Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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The #1 Skill of an Entrepreneur

  The #1 skill of an entrepreneur…. … is the ability to sell. Watch as Robert Kiyosaki speaks with Sara Nelson of Publishers Weekly about the importance of learning how to sell. He talks about how he does not consider himself an author, but an entrepreneur whose responsibility it is to sell his books. Read the rest here: The #1 Skill of an...

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60 Seconds Guide to Getting Out of Debt

~ The Motley Fool ~ Imagine being free of debt — no more sleepless nights over mounting credit card balances, no more ball-and-chain of debt feeding your anxieties, and no chance of threats from dreaded collection agencies. You can do it! Here’s the scoop — in one minute flat. 0:60 Resolve to spend less than you make Make it a habit as fundamental as stopping for red lights. Realize once and for all that if you can’t pay for it today — you can’t afford it. 0:55 Distinguish between Bad Debt and OK Debt OK Debt has an interest rate well under 10% — preferably with some tax advantages to boot. In the best case, what you bought with borrowed funds will appreciate in value. Home mortgages and student loans are examples of OK Debt. Automobile loans are on the border: They often satisfy the low-rate piece, but automobiles almost never appreciate in value. Bad Debt is everything else — from your titanium credit card to the 35% loan from Larry’s Kwik Kash. 0:50 Pick a winner Out of all your cards, pick the one or two major credit cards that feature the lowest annual interest rate. Resolve to use those cards for emergencies only. As for all the other plastic pals in your wallet, remove temptation by taking them out of your wallet. Throw them behind a major appliance, freeze them in a bowl of water, or decoupage them to a shoebox. Do whatever it takes not to use them. 0:41 Gather the latest bills from all Bad Debt accounts Line these up on the kitchen table. Find the minimum monthly payment for each account and then add these up to get an overall monthly minimum. Pledge to pay this overall minimum PLUS a hefty additional chunk every month — enough to make a solid dent in the outstanding balance of at least one account. If you can’t pull this off, you’ll have to make a drastic move to increase your income or lower your expenses. It’s harsh, we know, but it’s also an inescapable fact. 0:34 Pick the highest interest rate account and: Attack! Next, order the latest bills according to annual interest rate charged. Apply the “hefty additional chunk” (beyond the minimum) to the highest rate account(s). Repeat this process monthly until the last Bad Debt account is paid in full. 0:26 Ask for a lower interest rate Grab a bill from any account charging you more than 14% interest. Dial the toll-free number on the bill and ask to have your rate reduced — say, to 11%. Tell them that you’d really like to stay...

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Buy one home and get a second one free

The grocery shopper’s beloved BOGO — buy one, get one (free) — has moved into the realm of home sales. Yes, home sales. In yet another sign of how anxious sellers have become in today’s housing market, a San Diego real estate developer has offered a free $400,000 row home to anyone who buys one of his estate homes starting at $1.6 million. “We want to reduce our inventory,” Mark Connal, a vice president at Michael Crews Development, told the San Diego Union-Tribune. “We’re prepared to bite the bullet. … Right now, every builder I know is selling houses at less than it costs to build them.”                 Another company official, Dawn Berry, was quoted by a San Diego TV station: “We thought, ‘Why does it just have to be on Pop-Tarts and restaurants? Why not buy one home, get one free.’” Of course, you’ll have to pay property taxes on both. The houses available for $1.6 million and up are gated estate homes in the San Pasqual Valley. The row homes, in Escondido, once sold for $540,000, according to the Union-Tribune. A flier at the developer’s Web site says, “It’s never been done before and may never be done again!” The flier and a post at the company’s blog say the offer was good through May 31. A blog post at L.A. Land about the promotion generated plenty of comments. For instance, reader Greg said: “This is great! It will give me somewhere to park the free SUV I’ll get with the purchase of my new hybrid.” “steve in k.c.” said: “May I default on the first one and then still keep the second one? Thanks in advance. Honey, get the kids, and load the van … we’re moving.”   See the original post: Buy one home and get a second one...

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A fine line between good and evil…

There’s been a lot of posts on leverage lately in the blogworld so I didn’t think it would hurt to have one more… Also – I’m in no way advocating anyone use leverage for investments unless they are comfortable with the extra risks. Leverage is an instrument that almost everyone uses when they buy their house. Although most people buy a house to live in, not as an investment, it’s an example of where people are using leverage and they might not even realize it. If you ask people on the street about how they feel about borrowing to invest they might give you a lot of negative feedback. I suspect this is a holdover from times when margin accounts were the only way to borrow for investing. The problem with margin accounts is that if your investments drop in value enough then you have to come up with cash to pay the difference which is why certain investors were running out of windows in 1929. My opinion is that leveraged investing can be a useful tool but definitely entails extra risk. However it occurs to me that sometimes the idea of leveraged investments can be a question of semantics. Consider the following: Person A gets a $200k mortgage on his house with a 25 year amortization. After five years, his mortgage is $185k and he also has $10k in cash that he has saved. This person decides to invest the $10k into a dividend stock, let’s say…BMO. So now he has a $185k in mortgage and $10k of stock. Person B also gets a $200k mortgage on his house with a 25 year amortization. After five years, his mortgage is $175k but he has no extra cash to invest because he has been making extra mortgage payments. This person decides to borrow $10k from his secured line of credit and buys $10k of BMO as well and gets the tax rebate on the interest paid. According to popular wisdom, person A is the epitomy of responsible investing using good old cash to buy his stock. Person B on the other hand has made a deal with the devil and plunged into leveraged investing. So what’s the difference between the two? The only difference I can see is that Person B can write off his interest on his investments and Person A can’t. Obviously there are interest rate differences but I’m ignoring those since they shouldn’t be too significant. Moral is – if you don’t make extra payments on debt and use cash to do investments then you would be better off to put that cash into the mortgage...

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5 Best Ways To Earn Passive Income

1. High Dividend Stocks There are a lot of stocks that paying quarterly or yearly dividends. Over time, the power of compounding (with a little help from inflation) can substantially increase the value of your dividends. My mother bought the Indian subsidiary of Unilever (Ticker: UL) called Hindustan Lever about 20 years ago. She’s being reinvesting most of her dividends and today her annual dividends are larger than the value of the original stock purchase. American Capital Strategies (ticker: ACAS) has been growing its dividends approximately 10% every year. According to The Dividend Investor, If we invested $100,000 in ACAS on December 31, 1997 we would have bought 6906 shares. Your first quarterly check would have been $1,726.50 in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend payment would have risen to $17,095 by December 2007. For a period of 10 years, the quarterly dividend has increased by 300 %. If you reinvested it though, your quarterly dividend income would have increased by 890%. Yes, reinvesting the dividends in companies that have historically kept increasing their dividends is key. Even though you might get only 2.5% return today, eventually with the increase in stock price and rise in dividends, your annual return should be greater than 12%. This concept is very well explained in Prof. Jeremy Siegel’s excellent book, The Future for Investors, which I highly recommend. 2. Oil & Gas Royalties While there is a lot of fraud and speculation in direct oil drilling programs, they can be very, very lucrative for investors. Charlie Munger invested about a $1,000 in such an oil drilling program in the 60s and he’s estimated that its paid out over $500,000 in royalty payments since then. Apparently it still pays out $2,000 a month. Of course, most people NEVER see these sort of returns, but for the average person, investing in Canadian Oil & Gas Royalty Funds (or Income Trusts) is the next best thing. I’ve invested quite a bit of money into both the direct oil wells and the Canadian Income Trusts (or Canroys) and the overall result has been pretty positive in both (which is in excess of 12%). 3. Royalties on Books and Patents Royalties on Books and Intellectual Property Rights can be even more lucrative. However writing a best-selling book or creating a something thats worth patenting can extremely time consuming and expensive. For most authors and inventors, its a labor of love – something that they would pursue even if there was no monetary reward to it. But many ebook writers who sell get-rich-quick books about “making money online”...

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Don?t be too smart

Most of us think about our finances in terms of our top line — in other words, how much money we earn.  We pursue big incomes and then we spend those incomes on the right clothes, the right cars, the right home. Isn’t that what wealth is all about? Not at all. What really matters in building net worth isn’t how much we make, but how much we keep. That’s the bottom line on a financial statement. It’s also the key to accumulating wealth. Self-made millionaires know the importance of the bottom line. Thomas Stanley and William Danko, a pair of business professors, spent years studying households that had net worths of more than $1 million. Their research, outlined in their landmark work, “The Millionaire Next Door”, contradicts nearly all the stereotypes surrounding wealth. Most millionaires, it turns out, accumulate wealth by living below their means.  They avoid status objects such as big cars, huge homes and designer clothes.  They do their own yard work, drink beer instead of champagne, and stock up whenever laundry detergent goes on sale.  They put the emphasis on building up their bottom lines: the amount of money they have left over after taxes and living expenses. You don’t have to be a genius to adopt the same lifestyle.  Jay Zagorsky, an economist at Ohio State University, tracked down 7,000 American baby boomers who wrote a standard IQ test in 1980. He caught up to them in 2004 and asked them about their financial status.  Much as you might expect, the people who had higher IQs tended to earn more. But — and this is a shocker — there was no correlation between higher IQs and higher net worth. Smart people may earn more, but they appear to be just as vulnerable as anyone else to spending as much as they make and neglecting their bottom lines. One reason we get dazzled by a high income is that we forget the bite that taxes take.  If you’re a middle-class Canadian, you’re probably losing close to half of each additional dollar you make to income taxes, GST and PST. Think about what that means: the latte that costs you $4 in after-tax dollars costs you $8 in pre-tax dollars. (Makes you think twice about that morning treat, doesn’t it?)  The dinner at a fancy restaurant that costs you $250 in after-tax dollars costs you $500 in pre-tax dollars. (Gee, and the chateaubriand wasn’t even that good) Of course, the positive way to look at this is that if you pass up the latte and the dinner, you’re giving yourself the equivalent of a $508 raise...

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Rich Dad?s Other Cash Flow Quadrants

In his third or fourth “Rich Dad Poor Dad” book, Robert Kiyosaki expresses the advantages of investing in real estate by describing another type of cash flow quadrant. This cash flow quadrant describes the four ways to generate money through investing in real estate. They are: depreciation, tax benefits, rental-income, and appreciation. I like this model as it is simple to understand and remember. Let’s define each one a little bit more clearly: Depreciation – This is, thanks to Alan Greenspan, the amount structure loses in value over time, assuming no improvements have been done to it. Residential real estate, for example, is considered to fully depreciate its value in 27 1/2 years. So, for the purpose of taxes, an investor may choose to take that depreciation as a deduction. If the structure is worth $200,000, it’s depreciation for the year is $7273. Tax benefits – Anyone who holds a mortgage for property knows that all that mortgage interest is tax deductible. Similarly, when acquiring additional properties, the mortgage interest from those properties are also deductible, as well as improvements made to that real estate. Rental income – When we put a tenant into a property, be it residential, commercial or industrial, we usually receive an amount of rent associated with that occupancy. Hopefully that rent will cover the mortgage payment with some money left over. Appreciation – We all know that although we take depreciation at tax time, the property itself is actually appreciating in value as cities and populations grow. Typically, unless a major economic or whether related disaster occurs, real estate only increases in value. That is why banks and other lending institutions are willing to lend most, if not all the money to purchase properties.   Credit:Rich Dad?s Other Cash Flow...

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What you don?t know can hurt your kids

~ by Pocahontas ~ I’m a teacher by trade…so let’s take it back to school for a second, ladies, shall we? Raise your hand if you were ever told any of these things growing up: “Get a good education and a college degree.” “Work hard and move up the ladder.” “Save your money in the bank because investing is too risky.” “Get a good job with benefits and a pension.” Now do any of you whose hands are up know people have done all these things but are still struggling financially? Here’s a better question…do you think this is what the Rockerfellers or the Rothschilds are teaching their children?  Since my sistahs are without question some of the most astute women in the world, obviously you can surmise the answer to that is a resounding, “No”. Granted we all believe in the value of a first-rate education, but just because you have X many degrees and/or letters after your name does that really guarantee your financial success? As I said, my sistahs today are savvy enough to recognize that the wealthy are giving their kids something most people are not…and that is the “REAL” keys to financial freedom (after all, aren’t “they” the ones able to play golf at 9 am on weekdays while the rest of us grit our teeth through rush hour to go to a J-O-B? Clearly, they know something many of us do not).   So what IS it that they teach their kids? They tell them to own their own business so they can be in total control of their time and their income. Easier said than done, you think? Well, ask yourself this, “Can you honestly say you’d want your little one to grown up and do the job you’re currently doing?” Actually, do you own your job to be able to pass it down to your kids even if you wanted to after your retire from it like you could a business? Truth be told, most people would rather be the boss than answer to one, but they just have no clue how to make that happen. So allow me to share a few books with you that might give your “entrepreneurial spirit” a prick. First, you may want to invest in “Rich Dad, Poor Dad” and “Cashflow Quadrant” both by Robert Kiyosaki. The former will certainly change your life and the latter will definitely shed some light on the common mistake novice entrepreneurs make in distinguishing between self-employed and business owner. One book I will highly recommend for your children if they are in middle or high school and you want to...

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Tips to a successful and wealthy life

We all want to have enough money to be happy from today until the day we leave this earth.  Enough, is a carefully used word. For some people, enough is the amount of money it takes to just have what is needed, for others it means being wealthy and making a LOT of money. In order to move from making money to wealthy, you will need to change your perception of life. These tips to a successful life of making money and becoming wealthy will surely help. Your mind and your money. It is important to think about money in a more organic way if you are going to become wealthy. Money will have to be something you save and not something you spend. Being thrifty today can save that wealth for the long run. The Smaller the Better.  Aiming at the smallest of savings and adding up those amounts over time can be the best choice for a person wanting to be wealthy. Those smalls savings will add up over the years and as long as they are left untouched they will grow to be the wealth you desire. The freedom of saving. All it takes to be freedom from the financial burdens of life is saving. Saving is what people who are wealthy essentially do. So the next time you drop $20.00 on coffee or $40.00 on lunch, remember that the money you save today will buy your financial freedom tomorrow. You are the one. The only person that can be held accountable for your financial placement in life is YOU! You are the one that needs to make making and save money, no one else. Think stock. The next time you want to buy that new product on the market, stop and think stock. The product will, more than likely, be something you will not use in 10 years, but a stock in the mother company will still be growing. Look to the champs. The people who have already traveled the path from making money to becoming wealthy are the best ones to learn from. When finding a mentor, make sure to look beyond the glitz and glamor of celebrity life and focus on the real people of the world. If your goal in life is to become wealthy, you can achieve that goal. All it takes is time, saving, investing, learning and more saving. Then, if you have a little more time lying around, you can save a little more. About the Author: The author, Elliott Roberts, is a writer at Becomng, a Personal Development blog, covering topics ranging from Productivity to Goal Setting, plus...

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Financial retirement plans: figured out sooner is better

~ By Lindley Press ~~ Are those “golden years” approaching, and if so, have you thought about your financial retirement plans? Robert Kiyosaki, world-famous author and financial advisor, said before you retire, if you want sell your home and move to greener pastures, you have to balance your books first. “Retirees are on fixed incomes , let’s say it’s $1,000 a month, last year in 2007. The value of a dollar dropped 15 percent last year and it was even more this year,” said Kiyosaki. “So that means that your $1,000 a month last year is now only worth $850 and this year it may go down to $600 a month.” According to Kiyosaki, if you follow a few simple rules, you will really be protecting yourself for the long haul. “It really becomes important to be able to differentiate good financial advice from bad financial advice.  Do you know what’s going to work for you and not work for you?” said Kiyosaki. “I think the biggest mistake is “Well, I’ve been with the same financial planner for 20 years,” and I say, ˜Well are you rich?” and they say ˜no.” Well, maybe you should change.” Consumer Reports recently found out what their retired readers wished they had done differently, so yet-to-be-retired readers could avoid similar mistakes. While 93 percent of their readers were satisfied with how they had prepared themselves, those who had some regrets said they wished they had saved more. Getting ready for retirement Are those “golden years” approaching, and if so, have you thought about your financial retirement plans? “Never count on your pension being enough, even a federal pension or a government pension,” said one retiree. Those with many years until retirement said they know this has to be a priority. Many others said they wished they had started saving younger, and that’s the advice they would give to others. “The more financial education you have, the better you’ll be able to tell is this advice good for me or bad for me. Does this advisor know what they’re talking about or not know what they’re talking about,” said...

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