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Building Wealth through Saving and Investing

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Book Giveaway: Rich Dad’s Increase your Financial IQ





As promised, we will be giving away a free copy of Rich Dad's Increase your Financial IQ.

Here is a snippet of the review:

What I liked about the book?

  • In Financial IQ #1, the author explains why the rich are rich and why the middle class and poor stay that way.  Kiyosaki explains that the rich use their money to build assets which creates an ever building passive income stream (unlimited potential).  The middle class, on the other hand, use their limited TIME to bring home income.  
  • In Financial IQ #3, Kiyosaki explains to budget for a surplus.  Basically, this means to put your savings as a FIRST priority before everything else.  What he believes that if you are short on money to pay the bills after savings, you'll need to go out and make more money…

 You can read the full review here.

How Do You Enter?

  • Simply read through the quiz below (and answers) and let me know in the comments which question you found the trickiest.

The Rules:

  • Please only 1 comment entry / person (please enter a valid email address).
  • Only those with a North American mailing address may enter (publisher rules, sorry).

Deadline: 

  • Contest will end Thursday 5pm EST March 20, 2008 and the winner announced Friday March 21, 2008.  Good luck!

Rich Dad’s Increase Your Financial IQ Quiz

What’s Your Financial IQ? 

1. Which of the following is not an asset?
 
a. Gold
b. The Corvette you bought for your 40th birthday
c. A business
d. Wheat
 
2. On average, Americans save how much of their income?
 
a. Enough to buy a new flat screen TV
b. Why save when you own a house?
c. They don’t save. They owe.
 
3. A retirement plan that is paid for by your employer is known as a:
 
a. Defined benefit plan
b. A miracle
c. Both 
 
4. What kind of income is the hardest to protect from financial predators such as taxes?
 
a. The dividends that just got cut from the financial stocks you bought
b. The $50 and rocking CD collection you inherited from your uncle Craig
c. The forty hours worth of cash your company pays you for sixty hours of work
 
5. What is the best way to create a budget surplus?
 
a. Cut down on expenses by buying a fuel efficient car
b. Get a higher paying job to make more money
c. Saving and investing before paying your bills
 
6. An example of leveraging your money is:
 
a. Putting money in an interest bearing savings account
b. Buying investment real estate with a bank loan
c. Going to a local casino. 
 
7. The best way to invest is in a diverse portfolio of stocks, bonds, and mutual funds.
 
True or False? 
 
8. The key to becoming wealthy is:  
 
a. Only having two scotches per night
b. Buying high and selling low
c. Selling the CD collection you inherited from Uncle Craig
d. Increasing your financial intelligence
 

Answers: 1. (B) 2. (C) 3. (C) 4. (C) 5. (C) 6. (B) 7. (False) 8. (D)





66 Comments, Comment or Ping

  1. 1. Richard

    For me it was the first one. I thought gold and wheat were commodities and anything you owned was an asset.

  2. Number 3. Nobody I know has one (except my lucky sod of brother), so I barely recognize the phrase :)

  3. 3. Pierre-Hugues

    To me it was number 3. I guess I haven’t had enough job experience to know that not many employers pay retirement funds (hence the miracle I guess).

  4. 4. Ramona

    Nothing especially tricky on these, but what a wicked sense of humour!

  5. 5. James

    I agree with #4, knowing his stance on assets. A car is still an asset though, since you can sell it for some amount. Just because an asset isn’t a good investment nor does it generate cash flow, doesn’t mean it isn’t an asset. (Yes, having read his books, I know he doesn’t agree. But anything you own that has market value is an asset…)

  6. 6. kimi =)

    I was surprised that I got 4, 6, and 7 wrong. Looking back… I can figure out why 4 is C, but I really didn’t know that 7 was false! I thought you were supposed to have a diverse portfolio…

  7. 7. Elizabeth

    7…. true and false always mess me up. I like #1 though, I figured lots of people would get that wrong.

  8. 8. Marianne O.

    #4 for me. I still don’t understand this one, so I guess I need to read the book… *grin*

    Would anyone care to explain?

  9. 9. 45free

    #4 is C since there are the fewest opportunities for a salaried employee to shelter anything from the tax man.

    I was tripped up by number 8 because selling uncle Craig’s CD collection would probably buy about a bottle of scotch so that almost seemed like a win-win.

  10. 10. Neil

    Im pretty sure I disagree with question 7. That means that I still believe that diversification is important, even though I continue to have imbalanced investments :)

  11. 11. Johnn

    #2 was trickiest for me.

  12. I would say 5, even though I do it. It is difficult to wrap my head around the idea of “saving” when I have debt to pay down.

  13. 13. Karl

    #7. I think the reason is, we are constantly being told to invest and diversify our investments. Almost any financial literature I have read emphasizes heavily on diversification and that too in vehicles such as stocks bonds and mutual funds. However, we seldom realize there are *other* ways to invest, such as owning real estate, rental properties or a low start-up cost Small Business. But all of these require more work on our part, i.e., get up and look for a property, get a mortgage, etc. and are not as easy (perhaps even overwhelming) for starters, not to mention, far more risky.

    There were some other odd-ball (and humorous) questions in the list like: 1, 4, 8. But having read Mr. Kiyosaki’s RDPD before I got them right.

  14. 14. RD

    #7 – this one’s generally accepted by most people, but that doesn’t mean it’s necessarily the best way to invest.

  15. 15. Daniel

    wNumber 7. So warren buffet did it wrong?

  16. 16. nobleea

    Yup. Buffet’s got nothing on Kiyosaki.

    I thought #1 was hardest. Didn’t he say assets are things that create cashflow (in his first ‘book’)? In that case, only a business would be an asset. Gold and wheat do not create cashflow unless you lease them out in contracts or something (and run the risk of losing them).

    Don’t give me the book if I win it. I’ll burn it. Kiyosaki is a hack.

  17. 17. Dan

    If you do any financial reading most of these answers should come to you fairly easy. However I’d have to go with number 7, because when you think investing these are terms you come across frequently…so an uneducated personal would assume this as diversity.

    Dan

  18. 18. Rodney

    For me it was #1 as I thought Wheat was a commodity.

  19. 19. Sarlock

    #8… I sold the CDs high to buy a bottle of Scotch low and drank the Scotch. It did little to increase my financial intelligence.

  20. 20. Mike

    3 trickiest for me.

  21. 21. TC

    For me it was #1 and #4. I figured the corvette was an asset as you can sell it but I guess the depreciation on vehicles may factor into this one and #4 I’m not sure about as I figured the only way you get caught on this if you don’t report it is through an audit which still doesn’t guaruntee it will be found.

  22. 22. Eric

    #1. Thought if you could sell it and get something for it, then its considered an asset. Even though you would more than likely not get your money back.

    Eric

  23. 23. AndrewP

    #1.
    The first option I ruled out was the Corvette, since you actually hold it and can sell it.
    Since gold and wheat are similar in nature (commodities), I decided on a business (although THAT didn’t make much sense).
    By the end of my guessing process, I was confused and in need of a peek at the answers!!!

  24. 24. Ringo

    I suppose it’s no. 1. The Corvette you bought is an asset, but just a depreciating one! I got all correct except no. 3, as the “miracle” didn’t happen on me yet, no retirement plan by my employer! Good luck everyone!

  25. 25. Ryan

    It was #7 that did me in. Then after thinking about it, it made total sense. It makes sense that to some this quiz would be difficult, however it does not reflect a persons intelligence or intellect. Kudos to everyone for taking the time to increase their financial IQ. I still have a long way to go myself, but it’s sites like this that make the journey that much better and fun. Keep up the great work!

  26. 26. Kevin

    #7… that one got me. But I guess there are other ways to diversify, ie. Real Estate and Business Ownership.

  27. 27. VG

    Trickiest: #1. Your heart tells that corvette is an asset, but unfortunately it isn’t.

  28. 28. Jenny

    No.1 had me tricked, wasn’t quite sure what to make of it.

  29. 29. PeterW

    #1 definately the trickiest.

    Gold, Wheat and Corvettes are all appreciating or depreciating assets, but a business is usually an assortment of assets and liabilities with a dash of goodwill thrown in!

  30. 30. acusue

    Hi – Number 7 , Knowledge is power!

  31. 31. Al

    I’m not buying this clown’s book. He’s got 3 of his own 8 questions wrong after all.

    As pointed out by Richard, John, etc, all of the options in question 1 are assets.

    The answer for 3 is incorrect. Pensions are becoming rare, but they are hardly a miracle. If The Almighty cares to disagree, then I will defer.

    Answer 5 is way off. If you save first and fail to pay your bills, the penalties will kill you.

    His answer for 7 is touch and go too. Diversified portfolios can include a lot more than stocks and bonds so I’ll agree with his false answer.

  32. 32. FatboyJim

    #1 was tricky. Just because a car isn’t an income-producing asset, it’s still an asset. Is my house less of an asset because I’m not renting out a room?

    FJ

  33. 33. AppleTree

    They were all tricky, starting with number 1 through the end. I need some financial advice.

  34. 34. JME

    3 for me.

  35. 35. Fabian

    I didn’t think Gold was an asset. that was a lil tricky.

  36. 36. eden

    #7 is slightly tricky, slightly misleading. I don’t know how you can define a ‘best way’ to invest and I know that Robert would like us to invest in real estate and silver as well as stocks/bonds (I assume those are ‘okay’ in his book), but if you asked Warren Buffett I don’t think he would consider investing in stocks to be a bad thing.

    Investing ONLY in ‘stocks, bonds, mutual funds’ would not be very diversified be default, but you could find reasonable diversification within those asset classes. Throw in a piece of real estate on the side and you’ll be looking alright.

  37. 37. Mark

    7 for sure.

    Note : All the things in #1 are assets IMO. If you own it, and can sell it for money, it’s an asset.

  38. 38. KC

    #2 was the trickiest for me.

  39. 39. Smoky Rick

    I think #5 is the trickiest. The answers sound different from what a person should do, according to “the norm”.

  40. 40. Michael_S

    #7 got me

  41. 41. Aaron

    I got numbers 1 and 7 wrong. Seems like I need a refresher of some of the basics! #1 is definitely the trickiest by far.

  42. 42. Derek

    No. ! tripped me up because the last time I went to the bank to borrow, they asked me to list my car as an asset. Got to love the banks. Leveraging is workin for me.

  43. 43. Duke

    All Questions were Tricky as my financial IQ is compared to the missing link, ie. caveman intelligence.

  44. 44. DAvid

    ^ soapbox ^

    By trickiest, do you mean (a) deceptive, (b) uncertain, or (c) difficult to answer? (Definition from Dictionary.com)
    I feel the former is in fact the appropriate definition, especially with the errors of fact the questions contain, not that RK is at all bothered with errors of fact. Most of the ‘Answers’ are RK spin, rather than fact, so please don’t insult my financial intelligence.

    1. All are assets, though gold and wheat are usually considered commodities. All can increase or decrease in value, including the RARE Corvette I bought for my 40th birthday.

    2. They convert much of their income to (depreciating) assets.

    3. Just because a pension is fully funded by your employer does not make it a defined benefit plan. While most government and big business plans are DBP, many small businesses use other plans that do not have defined benefits, but are dependent on the market.

    4. C is for Cynic? MY company pays me handsomely for the time I spend working for it. My employer, on the other hand……

    5. Increase taxes while decreasing spending? Increase royalties on extractive resources? Creative Accounting? There are many ways to create a budget surplus! ;)

    6. No smart reply!

    7. The best and most important investment is in yourself. It is one thing you can control. Knowledge, effort, and capability are necessary before any further investment can occur.

    8. OR — e. selling books to suckers who answer questions like this.

    I am not a fan of RK, and feel he is nothing more than a charlatan who has found a great way to separate fools from their money. His books offer little of substance, and few real hints or tips as to how to really increase your wealth.
    v Soapbox v

  45. 45. charles

    I found #6 the one I had to think about twice.

    Again, I don’t like RK either. I’m surprised he still has a book deal, since his whole “factual” backstory is a fraud.

  46. 46. T minus twelve

    I just want to win the book. But to follow the rules, I was tricked by number 1. I mean, if you stuck a bushel of wheat on ebay how many takers would you really have???

  47. 47. Joshua

    #1 got me. Made me really think, the others seemed kinda easy.

  48. 48. Agent389

    7. The best way to invest is in a diverse portfolio of stocks, bonds, and mutual funds.

    That was by far the hardest for me to answer. This question’s answer deals mostly with risk. Or risk aversion rather. How averse to risk are you. Now that’s a very hard question. I guess it all depends on how good of a chance I stand of winning. But even still there is a chance I will loose. Almost every day I ask myself this question and almost every day I am unsure of the answer.

  49. 49. HB

    Number 7 was the trickiest.

  50. 50. Brenna

    #6 made me think for a second.

  51. 51. Edwin

    This was pretty easy having read Kiyosaki’s other books but #1 I think gives most people trouble. I love cars but all they really do is depreciate for the most part. A collector’s car could be considered an asset as it could be worth more than you paid for it but likely it is taking money out of your pocket instead of bringing money in while you own it. Maintenance, storage, etc. unless you do something creative and charge admission to see the car or something. :)

  52. 52. TL

    #5 was trickiest for me! :D

  53. #7 was the trickiest.

    Warren Buffet is the most quoted, widely followed, yet most misunderstood person in the financial spotlight. You’ll note that he doesn’t “diworseify” his portfolio for the sake of simply balancing things out, but instead builds a bank that increases shareholder equity and thus shareholder value.

    It’s the structure of the company that gets it to the senior exchange and properly funded to make an attempt to reach their goals. It’s not that the idea is bad, or the plan was flawed necessarily, although I’m not writing these out altogether. Without the proper setup in the beginning, and the proper mindset – diversification is doomed to fail if the foundations are built incorrectly regardless of the plan, the product, operations, or people.

    I work with a boutique investment bank, and you’d be surprised how many people who try to play in the higher levels still get this question wrong – and these people are millionaire CEO’s nearing the higher end of the food chain.

  54. I think that we can argue with #7 ;-)
    I don’t think that everybody would be good at real estate or creating companies. Many people would be better off investing in mutual funds until they retire (is it me talking or the financial planner behind me? hum…)

  55. 55. chad

    Not sure if I agree with #7, I would like to read more on why this is false

  56. 56. Jordan

    #1, a business is only an asset if it is producing revenue as far as I’m concerned.

  57. The first question was tricky for me, because only answer C was defined as an “asset” in Rich Dad Poor Dad Book.
    I disagree with the “false” answer on number 7. Just ask Bear Stearns employees who own a large chunk of the company what they think of diversification now :-)

  58. 58. Mikel

    I have to agree with others that #1 was tricky. Not because I got it wrong but because it goes contrary to R K’s teachings. Gold is probably ok but wheat is less so an asset. It does not put in cash flow until it is sold. But i still look forward to reading his book.

  59. 59. Robert

    I just finished reading rich dad, poor dad so i didn’t find any of the questions all that difficult. I was going to buy the new book but if I can win it for free, well that will save me some money and isn’t that what this is all about?

    Oh and a business IS an asset even if it is not generating income… As long as it has people (or even just you), that is an asset. Unless you classify yourself as a liability. :)

    Robert.

  60. 60. Ron

    For me it was #7.

  61. 61. Amina Mohamed

    RE: Rich Dad’s Increase Your Financial IQ Quiz

    I liked your review -and think this book might be a good idea for the novice that I am to learn more about all types of investing.

    I want to move away from mutual funds through a dealer and want to self-invest.

    I found #6 to be the trickiest.

    Thanks,

    Amina
    amina@tigerlilly.ca

  62. 62. vr6man22

    was a litte confused by question 4
    had to read it a few times.
    LOL

  63. 63. Konstantin

    #7 for me, too

  64. 64. newinvestor

    I would say # 5…

  65. 65. JustMissedOne

    I got #4 wrong but not realized the employee should be paying the taxes at the end of the year since the company paid him/her cash.

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