The rea- son is that most people leave school unaware of the im- portance of a financial statement, much less how to control one. Small wonder why so many people say invest- ing is risky. Investing is not risky. But not being financially literate is. How to See Investment Opportunities If you have plans on becoming rich by being an investor, I would say that having a good working knowledge of a fi- nancial statement is a minimum requirement. Not only will it improve your safety factor, it will also allow you to make much more money in a shorter period of time. The reason I say this is because being able to read a financial statement will allow you to see investment opportunities that the av- erage investor misses. The average investor looks primarily to price as the opportunity to buy or sell. The sophisti- cated investor has trained his or her brain to see opportu- nities other than price. The sophisticated investor knows that most of the best investment opportunities are not vis- ible to the untrained eye. Rich dad taught me that you make the most money as an investor by being financially literate as well as knowing in- ternal strengths and weaknesses of the investment. He said, "Where you find the best investment opportunities is from understanding accounting, the tax code, business law, and corporate law. And it is in these invisible realms where the real investors shop for the biggest investment Reduce Risk Through Financial Literacy 165 bargains. That is why I call the income statement and bal- ance sheet the magic carpet." So the mental attitude question is: 1. If you plan to become wealthy as an investor and invest in the investments of the rich, are you willing to keep an updated personal financial statement and practice reading other financial statements on a regular basis? Yes_ No Chapter 16 Investor Lesson #14: Financial Literacy Made Simple "Your dad struggles financially because he is word literate, but not financially literate," rich dad often said to me. "If he just took the time to learn how to read numbers and the vocabu- lary of money, his life would change-dramatically." Financial literacy was one of rich dad's six lessons in Rich Dad Poor Dad. To rich dad, financial literacy was crucial for anyone who was sincere about being a business owner or a professional investor. In later sections of this book, Sharon and I will be going into greater detail on the importance of fi- nancial literacy as it pertains to business and investing, and how to find investment opportunities that the average in- vestor misses. But for now, I think it best to quickly review fi- nancial literacy and how to make it simple and easier to understand. The Basics A sophisticated investor should be able to read many dif- ferent financial documents. At the center of all the documents are the income statement and the balance sheet.