Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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How much did Madoff scheme cost?

Madoff’s claim to have defrauded investors out of $50 billion may have been exaggerated, attorneys say, and it could take years to unravel the true cost. January 2, 2009 NEW YORK (CNN) — The Bernard Madoff scandal will certainly end up as the most expensive Ponzi scheme in U.S. history, but the $50 billion price tag claimed by the disgraced financier may end up as fictitious as the returns that he had promised investors. Madoff, charged in December with defrauding investors by as much as $50 billion, may have calculated the figure based on double-digit returns he had promised but never delivered. “Taking Bernard Madoff’s word for the total number is probably not an accurate way of accounting for the losses,” said Jonathan Levitt, an attorney representing individuals who lost money in the Madoff scandal. “I don’t think there’s any way to know the total amount yet,” said Greg Blue, an attorney with Morgenstern, Jacobs & Blue. “Everything we’ve heard is that his books and records are in disarray. There’s no official tally yet.” The task for investigators poring over Madoff’s muddled books is to figure out the scope of the losses. A Ponzi, or pyramid scheme, is an investment fraud in which high profits are promised to investors from fictitious sources. Early investors, and those who take early returns, are paid off with funds raised from later ones. Say an investor put $100,000 with Madoff in 1990 and saw that figure rise on paper to $1 million this year. Is the investor out his $100,000 principal or a total figure that never actually existed? For example, Yeshiva University announced this week that of its $110 million in Madoff investment losses, only $14 million came from principal. These questions are complicated distributions taken by many investors on their investments. For example, if an investor withdrew 10 percent per year in returns, and made back all his principal, could he be accused of profiting from the Madoff’s system of repaying old money with new, and subject to lawsuits from other defrauded investors? A further question that some may be asking would involve the “opportunity cost.” An investment placed with Madoff could have been made elsewhere and realized actual returns. A court-appointed trustee, Irving Picard of the law firm Baker and Hostetler, is currently working through Madoff’s investments for the eventual distribution to defrauded investors. Madoff complied with a court order to supply a list of his assets to the Securities and Exchange Commission by Dec. 31, 2008. Attorney Levitt said the process of untangling Madoff’s web of financial dealings could take years and a team of 500 accountants, lawyers and...

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The Rich Dad Difference Videos (#1 – #4)

Video #1 – 3 Types of education Video #2 – The Cashflow Quadrant Video #3 – Savers Are Losers Video #4 – Assets and...

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When the Going Gets Tough

When the Going Gets Tough the Tough Get Going This old, but poignant cliché applies in every situation when something is going off track-that is-going off track from what we currently know it to be. The news media and politicians create a ‘sky is falling,’ atmosphere when they focus on the bad news. Yes, it is tough to be laid off or seeing your friends or family get laid off, or if you own a business to see your products or service in a slump. However, there IS money to be made.  You need to think, ‘outside the box,’ and see the situation in a different light. What you focus on is what you attract.  Yes, the Law of Attraction applies in every situation-albeit the analysts are predicting doom and gloom, you can move outside the current paradigm. If you talked to Warren Buffett, he would tell you to analyze what can be done-versus what cannot be done.  Buffett did not become the richest person in the world by worrying about a downturn in the economy or doing what everybody else does. He developed and worked a plan to continue to grow his wealth. When everybody else is selling their stock, Buffett is buying. Yes, he gets ‘sweetheart’ deals and all that, and you are not Warren Buffett.  However, my point is that, in tough times, you have choices, even though they may be few.  You can give up or think, ‘outside the box.’  Instead, of seeing the glass as half empty you can see it as half full. Instead of thinking and focusing on doom and gloom you can develop creative strategies to stay ahead of the ‘so-called’ down turn. The economy rises and falls in response to what people are willing to put into it. Likewise, we have inside ourselves an inner economy that rises or falls in response to our beliefs about what is possible or impossible-positive, negative or neutral. The degree to which you are willing to challenge your belief system determines the success of your inner economy. Have you ever wondered why some families are particularly talented in music or art? Imagine if your family of origin had a belief that musical talent was something they lacked. As a member of that group, you would likely create that same belief about yourself. As a result even if you had the desire to pursue musical endeavors, you might hesitate to get behind yourself, fearing that your investment would be for naught. Even if you had the courage to follow your passion, your inner belief that you inherently lack musical talent would probably be a major obstacle in...

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Do Not Limit What You Can Accomplish in year 2009!

As the calendar year comes to a close, many of you will soon be sitting down to write your New Year’s resolutions. You may have your sights set on quitting smoking, getting into better shape, or spending more time with family. Perhaps you want to be more environmentally friendly this year, finally learn to play the piano, or take that trip you have always wanted to take. When setting personal goals for self-improvement, the possibilities are endlessly varied; however, on the forefront of everyone’s mind thisyear should be your personal wealth, and the quantifiable goals you can set to ensure that you prosper in the upcoming year. I assure you, we will do everything we can to assist you in achieving the financial and educational goals you set. Whatever you choose to include on your list, my suggestion to you is to expand it. I never cease to be amazed at two things: the unlimited capabilities of the human soul to achieve the greatness to which it aspires, and how few are those who ever undertake such challenges. Do not limit what you can accomplish in the upcoming year. Dream big, make goals that others may perceive to be outlandish, and work hard to achieve them. Kim Kiyosaki Read more here: Do Not Limit What You Can Accomplish in year...

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10 Ways to Save Energy and Money

It’s no big surprise that energy costs money, but some people greet their bills each month with shock when they see how much their consumption is costing them. According to the U.S. Department of Energy (DOE), the average family spends approximately $1,600 per year on utility bills alone. Anything you can do to conserve energy puts some of that money back in your pocket. Let’s take a look at 10 painless ways to reduce consumption and cut your expenses. 1. Use Your Thermostat Turning up the temperature during the summer and turning it down during the winter are great strategies for putting your thermostat to work for your wallet. The DOE recommends setting the air conditioner at 74 degrees and the furnace at 68 to keep your house comfortable while reducing your energy costs and decreasing the demand on the energy grid. A programmable thermostat lets you make the house hotter or cooler during periods when you aren’t home. This reduces the temperature difference between the exterior and interior of your house, which in turn reduces energy loss. If you don’t have a programmable thermostat, you can manually adjust your existing unit. 2. Ceiling Fans If you have ceiling fans in your house, turn them on and use them properly. According to Energy Star, a voluntary labeling program sponsored by the DOE and the U.S. Environmental Protection Agency (EPA), ceiling fans should be set to spin counter-clockwise in the summer, which pulls hot air up to the ceiling and away from the living space. In the winter, reverse the setting so the fans blow the hot air down. 3. Energy Star Appliances Energy Star also identifies energy-efficient appliances, including washers, dryers, refrigerators, freezers, dishwashers, dehumidifiers, room air conditioners, computers and more. When you are shopping for new appliances, look for the Energy Star label and you can rest assured that the items you are purchasing will go a long way toward saving you some cash. The point here is to not increase the use of these items just because they are energy savers. This is much the same as concept low-fat food: consuming more defeats the purpose. 4. Home Electronics Stereos, DVD players, televisions, kitchen appliances, and any other plugged-in appliances draw a small amount of power even when turned off. Large LCD and plasma televisions consume up to 400 watts of energy when in use and about four watts when not in use, according to the British Broadcasting Corporation. Use the surge suppressor to turn them completely off when not in use, or unplug these items until you really need them 5. Energy-Efficient Light Bulbs A quick and easy...

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Organizing yourself to financial success

“How do you know where you are going, if you don’t know where you have been?” I am a big fan of measuring performance through numbers. Numbers have no political agenda or emotions. They simply measure a result. In business, if I spend $10,000 on a trade-show, how much business have I got back from that? If its less than $10,000 then perhaps we shouldn’t sign up again next year. But most of us do not take this type of analysis in our personal lives because we don’t have a proper record keeping system. Watch any television show where they do a financial make-over and what’s the first thing the host does? Makes the person organize their financial lives so they know where they are at. You can’t plan the future without figuring out the results of your past and adjusting accordingly. When I was a little kid, my parents always argued about our “great” dining room filing system (he says with sarcasm). Everyone just threw the mail into piles onto our dining room table (we ate in the kitchen). My Mom always tried to clean it up and my Dad was always saying “don’t touch my stuff!” (I suspect a lot of you are nodding your heads remembering similar discussions at home). Of course, come tax-time, there would always be a mad scramble to find this tax stub or that statement, buried somewhere in piles. I am known at work as the pile guy- I file in piles at my desk (gee, wonder where that came from?) but I believe I am pretty good at getting myself organized on my personal finance side. I am not a personal organizer but this is what I do: I had my desk built-in with a shelf over it when I first moved into my condo. This is where I put all my current filing. My last year’s records are in the condo for easy access and everything else is in storage. I have two magazine files on my shelf over the desk. I bought them at Ikea for a couple of bucks each. One is labeled “bills” and the other “filing.” As soon as I get the mail, I file into one of the two files- immediately; no mail piles. Everything that doesn’t fall into those two categories, I recycle. Every Sunday I empty out both by either paying the bills or filing. I have separate binders for the following: (i) financial statement (bank statements, transaction records from stock trades, portfolio statements etc.); (ii) mortgage and condo related material (this is where I keep the legal documents from the purchase of...

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How the Financial Crisis Was Built Into the System

~ Robert Kiyosaki How did we get into the current financial mess? Great question. Turmoil in the Making In 1910, seven men held a secret meeting on Jekyll Island off the coast of Georgia. It’s estimated that those seven men represented one-sixth of the world’s wealth. Six were Americans representing J.P. Morgan, John D. Rockefeller, and the U.S. government. One was a European representing the Rothschilds and Warburgs. In 1913, the U.S. Federal Reserve Bank was created as a direct result of that secret meeting. Interestingly, the U.S. Federal Reserve Bank isn’t federal, there are no reserves, and it’s not a bank. Those seven men, some American and some European, created this new entity, commonly referred to as the Fed, to take control of the banking system and the money supply of the United States. In 1944, a meeting in Bretton Woods, N.H., led to the creation of the International Monetary Fund and the World Bank. While the stated purposes for the two new organizations initially sounded admirable, the IMF and the World Bank were created to do to the world what the Federal Reserve Bank does to the United States. In 1971, President Richard Nixon signed an executive order declaring that the United States no longer had to redeem its paper dollars for gold. With that, the first phase of the takeover of the world banking system and money supply was complete. In 2008, the world is in economic turmoil. The rich are getting richer, but most people are becoming poorer. Much of this turmoil is directly related to those meetings that took place decades ago. In other words, much of this turmoil is by design. Power and Domination Some people say these events are part of a grand conspiracy, and that might well be. Some people say they represent the struggle between capitalists, communists and socialists, and that might be, too. I personally don’t participate in the debate over a possible global conspiracy; it’s a waste of time. To me, the wider struggle is for power and domination. And while this struggle has done a lot of good — and a lot of bad — I just want to know how to avoid becoming its victim. I see no reason to be a mouse trying to stop a herd of elephants from fighting. Currently, many people are suffering due to high oil price, the slowdown in the economy, loss of jobs, declines in home values, increased bankruptcies and businesses closings, savings being wiped out, the plummeting stock market, and rising inflation. These realities are all direct results of this financial power struggle, and millions of people are...

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What The Heck Is A Bureau Credit Repair Report?

To get a bureau credit report, you can do so from one of three federally recognized credit bureaus: Equifax, Experian, or TransUnion. Each of these bureaus will allow you to get one free report- which means if you access all of them, you can get up to three free bureau credit reports per year. Be sure to take advantage of this fact, and keep an eye not only on your finances, but on your security. If you are working towards repairing your credit, these reports will become especially important.   Oh No- What’s This, A Mistake? Correcting mistakes or questionable activity on your credit report right away is of vital importance. The more time goes by, the harder it can be to correct any inaccuracies. As well, your credit rating suffers. Not to mention being harassed by bill collectors for bills marked unpaid. When you see a mistake, you have to make a hand-written request to challenge the information and send it to the credit bureau that sent you the bureau credit repair report. The credit bureau has 30 days to get back to you. In the meantime, they will be contacting all of your creditors to verify if what you said was true. If they cant find anything to disprove your written request, theyll change the information in your favor. As a borrower, you also have the right to have written statements included with your credit bureau repair report. These can be included as a permanent record in your report- for future lenders to read your side of the story. For instance, if you were involved in some type of natural disaster or other significant event which affected you substantially, but had never missed a loan payment previously, they may take this into serious consideration when considering lending to you. What a Credit Bureau Report is Not A bureau credit repair report does NOT magically remove all information about your substantiated bad credit days, such as information about bankruptcies, loans and repossessions. Changing that information is highly illegal. A bureau credit repair report also is not a new or secondary identity file about your credit history. That also is incredibly illegal ” right up there with fake I.D.s and forged passports. If you have to have changes made to your bureau credit repair report, be sure those changes are actually put into your report. The best way to do that is to order another report. Life is fun, isnt it? Here is the original: What The Heck Is A Bureau Credit Repair...

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7 Keys to Creating Wealth

What the financially challenged don’t know… 1.  They don’t know how to get into the money flow. The crucial distinction between sportsmen and spectators is not that the sportsmen play and the spectators watch; it’s that sportsmen get paid, while spectators pay! To get paid you need to be inside the lines, on the field of play. As long as you’re the one settling debts, you’re a spectator. You’re investing in someone else’s game. 2. They don’t know how to create value. To get into the money flow means creating value, and value is created automatically when you’re in your own flow, when you’re doing what comes naturally to you. Donald Trump is in his flow buying and selling property. He has an eye for spotting opportunities in buildings, which he buys and sells. He has become one of the biggest property tycoons in America. 3. They don’t know the difference between good debt and bad. When you buy a car or a boat, you’re buying a liability. Any purchase that does not put cash in your pocket is a liability. Good debt buys assets that bring in cash. If you take a loan to buy an apartment building that will produce revenue, that’s good debt. You can also borrow against your mortgage to acquire more assets. 4. They don’t know how $100 saved can be turned into $1000 invested. When you’re spending everything you earn just to survive and pay off debt, you normally think you don’t have much left to save. But the truth is you don’t need loads of cash to start saving, a few hundreds saved can be used to raise finance to buy an asset that will generate thousands. You can start with as little as $100. 5. They don’t know how to use other people’s resources. Take a look at any wealthy or successful person. Are they operating alone, or do they have a team of supporters? The gung-ho, lone-ranger approach simply does not work. The first step to getting on to the field is putting the right team together. You don’t have to know how to do everything, you only have to know who can do it for you. 6. They don’t know how to control their emotions. Starting your own business is risky. So is any investment. The single most important factor is not knowledge, but being able to manage your own emotions. Most people don’t invest or don’t start their own business, not because they don’t know how, but because they’re afraid. which leads to errors of judgment. Emotional maturity is absolutely crucial. 7. They don’t know why they want...

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Getting Rich By Saving?

When we think of ways to get rich, most of us picture making tons of money, so much money in fact that we can live the rich life, where how much money we spend becomes irrelevant. The truth is, that picture is flawed (to say the least). In recent years we’ve seen actors, former athletes and formerly successful businessmen who burned through tens, (sometimes hundreds) of millions of dollars. But before we get into a debate, we need to agree on what we refer to as “saving”. And in that regard, I tend to favor Robert Allen, the author of Multiple Streams Of Income, among other personal finance bestsellers. Here’s Robert Allen’s take on the subject: There are two meanings for the word save: (1) to pay less for your purchases, as in “Safeway saves you more!”; (2) to create a surplus, as in “I need to save money for retirement.” Some people are good at the first save. They like to shop for bargains. But they are terrible at the second save. Wealthy people are great at both. The second save involves taking that money that you refrained from spending and actually putting it to work (also known as investing it). Finding ways to save money can only take you so far. I was recently watching a commercial for a Robert Kiyosaki seminar where he flat out says that “Savers are losers”. If you keep the money you save in a bank account, inflation will, slowly but surely, erode its value. If you put that money into a money market account, or a CD, you’ll barely keep up with inflation. That’s sticking to the first save. When you look at it this way, Kiyosaki is totally right. Just understand that you’re not a loser not for saving, but for failing to invest what you’ve managed to save. Actually, it’s hard to get rich without getting some sort of hold on one’s finances. And if you do strike it rich while your finances are a mess, your prosperity will likely be short-lived. Saving is indeed the cornerstone of financial success, but you can’t get rich through saving alone. It has to be complemented with investing for it to translate into financial freedom. Read the original: Getting Rich By...

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