Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Program helps kids manage money, debt

It’s a late weekday afternoon and best-selling author Sharon Lechter is once again giving financial advice. Today, her target audience is quite different from the adults who purchased the “Rich Dad Poor Dad” books she co-authored with fellow Valley resident Robert Kiyosaki. This group consists of a half-dozen young teenagers at a Phoenix branch of the Boys & Girls Clubs, and the audience is one Lechter hopes to appeal to with YOUTHpreneur, part of her new business that teaches children how to be entrepreneurs. “I have a passion for financial literacy for families and children,” said Lechter, who left the Rich Dad Company in 2007 after disagreements with Kiyosaki and now runs Pay Your Family First. “What is happening with today’s kids is they don’t understand delayed gratification. . . . Kids want it before they even think about working for it.” Lechter’s focus on children comes at a time when national studies show high-school and college students are plunging themselves into deep credit-card debt and having easier access to credit. Meanwhile, President Barack Obama last week threw his support behind a consumer-friendly credit-card law that eliminates tricky fine print, sudden rate increases and late fees. The YOUTHpreneur program teaches children how to make money through gumball sales, and she’s teamed with local branches of the Boys & Girls Clubs and Fry’s Food Stores. Through the program, children learn about sales and profits by operating a candy machine at a Fry’s store. “It was a good experience. We learned about business,” said Michael Clark, a 14-year-old from Greenway Middle School in Phoenix. “We had fun doing it, and we made some money for the Boys & Girls Club. So, it was all good.” Lechter, of Paradise Valley, has taught the YOUTHpreneur program to about 70 children at six different Boys & Girls Clubs branches during the past year, and she’s selling the program on her Web site, youthpreneur.net. She said working with kids brought her career full circle as the certified public accountant began focusing on financial education when her oldest son, Phillip, went off to college. She said she thought she had taught her son to manage money, but as a freshman at Arizona State University, he quickly dug himself into a $2,500 credit-card debt. “I was so upset, but I was more angry at myself than him,” Lechter said. “We didn’t bail him out. It took him about five years to get himself on track.” The lesson apparently stuck because Phillip Lechter now is president of her new company, and he said the business would focus on entrepreneurship, financial education and money tips for teens and parents....

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7 New Rules of Financial Security

by Carolyn Bigda and Paul J. Lim In a world turned upside down, you must re-examine some basic assumptions. A good place to start: understanding the true nature of risk. Rule No. 1: Risk Old thinking: If you can stomach the ups and downs that come with risk, you’ll be rewarded. New rule: Risk isn’t about your stomach. It’s about making or missing an important goal. You know you have to consider risk. But what is risk? Many of us have learned to think of risk as synonymous with volatility. For years, what came down reliably bounced back even higher. You could easily conclude that risk tolerance was just a matter of taste. As long as you had the fortitude to see the occasional loss on your 401(k) statement and not panic, you would capture superior returns over time. What to do: You shouldn’t run from risky investments just because they lost money – that train has left the station. But the old buy-on-the-dips advice isn’t quite right either. This bear market’s lesson is that how much risk you can take is a matter of how much you can lose and still meet your basic goals. That may mean scaling back on stocks, even if you miss some of the next market rebound. Rule No. 2: Cash Old thinking: Keep enough money in ultrasafe accounts to cover life’s emergencies, but no more. New rule: Relying more on cash can rescue you in an “asset emergency.” For most of your career you’ll want to set aside about six months’ worth of living expenses in the bank. That money covers the mortgage and puts food on the table should you lose your job. The fact that you’ll earn only about 2% is beside the point. You can’t take the risk. The simultaneous crash in stocks and houses has taught us that we need to redefine “emergency.”Rande Spiegelman, vice president of financial planning for the Schwab Center for Financial Research, recommends looking at the next one to three years and adding up any big-ticket stuff you see coming: tuition, a wedding, a down payment on a house. Once you have your total, aim to hold that much in a cash account or a low-risk investment such as a high-quality short-term bond fund. What to do: It’s not easy to build cash savings and a retirement fund at the same time. If you have to make choices, build up that emergency fund first because you can’t expect to lean on your home equity or stocks if you lose your job. And see if you have some flexibility on the big-ticket obligations. Maybe you...

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Never a bad time to invest in gold

Gold’s popularity over the centuries has endured wars, plagues, civil unrest and all sorts of other perils. But would gold prices hold up well in a prolonged deflationary spell? For the first time in several decades, we’re starting to find out. With the economy shrinking sharply over the past two quarters, inflation pressures have faded. The U.S. Consumer Price Index has dropped in four of the past six months, and the inflation rate for 2008, at 0.1 percent, was the lowest reading since 1954. Gold prices also have retreated, slumping from a 2008 peak of $1,011 an ounce to a current price of about $915. “Gold is unusual in that it’s an asset that likes inflation,” Natalie Dempster, head of North American investments for the World Gold Council, an industry group, said during a recent stop in Phoenix. Even so, gold has bounced back from a low near $700 an ounce in November. The metal has held up better than many other commodities amid the deflation headwinds. Demand for gold isn’t just a function of inflation and deflation, of course. More than anything, gold is used in jewelry, with 68 percent of the metal destined for this use, Dempster said. Industrial uses such as electronics take an additional 19 percent, leaving a fairly small remaining slice for coins, bars and the like. Much of the demand, especially from places such as India and China, isn’t directly tied to U.S. consumer-price levels. The supply side of the equation, meanwhile, is affected by mining activity and new discoveries, of which there haven’t been many lately. “Mine production has been in a downtrend since 2001,” Dempster said. Supplies also are influenced by the amount of gold recycled as people sell jewelry to raise cash. “A fair amount of scrap has been coming back onto the market,” she said. With the economy showing signs of life, some observers think we may be near a crossroads where inflation picks up. Diversification suggested Russell Biehl, a chartered financial analyst at Classic Investment Management in Scottsdale, sees higher inflation ahead as the economy works through its rough patch and government spending kicks in. He suggests investors diversify a slice of their holdings into inflation-sensitive assets, including gold. “Eventually, the Federal Reserve will gain traction (in inflating the economy) with all the money they’re printing,” he said. Jay R. Penney, a chartered financial analyst in Scottsdale, also sees an investment role for gold. ‘A compelling story’ “As a dollar hedge, it is a compelling story for a portion of a portfolio,” he said. “I do expect inflation to rise, and dramatically so in the future, if things...

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Success breeds success

Have you ever met anyone famous? Did you actually get to talk with them? I did. The entire time I knew it would be a night I would never forget. How did this come about? It started in the same way that many great stories begin: in a smoky casino. If someone asked me what I was doing for my spring break, I would exclaim: “I’m going to Vegas!” to which everyone would follow that up with what my “game” was. Then I would explain that I was going for a real estate conference, and that I would have no time to gamble. That’s right. I went to Vegas, NOT to gamble! Blasphemy. After I said that I would get a reaction of disbelief to pity. Anyway, there I was, after about 12 hours of sitting and learning, standing around with the owners of SREC: Josh Cantwell, Greg Clement, and many others. It was amazing to see more than one person just “show up” whom I had seen on various webinars and websites, (and part of their gold coaching program). These people are famous! And I was just standing there (in the smoky casino, the best possible place to decide your dinner plans), shooting the breeze. Crazy. After awhile, we finally decided where to eat. It was someplace Italian. I didn’t care, really. It was amazing, I actually got to trade jokes with people who seem so normal, but then they go out and make $10,000 in one go and call it a bad month. But you didn’t come here for a story, did you? You want information, insight, intrigue (?). Well, here it is: what I learned most from my dinner from millionaires, actually just reaffirmed something that has been said time and time again. Your net worth truly is the average of those you surround yourself with If you have yet to hear this saying: take your five closest friends, average what they make in a year, and it should be very close to what you make. Why is that? I learned why that night. It’s one of those things that you really have to experience to truly comprehend, but I’ll say it anyway. To put it bluntly: Winners hang out with winners, losers hang out with losers. Misery loves company, but so does success. Whenever I would come back from a conference, seminar, boot camp, whatever, I would always feel so invigorated for real estate, investing, and life. Then, after awhile, my enthusiasm would start to fade. The reason being is that I was surrounded by negative people. Get this: successful people don’t put down each...

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Going Back to Work in Your Golden Years

Many 60-somethings are getting hit with a cold, hard reality: Their evaporated investment portfolios mean the golden years of retirement are getting further out of reach. In fact, the market’s downturn has taken such a toll that many retirees are now dusting off their resumes and trying to find work. Older workers (55 and over) tend to have relatively low unemployment rates (in part because younger workers, with less professional experience, are often the first to be let go), but the devastating jobs picture is undermining that advantage, according to a February report from the Economic Policy Institute, a nonprofit think tank. When the recession began in December 2007, older workers accounted for just over 11% of the total unemployed. That number jumped to almost 13% in February. Besides the fact that the timing couldn’t be worse, the growing ranks of older job seekers face some formidable hurdles. After all, many haven’t been on a job interview in decades. “They don’t know how to package their skills and accomplishments. They think the trick is just to list everything they’ve done, and get a job based on cumulative experience,” says David Delong, president of David DeLong & Associates, a research and consulting firm on work force issues. Outdated skills are another obstacle. Many 60-somethings aren’t up to speed with the latest technology and may not qualify for certain positions because of it. So if acronyms like HTML and SEO sound like a foreign language to them, they’ll need to brush up. Here are some steps the 60-and-over job-hunting crowd can take to get back in the job market. Know where the jobs are Sure, it’s hard to imagine that any industry is hiring these days. But it’s not as hopeless as you might think. Even better: Certain industries and employers are growing particularly friendly to older workers. According to the Urban Institute, an economic policy nonprofit, the 20 fastest-growing occupations among those with above-average shares of workers 55 and older include home health-care aides, pharmacists, veterinarians and (oddly enough) animal trainers. Other industries holding up in the downturn include education and the government. Search for full- and part-time jobs available in your area on the many sites that cater to older workers. Among those that offer listings and advice are Workforce50.com, RetirementJobs.com, and Encore.org. Get trained Many community colleges offer programs designed especially for seniors looking to get back into the work force. Rio Salado Community College in Arizona, for example, launched a program in partnership with AARP that helps older workers learn the ins and outs of job searching, including lessons on networking, building a resume and interviewing. The...

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Should You Invest in Silver Now?

Kiyosaki knows that there is a time to sow and a time to reap. He has reaped fortunes that helped him retire at the early age of 47. And, he sowed when real estate was not the preferred investment class and he cautioned real estate investors against risky strategies such as “flipping,” and relying solely on the appreciation of properties with low or no “cash flow.” So, what does this famous investor like now? He is looking at the commodity markets, specifically the precious metals: gold and silver. Yet gold and silver are investments that are still out of favor with most of the investing public. Why You Should Be Investing in Silver Just Like Robert Kiyosaki 1. For the average investor, silver can be an effective means of diversifying investment assets and preserving wealth against the ravages of inflation. Although the value of silver may vary, it has an intrinsic value that is immutable and permanent. Accordingly, many experts suggest that investors should include it among their investment assets. 2. The commodity markets, specifically the silver market, have outperformed both the stock and bond markets recently and, I believe, will continue to do so. Since 2000 if you would have invested your currency into gold you would have seen a 190% return on your money. If you would have invested your money into silver you would have seen a 240% return on your money. This is an important shift to recognize, yet very few individual investors are aware that this fundamental change in the marketplace has taken. 3. One of the most incredible truths about silver is that up until now, demand has outstripped supply for fifteen straight years. Annual silver supply deficits have run as high as 200 million ounces in boom years, and as low as 70 million ounces in years of recession like we are in now. It is important to realize that even in years of decreased silver demand the mining supply on an annual basis did NOT meet demand. There is nothing more bullish for a commodity than such a deficit condition. 4. There is actually less silver bullion available for investment than gold! This one fact alone should alert any intelligent investor into thinking that some silver must be held as part of one’s precious metals allocation. 5. When people have tangible evidence that something has gone badly wrong with the economy, they begin to hedge against it. They hoard real assets. Rich people hoard gold and silver. Here’s why: When things go wrong economically – when there’s a crisis like we have today – the price of silver goes bananas. 6....

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Don?t Believe Everything You Hear

OK, here’s your pop quiz of the week. The terms: inflation, recession, deflation and depression. Are they economic terms or are they psychological terms? Answer: When you let them operate together as the “little voice” between your ears, they become the same thing and you lose. The key phrase is, “when you let them.” It is no secret that in any difficult economic period, a lot of people get hurt and some people get very rich. Either way, it is the same economy, but a different psychology. The question is, Which person are you going to be? Let’s look at the terms and see how they apply. Inflation: How many times have you been overconfident, or even arrogant? What happens? Sooner or later, like an asset with value pumped out of proportion, the bubble bursts. Correction: Stay humble and connected to clients, associates, friends and their needs. Continue to always serve first. Deflation: Ever been disappointed? Not gotten the outcome you wanted? All your effort into a deal goes for naught when your prospect chooses another vendor or alternative. The money in your bank account is deflating. Do not rest on the laurels of yesterday. The best way to keep from deflating is to keep inflating through nonstop promotion, serving and selling. Keeping the pipeline and your daily calendar filled with revenue-generating activities keeps your energy up. Recession: Even though the government is undecided about whether this is happening or not, you and I know it’s old news. How about you? Ever feel like pulling back? Ever get tired of doing the same old thing? Ever have your energy level and passion level recede? And when it gets bad enough, have you ever felt like going back to bed and turning the electric blanket up to “womb” and forgetting about it? If you said no, you are lying. We have been there more than once. Now we are talking Depression. The No. 1 strategy to stave off all of these little voices and economic conditions is the same. It’s called Little Voice Mastery. It is gaining control of the war between your ears that takes you on an emotional roller-coaster ride every time you watch the market swing or hear the next politician or economist profess their confusing and alarmist rhetoric. There are more opportunities than ever. Weak competition is getting eliminated. That’s good for you and me because those of us who continue to educate and train on how to sell, how to communicate, how to recruit awesome teams and mostly how to manage our own emotions and “little voice” dialogue will WIN and snap up huge chunks...

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Vulture Funds On Hunt for Distressed Investments

A lot of us are worried in the global financial crisis that we are all facing. Companies are cutting down their costs. Unemployment rate rises. Economies are entering recession. Many are left homeless and are doing their best to make ends meet. While this scenario may be a disadvantage for a lot of us, this crisis poses an advantage and a great opportunity for the so-called “VULTURE FUNDS“. It’s a great time to hunt for their food. But what exactly are vulture funds in the first place? Just like vultures, birds who prey on dead bodies of animals, vulture funds also prey on dead things. They prey on distressed debts and assets of ailing companies experiencing financial turmoil. Sometimes, they are also called special situations fund. The ultimate goal is to buy these distressed debts and assets at a very low bargain prices and profit from it turning trashes into an instant gold. During the height of the Asian Financial Crisis in 1997, a lot of debts and assets turned sour. A lot of borrowers who availed loans in dollar currency were left with a ballooned principal and interest as an effect of rising mighty dollar against a basket of asian currencies. Because of this, there’s an aggressive increase of non performing assets in the balance sheets of banks which are considered as trashes ready for write down. In order to avoid huge potential losses from these trashes, banks dispose it by selling to vulture funds. One of the countries hardly hit by the Asian Financial Crisis before was our country Philippines. Non-Performing Loan Ratio (NPL Ratio), the ratio of non performing loans to total loans of banks, reached its peak to as much as 20% on their balance sheets. In order to address this problem, the Congress passed a law in 2002 called Special Purpose Vehicle Act of 2002 (SPV Act of 2002). This particular law gives huge tax incentives to vulture funds buying distressed debts and assets of banks. Six years after the passage of the law, banks now have considerably reduced their NPL ratio to as low as 5% disposing billions of distressed debts and assets to vulture funds set up by leading investment banks such as Deutsche Bank, Lehman Brothers, JP Morgan Chase, Morgan Stanley, Amroc Investments, and Barclays Capital. On the latest study conducted by Debtwire on Asian Distressed Debt Outlook for 2009 surveyed among 100 hedge funds, China and Indonesia posed the greatest opportunity for distressed debts and assets as an effect of the global financial crisis that we are currently facing. Truly, vulture funds can easily turn banks’ trashes into gold. But as with any other investments, high...

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Opportunities During Economy Recession

Well guys, I think we still got opportunities creating wealth during economy downturn. Here are some ideas. 1. Investing real estate. Buy foreclosed properties as the price is at the rock bottom. Having a house/apartment to stay is necessity, tenants (ex-house owners) still need a place to live after being foreclosed. There is still demand for renting property during recession. Robert G. Allen is expert in buying foreclosed properties, please read his famous book ‘Nothing Down’. 2. Buying a business. Slow down sales will hurt business. Find a good prospect business and strike at the right price. Sell off the business when the time is right. 3. Buying undervalue stocks. Find strong fundamental companies and buy their stocks if they are undervalued. Remember Warren Buffet’s advice, buy when people are scare enter the market, sell when people rushing to buy. 4. Buying unit trust/mutual fund. If the 10 years cycle assumption is correct, shares price will rise again. So buy now as almost all are in low price, they might be increase few years later. Advice from Robert Kiyosaki, investment by hoping for capital gain is risky. So, it’s up to you to decide. 5. Investing in precious metals. Precious metals like gold price tend to rise during recession. Same case might happen to current situation, but it is reverse currently due to banks and investors converting gold to USD. But still a lot of analysis suggested us to buy gold. 6. Buying devalued currencies. Currencies like AUD, NZD, SGD, IDR and ISK are dropping their value against USD. Some countries offering high interest rate, eg. Indonesia (10%), Australia (3.5%), Iceland (18%) and Sri Lanka (23%). You can have two types of profit: high interest rate return and potential of that currency to rise against USD. Some bankers offer facilities to deposit your saving into foreign currencies, check them out. 7. Obtain loan from low interest rate countries. Guess what you gonna do with this loan? Of course put into higher return places eg. blue chip stocks with high return or saving in other countries banks offering higher interest rate. Countries offering low interest rate so far are Japan and USA. You gonna have your stable passive income guys. 8. Buy tax lien certificate. You can buy this at most states of USA. I think the chances of house owner late paying tax are higher during recession. You may make a small fortune there. 9. Blogging. Since your workload is less during recession. Find some of free time to blog. You maybe rich because of this. Please helping mine too. 10. Offering loan to needy people. Setup business to...

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Investors need to overcome fear factor

Ever been on a roller coaster? It’s scary to even see it tumbling down from a height, scarier still to be in it. Most people scream, close their eyes tightly shut, with hands tightly clenched over the support beams till their knuckles are white. Some pray and even wonder at their own wisdom of taking a roller coaster ride. At the end of it, when it comes to a stop, most agree that it was one hell of an exhilarating ride that they had ever experienced. Similar is a stock market. In the middle of the ride, you’ll find lots of faces drained of their life blood—people who seem to be cursing their luck and the guy who had asked them to invest in the stock market. There are others who are throwing up, many who are crying and some who seem to be enjoying it. If you were to talk to such people from the investment community, you’ll know that they are worried about the turmoil, but have chosen to keep their faith in the markets. They are in it for the long-term. They have chosen investments carefully and are not bothered about the turmoil that is shaking the world at the very foundations. If there is one person who deserves a prize for sheer guts, it has to be American investor Warren Buffett. He has infused $5 billion into Goldman Sachs and another $3 billion to GE in the past 15 days. It’s not charity either. Buffett is acknowledged as one of the savviest investors of our time, maybe of all times. He sniffed out a fabulous bargain. He got preferred stock from these companies that pay him a dividend of 10%, with the option of investing in the common stock to the same extent, within five years at a predetermined price. It’s a win-win deal he has brokered for it is a vote of confidence on the company. Coming from Buffett, it’s like an investment grade rating or better than that as he is actually putting the money compared to rating agencies’ grades. That’s a good deal, isn’t it? Is there no risk at all here for Buffett? Of course, there is. These companies are still vulnerable. That is the reason they required the cash infusion in the first place. But with Buffett’s backing , they will have access to more funds and have a shot at becoming healthy again. The price that these companies paid was the fat dividend that they had to fork out—a small price to pay if the alternative was to go belly up. There are others who are scouring the wreckage...

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