Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Couples should learn investing together

Your wife clips coupons to make ends meet, while you think now is the time for you to buy that big screen TV. He said couples argue a lot about money. “When it comes to money, nobody ever agrees. And in my family, my wife calls me Imelda Marcos because I like shop and buy clothes,” says financial expert and “Rich Dad, Poor Dad” author Robert Kiyosaki. But his wife Kim likes to make money. “But we have this agreement: I can spend whatever I want as long as I make the money first. So that means, invest my money.” His example was a recent car purchase. “Like when I wanted a new Porsche, I had to go buy a piece of real estate and the piece real estate bought my Porsche for me. So my liabilities buy my assets. That’s a rule in our family. Now you may not be able to do that, but Kiyosaki said you and your mate should learn about money together by reading books and attending seminars. He said that allows you to have calm, rational discussions about your finances. “I would rather spend my time learning how to, not only make my money, but leverage my money to make more money so I don’t have to clip coupons or never do I ever have to say I can’t afford something.” Kiyosaki said most couples don’t take the time to learn all they can about money. “Most people invest money. But they don’t invest any time in education and unfortunately then couples fight. You know the number one cause of divorce is money. It damages families and all this. Yet they won’t invest anytime in going to the library and getting a book and studying it together.” Here’s how the money discussions go in Kiyosaki’s family: “My wife and I often read articles together. We go to seminars together and we talk about money like mature individuals. We don’t fight about money, but unfortunately, that’s what most people do.” Credit:Couples should learn investing...

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How Rich Are You: Determining Your Wealth

 have been talking a little bit about financial independence in my previous posts and I mentioned in one that the first step in the journey to financial freedom is to detemine exactly how much money that will be, in order for you to know you’re there.  This number sometimes seems overwhelmingly large when we think about it in such broad terms, I mean, I want so many things that a million dollars doesn’t even seen to appeal to me, anymore.  So, this post will help you detemind a monetary figure of what it will take for you to technically be financially free, based on your lifestyle, today.  The definition of financial wealth referenced by Kim Kiyosaki, wife of millionnaire entrepreneur, Robert Kiyosaki, in her book “Rich Woman” is:  “a person’s ability to survive X number of days forward”.  Basically, what this means is that measured in days, you are as rich as you are able to survive, while maintaining your current lifestyle, if you were to stop working.  Here is the simple formula to calculate your current financial wealth and it will also give you the figure you need to know to strive for, to attain financial freedom. Step #1 – Make a List of All Your Monthly Expenses Example:  Mortgage    $2500 Property Taxes    $300 Home Insurance    $150 General House Expenses (utilities, etc.)    $350 Car Payment    $550 Gas    $150 Meals & Entertainment    $500 Misc. Purchases    $500 Magazine/Newspapers/Books    $50 Travel/Vacations    $250 (and many others that are personal to you) The key here is that this is different from a budget statement.  Be honest with yourself on your spending amount.  What you want to do is list your current lifestyle, not trying to cut things out to fit what you know you should be spending.  Step #2 – Determine How Much Money You Currently Have This should not include your employment income because, remember, financial freedom means that you can maintain your lifestyle, without having to pay for it through working and, thus, you only work if you want to work. These things will include: Savings Stocks that could be sold or liquidated immediately Cash Flow from Assets (i.e. you rent an apartment building and cashflow X amount of dollars each month from it) *  Note:  Do not include things like your car or house that is paid-off or jewelry, etc., because if you were to sell those things, your current lifestyle would not be maintained and that would defeat the purpose of this goal. Step #3 – Compute Now, divide the total amount of money you have by your total monthly expenses.  The figure that you get (i.e. 4.5) would translate as the number of months you are wealthy.  In...

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One in five U.S. mortgage borrowers are underwater

By Jonathan Stempel   NEW YORK (Reuters) – One in five U.S. homeowners with mortgages owe more to their lenders than their properties are worth, and the rate will increase as housing values drop in states that have so far avoided the worst of the crisis, a new study shows. About 8.31 million properties had negative equity at the end of 2008, up 9 percent from 7.63 million at the end of September, according to the study, released Wednesday by First American CoreLogic. The percentage of “underwater” borrowers rose to 20 percent from 18 percent. Another 2.16 million properties could go underwater if home prices fall another 5 percent, the study shows. First American said the value of residential properties fell to $19.1 trillion at year-end from $21.5 trillion a year earlier, with half the decline in California. Forty-three U.S. states and Washington, D.C., were included in the study. While states such as California, Florida and Nevada were particularly stressed, the study showed worrying signs of deterioration in relatively healthy parts of the nation. “The economic slowdown is broadening,” said Sherrill Shaffer, a banking professor at the University of Wyoming at Laramie and a former Federal Reserve official. “As more people lose jobs, it will be more difficult to sustain the levels of pricing and home ownership, and that is a big factor driving down housing prices in more parts of the country.” Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio remained the most stressed states, with 62 percent of underwater borrowers and just 41 percent of mortgages. Other areas, though, also face more stress. Connecticut, for example, saw a 25 percent increase in homes with negative equity, while Washington, D.C., had a 44 percent increase. “Even I continue to be surprised at the tentacles of this financial and economic debacle,” said Robert MacIntosh, chief economist at Eaton Vance Management in Boston. “More people are being laid off, resulting in reduced income and therefore less consumption. That leaves fewer people with money to buy homes, and the mentality is that people believe they should wait six months rather than buy now. Less demand means falling prices.” Roughly 68 percent of U.S. adults own their own homes, and about two-thirds of these have mortgages. Many economists expect the nation’s unemployment rate to rise above 9 percent before the recession ends, up from January’s 7.6 percent. CALIFORNIA, NEVADA UNDER STRESS California had 1.9 million borrowers with negative equity at year-end, more than any other state, followed by Florida’s 1.28 million. About three in 10 borrowers in both states were underwater. By other measures, Nevada was the most stressed, with 55 percent...

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Money, Banking and the Federal Reserves

To most Americans today, Federal Reserve is just a name on the dollar bill. They have no idea of what the central bank does to the economy, or to their own economic lives; of how and why it was founded and operates; or of the sound money and banking that could end the statism, inflation, and business cycles that the Fed generates. Dedicated to Murray N. Rothbard, steeped in American history and Austrian economics, and featuring Ron Paul, Joseph Salerno, Hans Hoppe, and Lew Rockwell, this extraordinary 42 mins film is the clearest, most compelling explanation ever offered of the Fed, and why curbing it must be our first priority.   Credit:Money, Banking and the Federal...

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Money to make money

You need money to make money, it’s one of those cliches that I actually like and agree with but I am a bigger proponent of cutting out the clichs we hear all the time and getting to the practical application of the principle behind it. It is just as easy to say you have to have money to lose money. If you think it is easy to make a million dollars by buying a million shares of a stock and waiting till it gains one dollar then it is just as easy to loose a million dollars by buying the same stock and waiting for it to lose a dollar a share. Einstein’s theory of relativity had nothing to do with money but that doesn’t stop me from stealing his idea and applying it to finances. My economic theory of relativity says that the more money you have the more you can gain or lose, the less money you have the less you can gain or lose. It’s all relative. But ok, what do we do with this information? Well let’s look at how a person begins the journey. The first place to start making money is by getting a job or starting a business. Once you have an income then you need to save. Saving also includes investing. If I have a thousand dollars in the bank I have saved that money and if I buy stocks with it, I still saved the money but now I am trying to get more with it. If my income is high I will probably have more to invest and if my income is low I will have less money to save or invest (sorry, don’t mean to insult your intelligence but hang in there I am getting to the point). The low income person might not be able to catch up to the high paid person but, if they are willing to work at it, they can certainly do better. Remember, the high income person is also going to have higher expenses for things like his big house (higher mortgage and utilities), his fancy car and his fantastic vacations. On a percentage basis you can save and invest as much or even more than the high income earner but you have to be willing to give up one thing in exchange for another. In order to save more you have to spend less. It takes money to make money but notice there is nothing there about amount. You have money and as long as you have realistic goals you can have the same gains as a rich person. The difference is that...

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The Art of Alliances

~ Robert Kiyosaki Whenever I consider new strategic alliances or expansion opportunities, I look for three things: good partners, good financing and good management. Whether we’re looking for investors, partners or vendors, we weigh their experience, expertise, track record and character. The quality of the businesses or individuals we align with directly affects our future. Are your philosophies and standards aligned? Is there trust and respect and a shared vision for the future? Are the business rules and reporting processes clear and manageable? The best partnerships and alliances are ones that have the potential to deliver big wins–for both sides. I’ve come to believe that the strongest businesses are relationship-based, not transaction-based. We work to develop relationships with our customers to build loyalty and lifetime value. It’s the same with the B2B deals we strike: Long-term relationships in which both sides benefit and profit trump short-term, transactional plays when it comes to the investment they require and the dividends they pay. Good financing means strong financials as well as optimal strategies within the deal for managing debt, structuring terms, handling revenues and cash flow, and maximizing tax advantages. Often, the terms of the deal can turn an average opportunity into a great one. Regarding the importance of strong management, you may have heard the maxim in business that “money follows management.” I often ask myself what other companies see when they put my company under a microscope. If a potential partner or investor asks who your management team is and how strong they are, what will they conclude? That same test applies to the alliance decisions we make as entrepreneurs. If your management is weak, so is the future of the business. If the management team of the company you’re considering as an alliance partner or vendor is weak or ineffective, so are your prospects of a successful and profitable relationship. Weak management will be challenged in both good and bad times–explosive growth requires as much focus and discipline as managing through a downturn. It’s easy to find bad partners, lose control of your cash flow and discount the importance of strong management. It’s harder to invest time and resources to find and vet agreements with strong partners, structure a deal that adds value to the entire relationship, and search for, hire, and build a strong and talented team of leaders. No matter how strong your product or service, your attention to these fundamentals–or lack of–will determine your future. Read the original post: The Art of...

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Brief tips from Robert Kiyosaki

What tips do you have for building long-term relationships with the people who can help a business and investments grow? You have to be a great leader. It’s something I’m learning. I never stop learning to be a leader. I can’t say I am a great leader. I desire. I strive. I improve my leadership skills. There’s a great book called “The Starfish and the Spider,” and it’s a great book on leadership. It’s a very simple read. They’re two different leadership styles. In other words, you cut the spider’s head off, the whole animal dies. You can cut a starfish up in a thousand pieces and get a thousand starfish. That’s the difference. I am a starship style. I am not a spider style. It’s a great book on leadership, and I’m consistent in my leadership. Looking back over the years, is there anything you would have done differently to be more successful today? I don’t regret anything I’ve done because everything I’ve done has been a learning experience. I never stop learning. I make mistakes constantly. Today, with the economy as hard as it is, I would just say a tough economy means I have to get smarter. That’s all it means. I don’t judge it as good or bad. Other than being on “Oprah,” what marketing and promotional activities have been successful for you? Every product I design has a viral component to it. In other words, I don’t have formal sales people working for me or my company. So if a product is viral, and that means if someone recommends your book to someone else, it was designed into the book and my board game. In other words, I have people teaching people or people selling for me. And in today’s over-cluttered, over-communicated world, the person you’re going to listen to the most is a friend who says, “Hey, I read a great book, or here’s a great product I recommend.” It is the most powerful form of marketing there is. It’s also the oldest form of marketing there is. Who are some other people that you look up to and have guided your career along the years? Well, I have partners who I respect tremendously. I only do business with people I respect. You look at all of our company, and my advisors are real advisors. They are not financial planners. They are not celebrities. They are people hitting the trenches every single day. Another thing too, I don’t have to know anything. I just have to know who knows. The reason I say that is I’m coming out with a new book called...

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Kiyosaki strikes it rich again

By Louis Sahagun Los Angeles Times One day in spring 2007, the phone rang in the little Buddhist center in Long Beach that has been the focus of the Venerable Tenzin Kacho’s life since she was ordained a nun by the Dalai Lama. On the other end of the line was her brother, Robert Kiyosaki, a combat helicopter pilot in Vietnam who crashed three times and went on to become a globe-trotting entrepreneur and author of a bestselling book on personal finance, “Rich Dad, Poor Dad.” He was calling from his publisher’s office in New York. There were some pleasantries, then Kiyosaki cut to the chase: “I’ve got a great idea for you. We’re going to write a book together.” Some background: Tenzin and her brother were raised in a family of Japanese descent in Hilo. Their father was the state superintendent of schools. Their mother was a registered nurse. The book, her brother said, would be an inspirational blend of Eastern religion and business acumen told through their own experiences and conclusions about what is ultimately meaningful in life. “It’ll be great,” said Kiyosaki, a self-described meat-and-vodka deal-maker who believes that peace comes after a fight. “We’ll promote the book on a world tour. Eventually, you can start your own book series. I can see the titles now: Karma. Reincarnation. Compassion.” For Tenzin, a soft-spoken woman who wears saffron robes and shaves her head, the idea seemed audacious. Peace, meditation and loving kindness had been the bywords of her life at the center, an enclave of intricate altars, incense, votive candles and framed images of the Dalai Lama. Yet, to hear her brother tell it, the endeavor would bring a double benefit: It would help self-centered business people — such as him — get in touch with their inner Buddha. And it would make a working woman out of her and vastly expand the reach of her spiritual counseling. Tenzin calls it one of the hardest decisions of her life. Only months earlier, Tenzin, whose secular name is Emi Kiyosaki, had undergone an angioplasty that left her with out-of-pocket medical bills totaling $17,000 and ongoing battles with what she calls “a really bad insurance company.” No surprise there. While seeking spiritual perfection, she had all but ignored practical matters such as researching adequate insurance coverage, creating bank accounts and earning an income. Not anymore. Her collaboration with her brother resulted in publication this year of their book “Rich Brother, Rich Sister: Two Different Paths to God, Money and Happiness.” It also has redefined her priorities. In accordance with an adage espoused by her brother — “Give a man...

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10 Things Millionaires Won’t Tell You

by Daren Fonda  1. “You may think I’m rich, but I don’t.” A million dollars may sound like a fortune to most people, and folks with that much cash can’t complain — they’re richer than 90 percent of U.S. households and earn $366,000 a year, on average, putting them in the top 1 percent of taxpayers. But the club isn’t so exclusive anymore. Some 10 million households have a net worth above $1 million, excluding home equity, almost double the number in 2002. Moreover, a recent survey by Fidelity found just 8 percent of millionaires think they’re “very” or “extremely” wealthy, while 19 percent don’t feel rich at all. “They’re worried about health care, retirement and how they’ll sustain their lifestyle,” says Gail Graham, a wealth-management executive at Fidelity. Indeed, many millionaires still don’t have enough for exclusive luxuries, like membership at an elite golf club, which can top $300,000 a year. While $1 million was a tidy sum three decades ago, you’d need $3.6 million for the same purchasing power today. And half of all millionaires have a net worth of $2.5 million or less, according to research firm TNS. So what does it take to feel truly rich? The magic number is $23 million, according to Fidelity. 2. “I shop at Wal-Mart…” They may not buy the 99-cent paper towels, but millionaires know what it is to be frugal. About 80 percent say they spend with a middle-class mind-set, according to a 2007 survey of high-net-worth individuals, published by American Express and the Harrison Group. That means buying luxury items on sale, hunting for bargains — even clipping coupons. Don Crane, a small-business owner in Santa Rosa, Calif., certainly sees the value of everyday saving. “We can afford just about anything,” he says, adding that his net worth is over $1 million. But he and his wife both grew up on farms in the Midwest — where nothing was wasted — and his wife clips coupons to this day. In fact, most millionaires come from middle-class households, and roughly 70 percent have been wealthy for less than 15 years, according to the AmEx/Harrison survey. That said, there are plenty of millionaires who never check a price tag. “I’ve always wanted to live above my means because it inspired me to work harder,” says Robert Kiyosaki, author of the 1997 best seller Rich Dad, Poor Dad. An entrepreneur worth millions, Kiyosaki says he doesn’t even know what his house would go for today. 3. “…but I didn’t get rich by skimping on lattes.” So how do you join the millionaires’ club? You could buy stocks or real estate,...

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Chinese rush to buy cheap US property

By CHICHI ZHANG, Associated Press Writer BEIJING – Beijing lawyer Ying Guohua is heading to the United States on a shopping trip, looking not for designer clothes or jewelry, but for a $1 million home in New York City or Los Angeles.   He expects to get a bargain. Ying is part of a growing number of Chinese who are joining tours organized especially for investors who want to take advantage of slumping U.S. real estate prices amid a financial crisis. “It’s a great time to buy because of the financial crisis, and houses in large cities like New York and Los Angeles will definitely go up in a few years,” Ying said. The home is an investment, but he’s also planning long-term: He hopes his 5-year-old son might use it if he goes to college in the United States. While China’s ultra-rich have been buying property in the U.S. for years, the buying tours are new, made attractive by still-rising Chinese income levels and American real estate prices that have been falling for two and a half years. More than 100 Chinese buyers have joined such tours since late 2008, according to Chen Hang, the China-born vice president of real estate at Fortune Group. The Pittsburgh, Pennsylvania, company shows foreclosed commercial property to Chinese buyers. “The Chinese are going to seize the opportunity to take advantage of some great deals,” Chen said. Ying, the Beijing lawyer, is one of 40 investors going to New York, California, Boston and Las Vegas on a Feb. 24-March 6 tour organized by Beijing-based SouFun Holdings Ltd., a real estate Web site. SouFun plans to show participants foreclosed properties priced at $300,000 to $800,000. “We never thought these tours would garner such interest, but we’ve had an overwhelming response,” said SouFun CEO Richard Dai. “Before, we heard of Chinese or Hong Kong movie stars buying homes in the U.S., and now more and more Chinese can afford to have the same.” The home-buying opportunities mirror a larger trend. Cash-rich Chinese companies are looking to buy resources made suddenly cheaper by the downturn or companies suffering under the global debt meltdown. On Thursday, the Aluminum Corp. of China, also known as Chinalco and the world’s leading aluminum producer, invested $19.5 billion in debt-burdened global miner Rio Tinto Group _ China’s biggest overseas investment to date. Because the authoritarian government has imposed controls limiting China’s exposure to international capital flows, the country has largely avoided the worst of the global financial crisis. Meanwhile, high-level incomes have continued to rise. China had the world’s fifth-largest population of millionaires in 2008 with 391,000, up 20 percent from...

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