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SHOW NOTES FOR EPISODE 269: BEST OF OLD DAWG’S REI NETWORK PODCAST – RICH DAD ROBERT KIYOSAKI REVEALS WHY THE RICH ARE GETTING RICHER
Have you ever wondered why you work so hard, save and invest, yet never seem to get ahead financially? In this episode, Rich Dad Poor Dad author Robert Kiyosaki talks about why most people never get out of the rat race. He also talks about his book, Why the Rich Are Getting Richer and why we need to prepare for the impending financial crisis.
What You Will Learn
- The 6 fundamental words every serious student of business and finance must know
- How to know when real estate is an asset or a liability
- Where you should invest your money in light of the impending financial crisis
- The importance of understanding U.S. and global fiscal policy
- The global role of the Federal Reserve
About Our Guest
Robert Kiyosaki
Best known as the author of Rich Dad Poor Dad —the #1 personal finance book of all time—Robert Kiyosaki has challenged and changed the way tens of millions of people around the world think about money. He is an entrepreneur, educator, and investor who believes that everyone has the power to makes changes in their lives if they are willing to invest in themselves and their education. With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage and has become a passionate and outspoken advocate for financial education. He is the author of more than 20 books, the most recent of which is Why the Rich Are Getting Richer are Second Chance and More Important Than Money — an Entrepreneur’s Team.
“Why the Rich are Getting Richer” Book
- Real estate guys love the book
- Stock guys hate the book
- Reason for the book: to provide a “real” financial education
- He talks about how stocks are fake assets
- Real estate is real estate not “fake estate”
- The book is meant to help people who are “stuck in the rat race” – people who are told to:
- Go to school
- Get an education
- Get a job
- He sees a major financial Armageddon ahead for the stock market
- For real estate guys – there’s more of a happy ending
The Importance of Understanding Cash flow
- Financial Literacy Means Understanding the Vocabulary and Language of Money
- Six fundamental words everyone should know
- Income
- Expense
- Assets
- Liabilities
- Cash
- Flow
- A rich person can control cash flow
- A poor person has no control over cash flow
- Taxes are the key expense
- Working person making $100K per year gives 40% sucked away in taxes
- Buys a house – gives money to the banks
- Puts money in 401K or IRA – goes right to Wall Street
- Working person making $100K per year gives 40% sucked away in taxes
The Problem with the Poor and Middle Class
- Concentrate too much on the P&L or Income Statement
- Wants higher paying job – bigger salary
- Wants more commissions
- The Reason the Rich do Better is because…
- They concentrate on the Balance Sheet not the P&L
- The Asset side – true assets
- The Average Person has no Real Assets
- They have “fake assets” –stocks, bonds, mutual funds, ATFs, savings
Real Estate Can be an Asset or a Liability
- That’s why you need to be a real estate professional to truly understand the difference
Fake Money & Fake Teachers
- Fake money: US Dollar, Yen, Euro
- Fake teachers: telling you to flip houses (so the teachers can make their commissions)
- Take their courses but don’t buy their properties
Thoughts on Education
- Education is more important than ever before – But what kind of education is key!
- Unfortunately, education system tied up by teacher unions
- He grew up in an “education system” home with his poor dad
- Teachers don’t teach kids about money because “money is evil”
- Education system says “if you get enough college degrees you’ll get a job”
- What about student debt? – The school says “You pay it off”
The Rich Don’t Pay Taxes
- An intelligent person can control cash flow
- A stupid person cannot control cash flow
- When most people get their paycheck, a big chunk of it is gone!
- When they’re asked “doesn’t it bother you?” They say, “I’m a loyal American supporting my country!”
- In the meantime, the rich aren’t paying taxes
- Robert and Trump doesn’t pay taxes – legally – not because he is not patriotic (he served two tours of duty in Viet Nam)
Comments on Education System
- What Upsets Him about Many Academic Types
- Doesn’t like being taught by teachers with latent Marxist tendencies
- They don’t even know that they are Marxists and Fascists
- Unfortunately, the country is run by PhDs
- Jim Grant from Grant’s Interest Rate Observer
- “At first the US was on the gold reserve (for) the dollar. And then we were on the petrol standard and today it’s the PhD standard.”
- The finances of the country are run by PhD academics not capitalists but socialists
“A Rich Education” Video
- Rich Dad Video Produced With Ken McElroy and Jim Wheelwright
- Compares student loans and 529Bs against using real estate to pay for your kid’s education
- Compares student loan debt vs. real estate debt
- Will be posted on RichDad.com in next few weeks
Education is More Important Now than Ever Before
- If I want to be a doctor, I should go to med school
- When he went to Camp Pendleton, he went to learn how to fly because he wanted to be a Marine pilot
- What he learned in flight school was not what the fighter pilot teachers who flew in Viet Nam taught him in Pendleton. They taught him how to fly so he could survive in Viet Nam!
- Unfortunately, 80% of teachers in academia are “fake teachers” because they don’t practice what they teach
- When he went into his MBA program, he asked his accounting teacher, “What kind of accounting have you done (or practiced)?” And the teacher responded, “I never have.” Robert asked, “How can you teach accounting if you’ve never been an accountant?” And his teacher’s response was, “Because I’m a teacher.” –
- He says that part of the problem in academia – there’s no “accountability!”
- Robert said he knew more accounting than his teacher because of his Rich Dad
- Of course, accounting teachers would tell him it’s not real accounting
- He said “yes, but it’s entrepreneurial accounting”
- Students have the right to ask teachers if they have any “real world” experience.
Fake Assets and Fake Teachers
- Why would anyone buy an REIT?
- You don’t learn anything from buying an REIT – it’s a fake real estate asset
- You learn more from buying a little 2 bed/2 bath house
- Would you learn to play golf from someone who has never golfed?
- He buys real gold – not GTF gold
- He says there is 500 ounces of fake gold out there
In His Book More Important Than Money
- He showcases his “real” experts team and how to put a great entrepreneurial team together
- His “real – not fake” entrepreneur team – These are his advisors:
- Tom Wheelwright, his CPA – That’s all he does is taxes
- Ken McElroy, his real estate partner – Is a “real” real estate investor. That’s all he does.
- Garett Sutton, his attorney – All he does is practice law
We’re in for One of the Biggest Financial Collapses in History
- Within 6 months to 2 years
- How to prepare:
- Buy Real Assets
- Gold (Krugerands or Maple Leaves)
- Oil
- Real Estate
- Farm land
- Don’t buy “paper assets”
- Bitcoin – Ponzi scheme
- Be careful of tax increases ahead on real estate (especially in California)
How Robert is Preparing
- Owns 6,500 units – each unit puts $200-300 per month in his pocket
- Owns lots of gold and silver
- Multiple bank accounts in multiple different bank (stays within $250K limit)
- Money in different parts of the world
Robert’s Liabilities
- 4 houses (in very remote places)
- Rolls Royce
- Ferrari
The Federal Reserve
- The purpose: to incentivize you to borrow and to spend
- The reason interest rates are so low is that people feel they can afford to buy a house (because rates are low) and they are hoping it will go up in value
- The problem is that without inflation, people will not spend
- Price of housing is going down
- The problem with the academics and elites that run the Federal Reserve system is that they are terrified that, what they call “assets,” are not going up. They don’t understand the monetary fiscal system of the US or the world
- If deflation continues, the fed goes bust
- If there’s a crash then all that’s left is debt
- He understands monetary “policy” – he says the word policy is a lot like “police”
The Dollar, Euro and Yen are Fake
- Each U.S. dollar is a contract between the Federal Reserve and the US Treasury – both corrupt organization
- He has a friend that says he would rather have an avocado farm in Panama that said he would rather have an avocado than a US dollar
- The dollar is debt
- Canada is in Trouble – Lowest gold to GDP ratio
Life’s about Cash Flow
- An asset is an asset only if it puts money in your pocket
- An asset is a liability if it takes money from your pocket
- Most people have money flow out of their pocket
- Buy gold or silver
- Get your money out of banks
He called the 2008 Crash on CNN
- Predicted it six months ahead of time
When will the next big financial crash occur in the U.S.?
- Six months to 2 years
How to Contact Robert
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