Rich Dad's Guide to Investing - Volume 3

Volume 1 builds the mindset, Volume 2 teaches direction, and Rich Dad’s Guide to Investing - Volume 3 is the advanced course that pulls back the curtain on the real game played by the rich. This isn’t just about picking stocks; it’s about learning how to create the stocks others buy.

The 90/10 Rule

Robert starts with a brutal truth: 90% of wealth is controlled by 10% of people. Why? Because that top 10% knows things the other 90% don’t (or are too afraid to do).

• Average Investor: Buys pre-packaged investments, hopes the market goes up, panics when it crashes, seeks safety above all.
• Sophisticated Investor: Creates investment opportunities, controls risk, and most importantly: makes money even when the market falls.

I realized I’m still firmly in the 90% group—buying financial products created by others. To join the 10%, I must learn to design the game, not just play it.

The Three Types of Income

The most powerful takeaway for me was the clear distinction between income types and their tax brackets:

1. Earned Income: Taxed the highest. This is the employee trap.
2. Portfolio Income: Capital gains from trading stocks/real estate. Taxed moderately.
3. Passive Income: Cash flow from rental properties, royalties, dividends. Taxed the lowest (often 0% legally).

The ultimate goal of a sophisticated investor is to convert Earned Income into Passive Income as quickly as possible.

Investing Is a Plan, Not a Product

Many people ask: “What should I invest in? Gold or stocks?”. Robert answers: “Investing is not risky. The investor is risky.” True investing is a Plan of Control. You must have a plan for wealth, a plan for protection, and a plan for freedom. The “products” (Stock A or Land B) are merely vehicles to execute that plan; they are not the essence of investing.

Deep Personal Reflection

This volume is heavier than the previous two. It dives into corporate structures, raising capital, IPOs… concepts that feel distant for beginners. But that’s exactly why it sparked a bigger ambition in me: Why stop at buying Apple stock, when I could dream of building a business and taking it public?

Conclusion: Volume 3 isn’t for the faint of heart or those seeking quick riches. It’s for those serious about becoming an Inside Investor—taking control of their financial destiny at the highest level.