say, this game runs in the ban.!  Now you'll say, businessman fails many time,  they make loss also!  So yes, this is absolutely true. 

 

That's why it is said, 'Risk hai to ishq hai'.  Robert Kiyosaki says, there is risk in everything.  If you leave home and going somewhere,  this is also a risk.. 

 

A car may hit you.  You can fall.  There is risk in everything.  But still we take risk.  And rich people have this gutsy thing,  that many times, they are ready to take big risks.  And you know the most interesting thing,  when business fails,  what happens? 

 

Usually, bank tries to recover its money.  But if it is not able to recover,  then it itself starts recovering that loan with other people's money. 

 

Whose money?

Normal people's money!  Which a normal people give.  Sometimes, government also gives this money.  Government does recapitalization by giving money to banks.  Where you are charged more tax,  to make up for the money you paid earlier! 

This is a crazy thing, isn't it? 

Robert Kiyosaki says, this is true!  This is the system that has been running all over the world!  This is the thing, if you can use debt well,  and if not debt, you can use OPM.

 

What does OPM means? 

Other People's Money!  Basically, you raise money from others.  You must have seen what many smart business people do!  They raise money from various investors,  they do crowd-funding or go to various angel investors,  go to venture capitalists and ask money from them. 

 

They don't put their whole money!  That's the smart thing sometimes,  which many rich person do and the poors don't!  And third last is Phantom Income. 

 

Phantom income is also called Invisible income many times.  Robert Kiyosaki says, Phantom income is like ghost,  which exists but isn't visible.  Only the one who has right financial education can see it. 

 

Assume, there is normal middle class person,  who wants to buy a land,  and its price is 1 crore.  Suppose, he gives 20% down payment before buying it.  And to pay it, he uses the money which is left after paying taxes.  After tax deduction on the money you have already earned! 

 

Contrary to this, author says,  rich people never buy a house with their own money!  They take money from bank,  and then purchase real estate from bank. 

 

The tax that is saved in this transaction is called phantom income!  You must have seen that sophisticated investors also borrow money to purchase properties.  Because they eliminate the tax by borrowing. 

 

And Robert Kiyosaki says,  using something, he has built an empire of more than 8000 properties.  One more thing which author talks about,  is 'How money works'. 

 

If we talk about financial literacy,  India ranks 23rd in 28 countries.  According to Reserve Bank of India, only 27% people in India are financial literate.  Means, you can say, maximum people are not financial literate. 

 

And you see, many times people win even 5 crore rupees in KBC,  but still they get bankrupt!  Many celebrities earn a lot of money in their early career,  but again after sometimes, they get bankrupt. 

 

Because, sometimes, it's not just about money,  it's also about managing money! 

For example, the owner of Chai Sutta Bar, Anubhav Dubey,  with whom I've done a podcast,  he also doesn't come from privileged background. But still he has opened more than 400 outlets.  They have generated revenue more than 150 crores. 

 

The interesting part is that this is not rocket science.  That only other person can do, not you!  No, you also can do it. 

 

You've to focus on budgeting.  Have to focus on increasing income sources,  and have to invest atleast 20% of the money! 

 

Because remember,  'It's not now much money you make,  but how much money you keep'  and how hard that money is working for you'.  Investing and all these things are very interesting,  and to do investing, having money is important. 

 

There are many ways to earn money!  There are many skills on which you should focus.  And here also, the Pareto Principle comes.  Some skills are very important in today's time,  compared to other skills.