Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

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Cashflow at La Tazza

We had a great game of Cashflow 202 Saturday night, October 11th at La Tazza, in downtown Leominster. James, Dan, Marria and myself played. Anita McHugh dropped by for a while before she had to take off. Lee got out of the Rat Race first, about an hour into playing, followed a few turns later by James, then Dan and Marria. James won first thanks to striking oil with the Russian oil deal. These things happen in life; you have to be willing to take a risk. In real life, this sort of thing would be open to qualified investors (anyone in the Fast Track is) because of risk and in James’ case, it would not have negatively impacted him if it had not succeeded. We continued playing and I was able to buy another business on the next turn or two which put me over the $50K per month increase in cash flow and I already had two dreams. We called the game at this point because it was still early and Dan had a long ride home. We didn’t actually start until 7PM or so and we were done by 9:30PM. Now that was a fast, focused game and we ate dinner while we played. In this game, we all played the business manager but started with different starting portfolios. I started with a small amount of cash and a smallish stock portfolio. Initially, I had not been able to buy any real estate on my own (not enough money and I didn’t go heavily into debt) but I was able to partner profitably. I also was able short and option stock and sold my initial portfolio after a while without the companies failing. That allowed me to progess slowly in passive income and generate over $500K. I wasn’t negatively affected by a bad economic outlook and diminished rents. Then, with lots of cash on hand, I was able to buy a lot of junk bonds with a conservative yield that but me out of the Rat Race and on to the fast track. I never was able to lend privately to the Rat Race as all had sufficient cash. I stayed and talked with Stephanie, the owner, and patrons of La Tazza until just after midnight. I like the place and really enjoyed the political discussion. It also was good for another reason because I was given a strong lead for a potential deal. I’m not saying this to brag but. I’m saying this to share what this experience shows: if you are in the market for (insert item here), TELL PEOPLE! I don’t care if...

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As Capitalism Crumbles, U.S. Taxpayers Pick Up the Pieces

~ Robert Kiyosaki As we all know, the world changed drastically on Sept. 11, 2001, when the twin towers of the World Trade Center fell. This year, on the eve of Sept. 11, the twin towers of Fannie Mae and Freddie Mac crumbled. Then, on Sept. 15, Lehman Brothers and Merrill Lynch disappeared. Actually, that was a triple-tower collapse if you count AIG. In a few years, the biggest pair of towers will collapse: Social Security and Medicare. Even today, they’re looking shaky. How many ground zeros can we as people, a nation, and a world withstand before we admit something is very wrong with our global financial systems? What will it take to wake us up? Government Can’t Fix It Personally, I believe the biggest it’s a problem that so many Americans are looking to this year’s presidential candidates, Barack Obama and John McCain, to save our financial system. How did we become so financially weak that we surrender our economic independence to politicians? Where does it say in the Constitution that the government should solve our financial problems? And why have so many people throughout the world come to expect financial life-support from their political leaders? It seems most people will vote for anyone who promises a chicken in every pot and a guaranteed mortgage payment. We’re in the midst of a problem neither candidate can solve: A lack of comprehensive financial education in our school systems. What else explains the economic blunders committed by our political and financial leaders? Or why so many consumers are in debt up to their eyeballs? Or why millions of people expect a quick government fix of some kind? Under Water A few months ago, a friend of mine from Hawaii asked me if I wanted to buy his new powerboat with twin motors. Apparently, in late 2007, he purchased it brand new for approximately $85,000. His plan was to refinance his house when it appreciated in value and use the difference to pay for the boat. Failing to obtain new financing, he called to ask me if I would buy the boat from him — just take over the payments and it was mine. I passed, and the bank eventually repossessed his boat. Later, his wife called to tell me he’s now having problems making his mortgage payments. Apparently, my friend planned to pay for his house the same way he planned on paying for the boat, by refinancing his debt. I mention this story because it illustrates the problem Obama or McCain face: Limited financial education and diminished financial common sense. Apparently, my and the nation’s business leaders all...

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What a mess

I’ve been delinquent the past few months in posting. I’ve been quite busy, what with some of my business ventures (including a couple of new ones), real estate and the real estate investment clubs. There’s a lot of fodder for blog posts over the past few months. From more bank collapses including Fannie Mae and Freddie Mac, insurance company implosions including AIG, foreclosures skyrocketing, etc. But keep reading because you’ll find what finally motivated me to blog today when I’ve already get about 18 hours of work in the next 5-1/2 hours. I’m pretty much sick and tired of hearing mortgage brokers lay the blame squarely at the feet of borrowers. Let’s face it: there are (or were) a lot of bad brokers that coached borrowers and in some cases outright misled them. There were also borrowers that went along knowing full well that they were lying and could. The borrower knew it, the broker (and originator) knew it, the bank knew it. Even the insurers knew it. AIG was “insuring” these loans that everybody in all financial sectors knew were fundamentally unsound. Then they were put together with other loans of all grades into a great big pot. Then, like apples that you wouldn’t eat because they look bad and are on their way out but when pureed you don’t know the difference when made into apple sauce and sugar is added, they got sliced and diced into little pieces sold to investors as a sanitized product that had supposedly reduced the risk. Then they paid the companies to rate the new securities. Just like banks that had their preferred property appraisers that were compromised (think the investigations in NY and CA into inflated appraisals pushing people into jumbo mortgages or sub-prime products by collusion), the ratings were inflated (and unregulated). To further wash these bad mortgages, these securities were sliced and diced again in new securities, and rerated even higher! What investors doesn’t want some of their assets in AAA rated securities that pay a rate of about 8%? For those wondering, that AAA rating is supposed to mean that there’s about as little risk as there could possibly be. Ever since falling out of the last real estate bubble in the early-mid ’90’s, government has wanted to increase home ownership. That’s good for everybody including real estate investors and government because, lets face it, prices go up and so does tax revenue in a world of increasing value. So let’s just drop that partisan political nonesense. Republicans have been trying to blame Bill Clinton, Democrats, Congress, etc. In other words, it’s that nebulous “them”. Democrats have...

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What do the wealthy invest in?

The title to this post is a little off in that most times people invest in things in order to get wealthy.  Either way you look at it, there is much research on this subject.  Funny thing, it is not primarily mutual funds or even individual stocks that make up the portfolios of the wealthy. First, lets define wealthy.  There are three generally agreed upon categories.  The mass affluent which has a net worth outside of their primary home of $100,000- $999,999.  The wealthy which has a net worth outside of their primary home of $1,000,000- $9,999,999.  And the super wealthy which has a net worth outside of their primary home above $10,000,000. Interestingly, the investment strategy is basically the same between the wealthy and the super wealthy. And the higher you go in net worth for the mass affluent the more they look like the other two classes. So how do they invest?  What financial instruments do they use?  Well, the truth is they use all sorts of financial instruments, but there are two main strategies which set them apart from those that have less than them. First, is real estate.  The largest categories of investments for the wealthy is real estate and it only gets larger as you go up the wealth ladder.  Of course they all own a primary home.  But a second home is the next largest category of real estate investment.  And as you go up the scale they own 3,4 or more homes.  Next category is income producing real estate.  The wealthy own apartment buildings, commercial buildings, duplexes, etc. that will produce income for multiple generations.  REIT’s (real estate investment trusts) are favored by the wealthy. Raw land is bought and sat on until the investment blooms. The next largest category is businesses. Usually they control or own large blocks of a business that can be best called creative or niche businesses.  The wealthy have been able to identify unique ways to satisfy needs.  Many times the discovery has come out of a industry that they worked in for years, first as a employee. They also own some of the traditional investment classes like stocks, bonds, mutual funds.  However, it is at much smaller percentages than the non-wealthy.  For example, the super wealthy own individual stock and mutual funds, but the median ownership is around $1,000,000 for individual stocks and $500,000 for mutual funds.  Now remember, the super wealthy category starts at $10,000,000.  So their stock ownership percentage is very small compared to their overall assets.  They own cash value life insurance at about the same percentages as their stock ownership. Their overall startegies suggest an understanding of the tax laws, so that they legally avoid high outlays to government.  It also tells us they understand history.  The greatest investments,...

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Why Financial Experts Don’t Work

~ David Shafer ~ The hardest thing for some folks to understand is why taking advice from or turning your money over to experts doesn’t work.  After all, that is what we have been trained to do, listen to experts! There are two problems with this strategy. First, is the problem of our own emotional/mental structures.  Taking advice from experts doesn’t change our own mental structures.  If we don’t change the way we think about money, if we don’t change our understanding about money, if we don’t create a wealth creating environment in our lives, then we will fail to create wealth.  It is as simple as that.  By going to a “financial expert” we are demonstrating an unwillingness to take control of our own lives and that is what needs to be done in order to create wealth.  Study after study demonstrates this. We can not outsource control and expect to have above average results. Secondly, the masses of “financial experts” out there are mostly folks just like you, that haven’t taken control of their own finances, or turn themselves into active participants in their own financial lives.  What, you say?  Yes, that’s right how many folks in the financial expert category are actually wealthy?  How many have made their wealth through investing?  Most, if they have acquired any wealth, do it by having superior sales abilities that turns into superior income.  But as a class, they are wealth underachievers, meaning they have less wealth given their income, than the average.  I read that the average “financial expert” has an income of $80,000, in which they aren’t very good, at least below average, at turning into wealth. Original post: Why Financial Experts Don’t...

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When Pessimism Prevails, It?s Time to Get Rich

~ by Robert Kiyosaki If you’re serious about getting rich, now is the time. We’ve entered a period of mass-produced pessimism, when bad news is everywhere, and the best time to invest is when optimists become pessimists. The Weird Turn Pro Journalist Hunter S. Thompson used to say, “When the going gets weird, the weird turn pro.” That’s true in investing, too: At the height of every market boom, the weird turn into professional investors. In 2000, millions of people became professional day traders or investors in dotcom companies. Mutual funds had a record net inflow of $309 billion that year, too. In an earlier column, I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional. As a bull market turns into a bear market, the new pros turn into optimists, hoping and praying the bear market will become a bull and save them. But as the market remains bearish, the optimists become pessimists, quit the profession, and return to their day jobs. This is when the real professional investors re-enter the market. That’s what’s happening now. Pessimism vs. Realism In 1987, the United States experienced one of the biggest stock market crashes in history. The savings and loan industry was wiped out. Real estate crashed and a federal bailout entity known as the Resolution Trust Corporation, or the RTC, was formed. The RTC took from the financially foolish and gave to the financially smart. Right on schedule 20 years later, Dow Industrials and Transports struck their last highs together in July 2007. Since then, nothing but bad news has emerged. In August 2007 a new word surfaced in the world’s vocabulary: subprime. That October, I appeared on a number of television shows and was asked when the market would turn and head back up. My reply was, “This is a bad one. The worst is yet to come.” Many of the optimistic TV hosts got angry with me, asking me why I was so pessimistic. I told them, “The difference between an optimist and a pessimist is that a pessimist is a realist. I’m just being realistic.” As we all know, things only got worse in early 2008, with the demise of Bear Stearns and the Federal Reserve stepping in to save investment bankers. In February, many of those optimistic TV (and print) reporters became pessimists — and when journalists become pessimists, the public follows. By March, mutual funds had a net outflow of $45 billion as...

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Complimentary Tickets – BreakThru To Success Seminar

Get your complimentary tickets to Chris Howard’s Breakthrough To Success seminar! The BreakThrough To Success seminar is a 3 days action-packed seminar, worth $895 per ticket.  Watch this video where Chris Howard explains more about Breakthrough to Success… The seminar is conducted in various dates across Australia, New Zealand and Europe. Get your complimentary tickets at http://www.breakthroughtosuccess.com.au   Continued here: Complimentary Tickets – BreakThru To Success...

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Your Kid Thinks He’ll Make $173,000 A Year

If you need a reason to set up a plan to teach personal finances to your children, a new survey from Charles Schwab Financial Services should give you the motivation. They recently gave a survey to 1000 teenagers between the ages of 13 and 18 and came away with some findings that show that teenagers today have high expectations on what they believe they will be earning in the future: Teenagers today think that they are going to make quite a bit of money. The average teenager believes that they will be earning an salary of $145,000 a year. Boys believe that they will be earning a salary of $173,000 per year while girls believe they will be earning $114,000 per year. This despite the fact that the average annual salary for a worker in the US is about $40,000 today. According to the survey, teenagers in the US get most of their money from gifts given to them (54%) while over half (52%) say that they get their money by simply asking their parents for it when they need something. Close to one-third (29%) of teenagers already have some type of debt with the average amount being $300. This is a 23% increase from 2006 when the average debt owed by teenagers was $230. Another findings from the survey was that teenagers say that they do want to learn more about personal finances so that they can make better decisions when they are living on their own. Obviously, the schools are not teaching these fundamental lessons to the children and so it is up to the parents to help educate their children about finances.   See the rest here: Your Kid Thinks He’ll Make $173,000 A...

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Slight Reprieve in Oil Prices Won’t Last Long

I observed an interview of Robert Kiyosaki this week in regards to oil/fuel prices and the long term forecast. Kiyosaki claims that the primary reason for our current oil price situation is the devaluation of the dollar.  Oil is purchased in dollars and as the United States continues to print more dollars the value declines which directly results in escalating oil prices.  There are obviously other factors that cause the price of oil to rise including demand and oil speculators, however, the primary culprit is the declining value of the dollar. Kiyosaki also says to enjoy the slight reprieve we’ve observed over the past couple of weeks because in the long term, if the dollar continues to decline in value, we can expect to see gas prices well over $6.00 or $7.00 a gallon. Posted by Glenn Crawford of Project Liberty Originally posted here: Slight Reprieve in Oil Prices Won’t Last...

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Keeping fingers away from Investment account

One of the reasons why I write this thing here now, is to keep me accountable and help me have some discipline 🙂 So what’s the problem? The problem is that I got margin call when Silver was somewhere around 14.44 USD. Now in couple of last days it has gone up to 14.86… So I decided not use anymore strategy called buy and pray or wait and lose :-p But in the back of my head my Little Voice is still telling “Jump in” or “Get an new position, because otherwise you will miss out the opportunity.” etc. So I decided that my strategy is: Buy when Silver price goes over 14-day moving average. And where I look this information is http://www.lbma.org.uk/ and based on that create my own graph. Sell when Silver price goes under 14-day moving average. And I will change the strategy after Silver price will go over 200-day moving average.In this point the strategy will be: Buy when Silver price goes over 200-day moving average. (This last happened 9/20/2007) Sell when Silver price goes under 200-day moving average. (This last happened 8/5/2008) So in the end I will not have many buying/selling going on… and for selling probably I can put a Stop in place. I now found out how I could do that… I just need to try it out, how it works in real environment. Last thing: I will continue with futures. The main thing why I like the futures is that gain or loss is accounted every day. So I can’t hide myself somewhere and “decide” in some point that now I’m going to be a long-term investor, when my actual idea was to be a short term speculator.The second point is that when things will go as planned and I create some money out of this strategy I can start removing the money from investing account and move it into other deals. Original post: Keeping fingers away from Investment...

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