Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Financial advice: buyer beware

Diana Clement ~ NZ Herald Not everyone can be a financial expert. And in the same way you might go to a doctor for medical advice or a careers coach for guidance on how to climb the corporate ladder, many people choose to get professional financial advice from someone qualified and experienced. A number of professions offer advice and some overlap. These include accountants, lawyers, financial advisers (also called financial planners), insurance advisers, stockbrokers, and mortgage brokers. You can also get free advice from budget advisers associated with the Federation of Family Budgeting Services. If you’re in debt, this can be a very good place to start because it costs nothing. Or, if you need a kick up the pants as well as advice, you might consider employing a financial coach or mentor. Their role is to keep you on the straight and narrow and focused on achieving your financial goals. Seeing your coach is like getting a weekly or monthly financial reality check. Have you done what you said you would do? Are you fooling yourself with myths and excuses? Banks and life insurance companies also employ people who can give you “advice”. But only about the products that their particular company sells, which may not be best suited to your circumstances. Before you choose an adviser it’s important to understand the way your adviser gets paid. In the case of accountants and lawyers it’s usually on a per-hour basis, which should, unless you’re really unlucky, mean that you’ll get advice best suited to your needs. A small number of financial planners charge by the hour and either don’t take commissions, or reinvest them for you. Many Kiwis aren’t prepared to pay up front for financial advice. If you do, however it will save you wondering if you’re getting the best advice. Typically, financial advisers get a commission or cut from products you invest in and sometimes charge an ongoing annual management fee. In some cases this has led financial planners to recommend inappropriate products to clients. However, most are professional in their dealings with clients and offer best practice advice. Most advisers use what is known as modern portfolio theory, which uses diversification to optimise the return from investors’ portfolios. Usually investors will be given a portfolio containing a mixture of cash, shares, bonds and property, weighted according to their risk and return. Because of the way most advisers are paid, they tend only to recommend those investments that pay commission and residential property investment is often left out of the mix. They will, however, include commercial property syndicates, which do give investors exposure to property. In...

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Printing money by Federal Reserve in US and European Central Bank in EU

First I heard about this topic from RichDad Insiders. Then I heard it again and again from different sources… most interesting story’s have been when Mike Maloney is talking… Today I would like to share with you two graphs:M3 (money offering) of US Dollar:Source: Seeking AlphaM3 (money offering) of EURO:Source: European Central BankWhat we see here?Basically we see here that there is today 20% more US dollars and 12% more EUROs in circulation than one year ago!!!Both of graphs show how many percents more currency is in circulation compared to a year ago. To be honest both currencies have lost more value as these percents because central banks have sold at the same time also their assets – so there is less and less assets backing the same number of currency. Read the original post: Printing money by Federal Reserve in US and European Central Bank in...

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Calling all Bizkid$

KLRN and Security Service Federal Credit Union are looking for kids with a little bit of business savvy. Throughout the month of April, kids six to 12 can shout out their business successes at the KLRN Web site, or they can pick up an entry at Security Service Federal Credit Union.Each week, one kid will be chosen to win $100. A grand prize winner will get $500 and be submitted to PBS for possible inclusion on an upcoming episode of Biz Kid$, a show that teaches kids about money. More here: Calling all...

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In case of emergencies, break into stash of cash

~ Annette Sampson ~ The strategy To stash some cash for emergencies. Do I need to do that? Are you kidding? Hasn’t all the mayhem on world debt and sharemarkets this year brought home the fact that spare cash is a good thing to have? Whether you believe the latest rally is the turnaround point or not, the fact remains that the easy money of recent years has dried up and the resulting credit squeeze has put meaning back into the old adage that cash is king. There’s not a lot the experts agree on but on one point they are unanimous: the uncertain times aren’t disappearing any time soon. We’re still seeing the unwinding of dodgy lending practices, a recession in the US looks increasingly likely and Australia can’t seem to work out whether the porridge is too hot, with inflation the main problem, or about to become too cold as all those interest rate hikes start to bite. A cash buffer gives you the security of having money on hand if your personal circumstances take a turn for the worse and the ability to take advantage of opportunities when other people are strapped for funds. In falling markets, investors with liquidity can snap up bargains as cash-strapped investors are forced to sell. How much of a buffer should I have? Denis Orrock, the general manager of InfoChoice, says his Depression-era dad always advocated having three months’ income set aside to help you get back on your feet if something went wrong. He says that’s still a reasonable ballpark figure, though how much you need will depend on things such as how much debt and other commitments you have. “[Having a buffer] also frees you up and gives you more choice in life,” he says. “You often see people who don’t like their jobs but can’t afford to leave. But people make decisions if they have money set aside and want to make changes. They reap the benefits of their savings.” Financial planner Laura Menschik of WLM Financial Group says in uncertain times you need to look at what you can do to make yourself as comfortable as possible. This could mean having cash set aside but it could also involve paying down your debts so that you have money to draw on if you need it. “If you pay off all your credit cards, you know that you can use them in an emergency,” she says. “Reducing your debt over time gives you access to finances when you need them.” If you have a home loan with a redraw facility, Menschik says pumping extra money into your...

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What?s your money personality?

US-based psychologist Kathleen Gurney, a leader in the field of money personalities says everyone fits into one of these nine money personalities. ENTREPRENEURS: This is a very male dominated group that favours investing in the stock market. HIGH ROLLERS: They are thrill seekers who enjoy the ride of financial risk. HUNTERS: These are often women. Usually highly educated, with a live-for-today financial style. ACHIEVERS: These are often conservative and not interested in risking assets they have worked hard to accumulate. They’re big on insurance and like to take charge of their money. MONEY MASTERS: They get contentment and security from money and are the top wealth accumulators. They tend to act on sound advice and don’t rely on luck. PERFECTIONISTS: They hate making mistakes and as a result they often don’t make decisions about their money. They find it difficult to find suitable investments thanks to having tunnel vision. PRODUCERS: They have a lack of self confidence in money management and do not profit from risks because they can’t evaluate them carefully. OPTIMISTS: They can cope with risk, but are more interested in enjoying their money than taking risks. They have few anxieties and tend to outsource the management of their money. SAFETY PLAYERS: They are the really risk averse investors who put their money into really safe and secure investments such as the bank. They don’t take enough risk to make their money grow. Here is the original post: What?s your money...

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U.S. teenagers lack financial literacy

By Barbara Hagenbaugh, USA TODAY WASHINGTON — U.S. teenagers are making little headway when it comes to financial literacy, a survey out Wednesday shows. High school seniors on average answered 52.4% of a 30-question financial survey correctly. That was up from 52.3% when the survey was last conducted two years ago but down from 57% in 1997, the first year for the survey, according to the Jump$tart Coalition for Personal Financial Literacy.”Financial literacy is still a very significant problem. It doesn’t seem to be getting any better,” says Lewis Mandell, a professor at SUNY Buffalo School of Management who oversaw the survey, which was conducted in December and January. It includes topics such as investing and managing personal finances. He said the lack of knowledge was troubling given that today’s high school seniors likely will be more responsible for their own financial well-being when they retire given trends away from company pension plans and an uncertain future for Social Security benefits. But the study suggests students are unprepared for such a task, Mandell says. In one question, only 14.2% of the students correctly answered that stocks would have the best growth potential for money over an 18-year period. That was the lowest percentage in the survey’s history. “In the 21st century, the only person you can really count on is yourself,” he says. The results of the survey taken by 5,775 high school seniors in 37 states were unveiled at a news conference in the boardroom at the Federal Reserve. Fed Chairman Ben Bernanke called improving financial education “vital to the future of our economy.” Survey details: • White students answered an average 55% of the questions correctly vs. 44.7% for blacks and 46.8% for Hispanics. The gap between whites and blacks was the widest in the survey’s history. • Students from families with incomes of $80,000 or greater answered 55.6% of the questions correctly on average vs. 48.5% for those with incomes less than $20,000. The gap between the two income groups was also the largest in the history of the survey. • Nearly 17% of the seniors had taken a money management or personal finance class, down from 20% in 2004. Surprisingly, students who had taken a class actually fared worse than those who did not. Students, however, who had played a stock market game, in which they used play money to pick stocks, fared better than students who had not participated. • There was little difference in financial literacy based on gender. Boys on average answered 52.6% of the questions correctly vs. 52.3% for girls. Students aren’t the only whose financial literacy is lacking. In a...

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Cashflow game – lessons learnt

If you think playing the Cashflow game is just like playing another silly round of Monoploy, then you need to seriously think again.  Cashflow boardgame is not just like a game, it is a educational tool for you to sharpen your finanical acumen and you get to learn different lessons each time you play the game.   The author of Rat Race Escapes (ratraceescapes.com) shares his learnings from his recently cashflow game: Sue, Bob, Terry and I played Cashflow 101. I played the teacher. Because the monthly cash flow is lower than occupations I normally play, it was much longer before I started taking big deals. Things moved pretty slowly for me for quite some time, buying 400 shares of MYT4U at a reasonable price of $10, even though I immediately landed on charity and in my next 3 roles I had for paychecks. Shortly thereafter, I partnered with Bob and Sue on a limited partnership with a doctor’s office and then immediately I was downsized. Things were looking great when I bought a “great deal” for $35,000, a government owned home with a tenant, for $2000 down and $220 per month cash flow. Just before my next turn, a buyer appeared and I sold the house for $135,000, putting $102,000 in my pocket. I paid my bank loan plus my credit card and retail debt and still had $90,000 in cash! On my next turn I drew a Big Deal and it was the 60 unit apartment building. Perhaps I should have passed on it. It was initially a net neutral deal for my monthly cash flow: with a down payment of $200,000, I borrowed $110,000 to make up the difference in the cash I had on hand but the $11,000 in monthly cash flow covered the loan. I still had a decent monthly cash flow of about $1600. Had I passed and taken a different big deal on a subsequent turn, I’d have retained cash, increased my cash flow and I may or may not have exited the Rat Race sooner. After a couple more turns, and starting a software company in my basement, received a paycheck and borrowing more money from the bank, I got laid off again. My cash flow shrank to less than $100 and on a subsequent turn to about -$300. I survived and then sold the limited partnership, double the money for myself and partners and then sold the MYT4U stock for $40 after a split. After paying debt down, I was back to good cash flow and still had cash. In the mean time, Bob exited the Rat Race getting $600,000 as his initial Cash Flow Day. Bingo, now there was a...

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Rich Dad 2008 Predictions Part 1

Stop and listen. Here’s Rich Dad’s predictions for this year. When the video ends, at the bottom you can pick parts 2, 3 and 4. Read the original post: Rich Dad 2008 Predictions Part...

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The Spare Time Co. or boosting your personal bottom line and getting out of the Rat Race with a business in the basement

When playing Cashflow, most players in 101 won’t start the small businesses “in the basement” like the software company or widget company thinking it’s a lot of money with no payoff and a chance to lose your money. This is the same attitude that they have in life. The network marketing in 202, Spare Time Co., on the other hand, every wants to do because it’s cheap and easy (too easy, really). Most things in life take real effort. Taking the time to come to Cashflow games and getting out of the Rat Race takes effort to. It just happens to be enjoyable so it doesn’t seem to be as much work. Most people that play with the Twin Cities Rich Dads and Moms are in the E Quadrant. Remember the Cashflow Quadrant? We are all trying to make our way to the Investor and Business Owner quadrants. Going through the S Quadrant (self-employed) is an excellent way to move in that direction because of extra income and business growth. Of course, not all small businesses make it. But there are enormous tax benefits to having a “business in the basement” that is not a hobby as defined by the IRS. And that doesn’t mean the business can’t be your hobby either! After all, improving your economic means is about life style as well, right? Any type of business or investing takes effort and your part-time business would too. The pay-off could be immediate but probably takes some amount of money to start and perhaps on an on-going basis for a while, but when you reach profitability, you have cash flow. We’ve all heard about “delayed gratification” and this kind of falls into that category. What kind of things can you do? The possibilities are endless. You could be an online affiliate marketer, have a ecommerce site where you do no product fulfillment or orders, follow the system laid out in “The 4 Hour Work Week”, build picnic tables, create websites, manage real estate, plan parties, walk dogs, etc. You could do all of the work yourself, some of it or none it. There’s still planning, managing and funding it (and other things too) but it doesn’t have to kill you. So when you think about your goal of getting out of the Rat Race, do you think that extra income and an asset you can sell later perhaps would help? And think of the education you’ll get! One real important aspect of the business in the basement, or any business for that matter, is it changes how you are taxed. Remember what Rich Dad says: in a business,...

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More banks freezing HELOCS

Yesterday, I got word from another investor that her HELOC was frozen, this time by Bank of America. This is the third large company that has frozen the HELOC of someone I know personally. So consider your strategies where HELOCs are concerned. And think about maybe refinancing them with a small bank. More here: More banks freezing...

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