Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Finding Your Magic Investing Formula

– Robert Kiyosaki People often ask me, “How do you find great investments?” My standard reply is, “You have to train your brain to see them. Great investments are all around you.” I know that’s not a very satisfying answer. Most people want something more specific and concrete. But my reply is as accurate as possible. If we could’ve seen all the great investments just in the past decade, we’d all be multi-billionaires. Missing Out on Millions There have never been more opportunities to become rich than in the last 10 years. And there’ll be even more opportunities in the next 10. Let me explain. Like many investors, I didn’t see the power of eBay almost a decade ago. If I had, I’d be a billionaire today. Nor did I see the power of YouTube, or Google, or MySpace. Being an old guy, my brain isn’t trained to see investing opportunities in cyberspace. So I missed them. Thirty years ago, when my business career was just starting at Xerox, I was introduced to a new type of computer. I wasn’t tuned into computers at the time, so little did I know that I was looking at the early version of what was to become the Macintosh. So I also missed that billion-dollar opportunity, too. How many billion-dollar opportunities have I missed? Maybe millions. If I’ve missed so many million- and billion-dollar opportunities, why am I writing articles and speaking worldwide about financial independence? That’s a valid question, and the answer has to do with helping you find great investments. Perseverance Pays Off I took my first real estate investment course in 1974 in Honolulu. The cost was $385, and I believe it was two or three days long. Toward the end of the class, the instructor said something I’ve never forgotten: “Now you know the difference between good real estate investments and bad real estate investments. Now you all know what to look for.” He paused and then added, “The problem is, most people will tell you such investments don’t exist. Your friends will tell you so, and so will real estate agents.” Truer words were never spoken. For the next few months, I went from real estate office to real estate office, looking for investments. As promised, the real estate agents told me what I was looking for didn’t exist. My friends and co-workers at Xerox told me the same thing, and said I was either dreaming or smoking funny cigarettes. Finally, in a small, obscure real estate office in downtown Waikiki, I met a scruffy little broker who said, “I have what you want.” The next weekend...

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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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Hear This

 – Robert Kiyosaki The other day, I asked Mona, the president of The Rich Dad Company, what she thought of the rough draft of my new book, which is due out this fall. She took a deep breath and said, “I am disappointed in it; it lacks punch and leaves me wanting more.” Her words cut like a knife. I felt like I had been stabbed in the heart. I didn’t respond. But once I got over my initial reaction, I was able to appreciate Mona’s candor–and her courage. I asked her what was missing and what we could do to improve the book. (And I’m happy to say that revisions are well under way.) Unpleasant feedback is never easy to take, nor is it easy to give. We would all rather give or hear only positive feedback. Yet feedback, both positive and negative, is essential for personal growth, character building and business stamina. The world is one big feedback loop. For example, when your CPA hands you your financial statement, he’s giving you feedback on how smart (or stupid) you are as an entrepreneur. When you step on your bathroom scale, you’re also looking for feedback. Many people don’t step on a scale or look at their financials for the same reason: They don’t want the feedback. They want to pretend everything is just fine. In business, if your ads don’t increase sales, that’s feedback. If a customer walks into your store and walks out without buying anything, that, too, is feedback. Blogs are feedback.  My rich dad often told me, “There are two types of feedback: to your face or behind your back.” He frowned on the businesspeople who surrounded themselves with yes men. He said, “Yes men are dangerous people. Yes men are nice to your face but often stab you in the back.” Feedback is felt physically. I feel feedback in my heart. Some people feel feedback in their throat and others feel it in their gut. The next time you feel your heart, throat or gut react to what you’re hearing, be grateful for the honest feedback and then grow from the experience. Face-to-face feedback takes tremendous courage on both sides. Cowards find other ways of communicating. One of my most important tasks as an entrepreneur is to keep the door open for both pleasant and unpleasant feedback. If I don’t allow feedback, honest communication becomes polite, the company struggles and customers go elsewhere. If you want to be successful, step on the scale, read your financials and ask for feedback . . . good and bad.   Read the original here: Hear...

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Learning to Delegate

  Karen E. Klein I have a small company and want it to grow, but have no experience trusting employees to take care of the details I now look after myself. How do I start delegating tasks once I start hiring a larger staff? —K.G., Seattle It sounds as if you’re hesitant to let go of some of the control you’ve established as a hands-on entrepreneur. This is a common early hurdle for companies moving to the next level of sophistication. But before you spend time and money building systems or hiring employees, you’ll need to sell yourself fully on this idea: If you don’t, even your best efforts to delegate tasks won’t work. “The first person to convince that you can have a business that works without you is yourself. If you do not have a vision of what that looks like, then how can you expect someone else to have that vision for you?” asks Brian Blomgren, owner of business coaching and training firm ActionCOACH in Atlanta. “Because an owner has already sacrificed so much to build the company, he or she may not be able to see their value to others outside of the role they play in their professional life. If you find yourself in this situation, take the time to create a new identity that you want to pursue and live up to,” Blomgren says. Another stumbling block you may run across as you begin turning responsibilities over to your new employees is the feeling that you must constantly be busy—or even overwhelmed—with work during your day. As your employees begin taking over some of the detail work that you’ve always handled, you’ll need to step back and not indulge your tendency to micromanage. “Build a vision for yourself on what you will be doing once your business is running day to day on a self-sufficient basis,” Blomgren says. Many entrepreneurial companies suffer because their leaders do not have the time to keep up with trends, check in with clients, talk to vendors and competitors, and strategize about their firms’ future direction. As you let go of routine business jobs, free up some time every day, or even every week, to think about your company’s overall vision and brainstorm with key employees. Your ideas will help your firm grow in a smart, strategic manner. Plot your daily activities on a four-quadrant chart with the horizontal axis being the level of skill and then the vertical axis being your level of enjoyment in the activity, Blomgren suggests. “Your lower-left-corner quadrant would be low skill, low enjoyment, while your top right corner would be high skill,...

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Robert Kiyosaki interview on Days With Zahrah

Robert Kiyosaki appears on Days With...

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Government bailouts and school children

~ Marcus De La O There was something missing from the $700 billion taxpayer funded bailout that was signed into law. It seems impossible, I know. Congress spent several days making sure nothing was left out, including money for Puerto Rican rum makers, race track owners, wooden arrow manufacturers, and of course, the always under-funded wool researchers. It was painful to see the very people who caused the mess taking charge of fixing it. If it made you mad, it should have. The bailout amounts to over $2,300 from every American’s pocket, and there are no guarantees that it will work. Most of us would have preferred to stick it to the man and let those greedy Wall Street villains go bankrupt. If you watch TV or read the paper, you’ve heard that the problem was caused by our government loosening lending standards. This is a symptom of a larger problem, one that needs to be fixed now. The real cause of this disaster is not on Wall Street. It is much closer to home. Imagine if our children were forced to take money management classes starting in the third grade. Forced! Forced to take classes in money management? Why not? They are forced to take algebra. How many of us use that in the average day? They are forced to take biology, foreign language, health, and geometry. Sex education may soon be forced upon our children as well. Money management, however, is not even an elective. When offered an amazing loan to buy a house with little or none of your own money, a properly educated young adult might say “no thank you.” When tempted to run up the VISA debt to get that new plasma screen, the ghost from classroom past would say “No.” Every year a new batch high school graduates take to the street with no financial education. This is the real cause of the financial crisis. Instead of a couple thousand regulators teaching banks how to lend, let’s teach a couple hundred million Americans how to borrow. Rather than showing us how to spend our money, our government should show us how to save it. Our children need to come out of high school knowing that managing their money is just as important as earning it. Our government has let us down in this area for a long time and missed another chance. Financial education should be required in all public and private schools. Over the past few weeks, we did not hear one of our leaders speak about the importance of teaching money management to our children. Not Bush, Obama, McCain, Pelosi, Cox,...

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Bankruptcy Is Not the End Of The World

by William Blake You may have had to file for bankruptcy because of events that have affected your financial circumstances. Bankruptcy, however, is not the end. . Deciding to file for bankruptcy is not easy. But many people have had to and are now able to care for their finances stably. You can dust yourself off and get back on your financial feet even after bankruptcy.   All damage done to your credit by the bankruptcy process can be healed. Chapter 7 bankruptcy eliminates all of your debts, and some of your assets. Afterwards, building up your credit again is dependent on you paying your bills in a timely fashion. Be responsible with what you still have left. You still have your home. Make utility payments on time. Establishing a record of timely payments is one way to work towards fixing your credit. After a few months, apply for a secured credit card. Secured cards require the cardholder to pay a deposit. This is the money that you will start with. Over time, you may qualify for an unsecured credit card. Keep just one credit card. And don’t charge purchases on it needlessly. Simply having a credit card that can be used in emergencies is a way to build back your damaged credit. Train yourself to pay for everything in cash. Unless you have cash to back up a purchase, don’t buy anything; this could be one reason bankruptcy was filed in the first place. Going back to using cash is a healthy way to build up a bank account and savings account balance. Plan to succeed. Since you have already experienced bankruptcy, you know you don’t want to go through the process again. Establishing a good savings plan that includes an emergency fund will help you prevent any future need to file for bankruptcy. Credit card payments shouldn’t present any kind of problem after having had all of your debt eradicated. When you do get a credit card again, you can expect to be bombarded with offers from credit card companies. They will do there best to get your business, but you can resist them if you are determined to stay out of debt. Learn to live within your means. This requires that you be prepared for the unexpected. Credit counseling classes or meetings with a financial advisor can be helpful, since they will provide you with great tips on how to maximize your savings and care for your expenses responsibly. A financial advisor can take the extra money that you put in a savings account and show you how to invest for the future. One day you...

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Go Big or Go Home

-Robert Kiyosaki – A few days ago, I spoke at a luncheon with approximately 500 local business leaders. I began with these words: “I have good news and bad news. The good news is you will have fewer competitors next year because many of your competitors will be out of business. The bad news is you might be one of those out of business.” I then showed them my local newspaper, pointing to the headline “Businesses Are Struggling.” I opened the newspaper and said, “I can tell you who will be in business.” I pointed to a full-page ad for a local appliance store. “I’ll bet money that this business will be here next year. Why? Because this business is advertising more aggressively than its competition.” In previous issues of Entrepreneur, I’ve written about the importance of advertising and promotion. I’ve shared my rich dad’s lesson that when business drops off, many entrepreneurs listen to their accountant’s advice and cut back on advertising and promotion. That’s the worst thing you can do. When times get tough, your job is to promote more, not less. Promotion is a six-week cycle. That means if I promote today, business increases six weeks later. Many businesses violate the six-week cycle. They promote for, say, four weeks, and because nothing happens, they stop. Two weeks later, there’s a sudden increase in business. For four weeks, business remains strong. Then, just as suddenly, business drops off, because six weeks earlier, the entrepreneur had stopped promoting. My rich dad’s lesson was to never stop promoting: Promote whether the economy is strong or weak; promote even when you may not have the money. If you have no money, stand on a street corner at lunchtime with a sign hanging around your neck promoting your product or service. Not only will you meet new customers, but you might also save money on lunch, lose some weight and get a suntan. Obviously, it takes more than just promotion to do well. To be successful, a business also requires strong fundamentals and a desirable product or service. During tough economic times, though, even some good businesses fail; some businesses shrink and others grow. When a business closes, its customers migrate to the business that fights hard and stays open. Businesses that promote while others cut their ad budgets have a better chance of getting bigger . . . even if the economy is shrinking. Original post: Go Big or Go...

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Raising Kids in a Consumerist World

~ Carrie Schwab Pomerantz ~ Call me old-fashioned, but lessons like the work ethic, financial responsibility, delayed gratification, and charity are, to my mind, just as vital as knowing about balancing your checkbook, portfolio diversification, and the ins and outs of 401(k) plans. In an affluent society that seems more determined than ever to get more — more wealth, more possessions, and more of the status that seems to come with those commodities — values and virtues are more important than ever. Teaching your kids the ABCs of money management is crucial, but sharing your good money values can help make your hard work stick. I probably don’t need to convince you that values are important. Instead, my goal is to help you see how financial values can be taught, and that — whether you’re conscious of it or not — you’re passing your own values to your children through your words, behavior, and actions. The Example You Set I’m a big believer in giving kids direct, hands-on experience with money. Give them an allowance. Teach them to save. When they’re old enough, encourage them to work part-time. All these lessons will help your kids learn to use, accumulate, and earn money. But remember this: They’re also learning by example — your example. They watch you spend money every single day. They hear how you talk about work and investing. The way you deal with personal finance may be the single biggest factor in shaping their attitudes toward money. This does not, of course, mean you have to change the way you spend, earn, save, or invest. But it does mean you need to be aware of the example you set. And as a parent, you’re the ideal teacher for all kinds of lessons about finances and the values associated with them. It starts with the little things, like encouraging them to save part of their allowance. But every day is filled with opportunities to impart practical and philosophical lessons about money and values. Hands-on Lessons Small children can help comparison shop in the supermarket, for example; they’ll learn something useful and realize you’re prudent with money. Older children can help when you pay the bills; again, they’ll be learning something practical, and it’ll be an opportunity to teach them about day-to-day financial responsibility. Sharing this can teach them the importance of paying off credit card bills monthly. Tax time can be a chance to explore the financial realities of being a citizen in the community. When you make donations to the institutions you support, you can teach your children about the importance of charity and the idea of...

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ECON 101: Credit Crunch for Dummies

By SCOTT MAYEROWITZ ABC NEWS Business Unit Is your head spinning these days trying follow what is going on with the economy? Subprime. Collateralized Debt Obligations. Liquidity. Every day it seems as if these words — which nobody you knew was using just a few months ago — are being thrown around. The stock market is down. Government officials are scrambling to find ways to help the economy. And a lot of people are talking about a recession. So what does it all mean? And how did this all begin, especially when just a few years ago the economy was booming thanks to the red-hot real estate market? Well, that’s where the problem starts. A combination of low interest rates and aggressive new lending practices in the late 1990s and early 2000s led to a buying frenzy. Many banks were enticing first-time home buyers into the market with pitches of “historically low interest rates” and “no down payment required.” In June 2003, the Federal Reserve had lowered its key Fed Funds interest rate to just 1 percent. Mortgage rates were of course higher, but were still considered a relative bargain. Banks had also changed the way they made loans, opening up the American dream of homeownership to a whole new group of people who had always considered themselves renters. The Mortgage Boom With rising home values, almost everyone believed they could get rich just by buying a home. And pretty much everyone — even those with terrible credit histories — could get a home loan. Many got adjustable-rate mortgages with low, introductory teaser rates that made their mortgage payments affordable. Those rates would eventually reset to higher ones, but many owners planned to sell first or refinance. Even high-risk borrowers — if they made their mortgage payments on time and built up a good credit history — could refinance into a more traditional fixed-rate mortgage before their interest rates reset. And since the home would undoubtedly be worth more than it was just a few years ago, the banks were willing to lend out more money because the collateral for a loan — the house — would theoretically be worth even more in a year or two. How Wall Street Profited To facilitate some of these new loans to riskier borrowers, lenders and those on Wall Street came up with new ways to package them up and sell them off to big pension funds, private equity firms, mutual funds, foreign investors and any other investors looking to profit from the housing boom. Gone were the good old days when everything was simpler, where a local bank manager who knew...

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