"The second thing is when I look at an investment, I also overlay it on my personal financial statement, and see where it fits. As I said, investing is a plan. I want to see how the busi- ness, the stock, mutual fund, bond, or real estate's financial statement impacts my personal financial statement. I want to know that this investment will get me to where I want to go. I can also analyze how I can afford the investment. By know- ing my numbers, I know what will happen if I borrow money to buy an investment and the long-term impact balanced with income and outflow due to debt payments." "And the third thing?" "I want to know that this investment is safe and will make me money. I can tell if it is going to make money or lose money in a very short period of time. So if it does not make me money, or I cannot fix the reason why it will not make me money, why should I buy it? That would be risky." "So if you do not make money, you don't invest?" I asked. "In most instances," said rich dad. "Yet as simple as that sounds, it always amazes me when I meet people who are 160 Rich Dad's Guide to Investing losing money or making no money and they think they are in- vestors. Many people who invest in real estate lose money every month and then say, 'But the government gives me a tax break for my losses.' That is like saying, 'If you lose a dollar, the government will give you 30 cents back.' A few very so- phisticated business people and investors know how to use that government ploy to their advantage, but very few people really do. Why not make a dollar and get an additional 30 cent bonus from the government? That is what a real investor does." "People actually do that? They actually lose money and think it is investing?" "On top of that, they think losing money for tax advantages is a good idea. Do you know how easy it is to find an invest- ment that loses money?" asked rich dad. "I imagine it would be pretty easy," I said. "The world is filled with stocks, mutual funds, real estate, and businesses that do not make any money." "So a real investor first wants tcf make money, and then after making money, they want an additional bonus from the government. So a real investor will make a dollar as well as get a 30 cent bonus from the government. An unsophisticated in- vestor will lose a dollar and be thrilled to get 30 cents from the government in the form of a tax write-off." "Just because that person cannot read a financial state- ment?" I asked. "That is one of the basics. Financial literacy is definitely an important investor basic at the rich investment level. The other basic is to invest to make money. Never invest with the intent to lose money and then be happy with a tax write-off. You invest for one reason only: to make money. Investing is risky enough without investing to lose money.