Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki


What is Gearing?

Borrowing money to invest in shares is commonly referred to as ‘gearing’. Read on for a short guide to gearing, the pros and cons of borrowing to invest, and where you can find more information on borrowing to invest in shares. What is gearing? Investing in the stock market can be a great way to make money, period. However, not everyone has the capital they need to get started straight away, so more and more people are borrowing money from lenders to invest. Gearing has the potential to increase profits with your money as you have more to invest with, but it can also increase losses. The other type of gearing (with the aforementioned gearing being positive gearing) is negative gearing, which occurs when you borrow to invest in an income producing asset but the cost of borrowing is greater than the returns you receive from this particular asset. On a property, for example, negative gearing takes place if the interest you need to pay on the loan is bigger than the rental income you get from the property once other things such as maintenance are figured in. Advantages of gearing: increasing profits There are two oft-cited principal advantages of borrowing to invest: Increasing your profits – if the shares you buy with the money you borrow increase in value, you win when you sell on the shares. There is also the potential for dividends and bonus shares made by the company in question. Tax benefits of negative gearing – If the money you are making on your investment is working out to be less than the cost of borrowing in the first place, you are eligible for a tax deduction on the difference between the amounts. What are the risks of gearing? Interest rates, financial loss and fees The market changes a lot – conditions may change, and rising interest rates may mean you struggle to meet loan repayments, especially if you over-extend benefits. You may rely on the income the investment produces, before experiencing a period where there is no income. Your loss can be multiplied. There may be fees or penalties if paying the loan off earlier than planned. Assets simply may not provide the returns you hoped for. You may have to pay a ‘margin call’ if the value of your investment falls below the level that covers the lender’s loan. In short, a bad investment means little or no returns and a big debt that needs paying off too, so good financial advice is crucial. Originally posted here: What is...

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Types of Investment Risks

No investment is risk-free. Some investment risks may be particular to the investment itself or to the particular asset class. Others may be much broader, for example relating to the country of investment or the economy in general. Economic risk (also known as systemic risk): Risk inherent in the economy as a whole. In the event of an economic recession, the stock market, the interest rate market and the exchange rate market may all be adversely affected. Economic risk can arise due to recession, failure in prudential regulation or faults in the financial system. Economic risk affects the entire market. Market risk (also known as unsystemic risk): Risk of volatility in a market or market sector. The “tech boom” and subsequent “tech wreck” in the United States in the late 1990s was an example of the risk of a particular market sector.  Market risk doesn’t affect the entire market. Inflation risk: Risk that inflation will adversely affect the performance of your investment. Interest rate risk: Risk that the value of an investment will change due to a change in interest rates. Changes in interest rates directly affect the value of interest rate securities, such as bonds. Interest rates also have an indirect effect on other investments, such as property and shares. Exchange rate risk: Risk of fluctuations in exchange rates adversely affecting the value of an investment. A good way to diversify your investment portfolio is to invest overseas, but changes in the exchange rate of the Australian dollar against the currency of the country you invest in can affect the return of your investment. Liquidity risk: Risk that an investment can’t be easily and quickly converted into cash (bought or sold) at a fair price. Credit risk (also known as counterparty risk): Risk that the counterparty to a contract will not live up to its contractual obligations. Political risk (also known as geopolitical risk): Risk that a government will unexpectedly change its policies or implement new regulations, making an investment less attractive. Political risk can also refer to the uncertainty associated with investing in countries with a political climate less stable than our own. Sovereign risk: Risk that a central bank will alter its foreign exchange regulations and reduce or null the value of foreign exchange contracts. Country risk: Risk that a country won’t be able to meet its financial commitments. Company risk: Risk that the company you invest in fails and goes out of business. Institutional risk (also known as operational risk): Risk of insufficient internal controls, failures in risk management systems, insufficient capital to absorb unanticipated losses, or inadequate governance structures. Institutional risk also refers to...

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What Robert Kiyosaki had to say on Fox News

Recently, Robert Kiyosaki appeared on Fox News to promote his newest book, Increase Your Financial IQ. On Your World with Neil Cavuto, Robert talked about how his earlier predictions have come true and discussed the current real estate market, including explaining how he chooses where to invest.  His real estate investments follow the job market;  in other words, he buys properties where the job market is strong because workers need places to live.  He said: “We don’t have a real estate crisis, we’re having a financing crisis.” At the end of the interview, Neil Cavuto said: “Robert Kiyosaki – he has been right every step of the way.” When Robert appeared on Fox Business Network’s Happy Hour, he repeated that this is a great time to look for investment bargains. But, he cautioned, you need to be smart about it. “Financial intelligence is your greatest asset,” he said.  “Invest in your intelligence first before you go buy a stock or bond or gold or silver.” He was critical of financial “gurus” who tell people to cut up their credit cards. He pointed out that you need credit cards to function in today’s economy to rent a car, check into a hotel, purchase merchandise online, and so on. The key is to use credit cards responsibly. When people get into financial problems because of credit cards, the fault is not the credit cards, but the person using them. Read more here: What Robert Kiyosaki had to say on Fox...

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Choosing a Mentor

~ Jerome Ratliff~ Having a mentor a part of your business or you, can accelerate your profession into overdrive. When working with a mentor, you create a professional relationship which allows you to become a better professional. But finding your mentor, regardless who it is, is not an easy task. Where should you start looking for your mentor? Put together a plan of how you intend to find your ideal mentor. Decide at that moment that you will not quit before you find him/her. What’s your objective? What do you need a mentor for? Why do you need a mentor now? These are questions you must ask yourself prior to meeting with a mentor. In addition, make sure to have your string of interview questions ready for the mentor. This will be how you determine who is right for you. Start by asking around. See what other successful professionals are doing and ask questions. What do you got to lose? Be up front in the interview by letting them know what you would like to accomplish by having a mentor. This will help determine if the mentor is right for you. If you’re impressed with them, ask for a referral to speak with the mentor. Look for organizations that offer mentoring programs. It may cost you, but at the same time it will be well worth your money. That’s assuming that you chose the right mentor too. Two years ago when I began with Robert Kiyosaki’s mentoring program, I failed to ask a lot of the upfront questions that I’ve outline here before you. Luckily for me, since Robert Kiyosaki’s program is so structured, it didn’t matter. However, it could have helped me by showing that I was proactive. You may come up with your own questions, just be sure that you are thorough and show that you are determined to succeed. A good mentor will hold you accountable for what you need to be doing as a professional. This is important because you are the one in charge, not the mentor. The mentor is there to help you kick it into gear. Being a part of Robert Kiyosaki’s mentoring program has changed my life immensely, that I decided to mentor others. So, if you’re serious about choosing a mentor, then start today and start now. You won’t regret it. View original post here: Choosing a...

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Robert Kiyosaki interview on WNBC

Robert Kiyosaki came out with a new book caled How to Increase Your Financial IQ. He went on WNBC recently to give some practical money-saving tips in support of his new book’s launch.   See original here: Robert Kiyosaki interview on...

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The 4 money symbols

I am by no means an expert on money or business. Recently I talked about reading ‘Rich Dad, Poor Dad’’ by Robert Kiyosaki. It really did have an impact on me and I’ve been thinking about how to use my dispensable income wisely. I thought of the ways money flow in and out of my life. As well as saving, which I can’t really afford to right now, I thought of four others. Two are positive and two are negative. Two are extreme and can make or break you. The other two aren’t as drastic. + Plus is money that comes into our lives through selling something we already have. What we are really selling are valuable assets which are more valuable than we realize. The main one is time which is extremely valuable but we usually sell it quite cheaply. In my case this involves labouring on a building site for minimum wage while I could be at home using my time to start a business. Another example is a skill such as a builder building a house for money. While you are getting paid, like time you have to actually show up and produce every time in order to receive your money. – Once we get our money we usually spend it. Subtraction is money going out of our lives in small steps. These are usually essentials such as food but can include things we waste our money on such as a new TV or a restaurant meal. ÷ Division is when we use money to buy something but it also takes money away from us on a regular basis in the form of bills, maintenance or credit. Kiyosaki calls this a ‘liability’ which includes a car, a house, sky/cable TV and addictions such as smoking. Liabilities can easily lead to debt. ×Multiplication’s are the best things you can seek. These are ‘assets’ and when you buy them they keep giving you more money. This is how the rich get rich and they use money from their assets to buy more assets. According to Kiyosaki when you have enough assets then you can buy liabilities and luxuries. I suppose it’s easier said than done and I have yet to buy any assets. At least I now know what to look for and I’m a bit more conscious with my money. ~~ ~~ View original post here: The 4 money...

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‘Rich Dad’ offers help to emerging companies

~ Sunday Business Post ~  Keith Cunningham lost his entire $300 million fortune at 40 and then made it all back. Now, he’s giving lessons in ‘wealth mastery’, writes Niamh Hooper. Half of all businesses started today will not last beyond two years, and 80 per cent will not last beyond five years. As we face into an economic downturn, thousands of Irish businesses are digesting these statistics and are looking for help. Some turn to American entrepreneur, author and businessman Keith Cunningham for tips on ‘‘wealth mastery’’. Regarded as a world authority on business turnaround, Cunningham claims to be the ‘Rich Dad’ in the international Rich Dad, Poor Dad book series that has sold over 26 million copies worldwide. In the four years since the first book was published, it has proved to be the most popular book series in Ireland on ‘getting money to work for you, rather than you working for money’. Nice concept. But in Cunningham’s company, it’s more than a concept. In an interview with The Sunday Business Post before giving his Igniting Your Business seminar to a sell-out audience of 550 people in Dublin, Cunningham said success was determined by one thing. Commitment to mastery. The 57-year-old straight-talking Texan’s story is an inspiring one. Having started out in business at 11 with his own profitable door-to-door egg delivery service, he went on to create a $300 million business in Cable TV and real estate. By 40, he had lost it all. His money, his wife, his kids – everything. ‘‘I got cocky, I think pride was my downfall, I got complacent.” He declared personal bankruptcy in 1991 and took an 18-month sabbatical. ‘‘On my ‘think time’, I studied all the world’s religions, all the ‘ologys’, read 180 books and attended many seminars. I began re-evaluating who I am, what I stand for and what my life is about. I had stopped learning, stopped growing. I re-emerged with a commitment to mastery. ‘‘The most powerful thought for most people is that hell on earth would be to meet the person you could have been.” During his time off, he met and mentored Robert Kiyosaki, providing the business information in the Rich Dad, Poor Dad books. ‘‘I got him interested in business and he got me interested in teaching,” he said. Within three years of his return, Cunningham had rebuilt his net worth. In recent years, he has mentored thousands of successful business people, sharing with them his mistakes and learnings of the past 35 years in business. He has also written the book Keys to the Vault. The concept of mastery – ‘‘what you...

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Robert Kiyosaki on ABC News

Robert Kiyosaki appeared on ABC New in April to teach audience how to get smart with their Money. Click on the image below to launch the video:     Go here to read the rest: Robert Kiyosaki on ABC...

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What is Net Worth?

It also is critical to look at your overall financial situation to determine if you are getting ahead from one year to the next. A “net worth statement” helps you determine “where you stand” and serves as a measure of your overall financial position.The net worth statement is a summary of your financial position at a particular point in time (on a given date). It is a list of all your financial assets (what you own) and all of your financial liabilities (the debts that you owe). Net worth is the dollar amount you have when you subtract everything you OWE from everything you OWN. You will need this information when you: borrow money; apply for a home mortgage; determine insurance needs; plan your retirement; write your will and determine estate planning needs in the event of death, divorce, or remarriage; settle a divorce. What Are Your Assets? Assets are any financial or material possessions that have monetary value. On the net worth statement the value is listed at the current market value, not what you paid for it. Assets include things such as: Cash on hand or in savings accounts (including certificates of deposit or checking accounts) Stocks, bonds, mutual funds Cash (not face) value of life insurance Money others owe to you Annuities, retirement plans Employee benefits such as company stocks Your home Other real estate and business interests Automobiles, trucks, other vehicles Household furnishings, antiques, jewelry, books, coins, artworks, etc. What Are Your Liabilities? Liabilities are the financial obligations or debts you owe to other persons or institutions. Included are: Mortgages Installment loans (cash advances, auto, etc.) Department store and credit card debts Taxes owed Unpaid bills (medical, utilities, etc.) Any other liabilities Figure Your Net Worth Total your assets and your liabilities. Subtract the liabilities from the assets. The result is your financial net worth. Now that you have taken the time to calculate your net worth, how do you feel about your financial situation? Happy? Relieved? Discouraged? If you are a bit discouraged, do realize that a negative net worth statement may easily happen to someone just starting out on their own or to young families. Just as a photograph shows how you looked at one specific time, so too, the net worth statement reflects your financial situation at only one point in time. It should be updated at least once a year or as your financial situation changes.  If you are not satisfied with your net worth and want it to grow, develop a plan to increase it. More income, lower living expenses, and/or more investment growth are some alternatives. To increase your...

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Money Lessons From Rich Dad

1. Build Your Mental Wealth Muscles This is my absolute favorite lesson from the book. The author would constantly hear his poor dad saying, “I can’t afford that.” However, his rich dad said that instead of saying you can’t afford something, ask yourself… “How can I afford this?” The first statement requires no thinking. You want something. You don’t have enough money. Therefore, you can’t afford it. The second statement is so much better. You want something. You don’t have enough money. So, let’s find some way that I can create enough money to be able to afford it. The difference between these two statements is incredible! “Forcing yourself to think of how to make extra money is like going to the gym and working with weights. The more you work your mental muscles, the stronger they get.”                 – Robert Kiyosaki, author “Rich Dad, Poor Dad” So, let’s say you wanted to buy a new big screen TV, but you don’t have enough money. What can you do to be able to afford it? Let’s come up with a plan… I don’t know you, but I bet one thing you could do is find some unneeded junk around the house and sell it on eBay. With that alone, I bet you would have enough for your big screen. Or, at least half of it anyways! Another thing you could do is start a savings plan for it. I bet you could easily save five dollars here or five dollars there. Cut back a little on your usual spending habits. Then, use those savings to help pay for the big screen. The point is, next time you want something you can’t afford, use your mental wealth muscles to find ways that will make you be able to afford it. The more you use these muscles, the better they get. And the more money you will find yourself accumulating. 2. Increase Your Financial Intelligence It’s a fact, schools don’t teach students nearly enough about money as they should. You learn history and you learn how to find what x is equal to, but you never learn what financial options that you have. I’ve learned that increasing your financial intelligence is a self-study. High school or college is never going to teach you as much as you should know. You’re going to have to pick up the books and learn it yourself. So… What areas of financial intelligence do you need to learn? Rich dad suggests four main categories. Those are… Accounting – You’ve got to be able to read financial statements. Investing – You have to learn to grow your assets...

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