Wisdom of Rich Dad

Wealth is the product of man’s capacity to think.
-Ayn Rand 

Being grateful for one’s financial situation can be challenging at times. But we must master the “attitude of gratitude” for true wealth to be ours. For most people, managing their finances becomes a source of constant concern and pressure. There are few who can truthfully say that they are consistently grateful for their ongoing financial situations.

The more grateful they are though, the faster they tune into the forces that attract greater financial abundance. So many people are in the habit of constantly telling themselves that they don’t have enough money. This very attitude of “I don’t have enough money” can become a self-defeating p rophecy and make their lives seemingly miserable. They often miss the many riches that surround them because they are too busy worrying or feeling “less wealthy” than others.

If we don’t appreciate the wealth that we have received already, we are more likely to miss out on the fulfilment of life it can bring. Our “life” is directly proportional to how much gratitude we have. If we don’t appreciate our life, if we don’t appreciate what we have, it becomes less meaningful to us and can simply become clutter. To transcend this feeling, being making an ongoing list of all the things you can be grateful for: things that you already have, such as, money and other assets, and opportunities to produce more, so that you receive more. The Gratitude Effect can bring abundance as well as more overall life.

Look and you will find it – what is unsought will go undetected
- Sofocles

Everyone has wealth. If you think you don’t, you just haven’t recognized it yet because it’s in a form that eludes you. Your wealth can be in the form of your children, you friends, your business, your spirituality, your body, or anything really. It will take the form of whatever is highest on your hierarchy of values. If your highest value is your children, your wealth and your investment will be in the form of your children. When you are sixty, seventy or eighty, and you are retired, they will probably e taking care of you. Your investment will thus come back to you with its many rewards. If your highest value is your religion and your church, the church may provide for you when you get older. Once again, your investment will pay off. If you place the highest value on your physical body, then you may live long and healthy, and your body may be what supports you. If your highest value is money, your financial investments will most likely be the form of wealth that takes care of you in the future. If your highest value is your friends and your social circle, then your friends will probably take care of you when you are unable to do it yourself anymore.

If you take one thing from this article, let it be the knowledge that you are not missing wealth. You already have something you can be grateful for. But if you would love your wealth to be in the form of cash, you have to appreciate that form of wealth. You have to put it higher on your values list, or cash is not going to show up in your life. The word wealth has more to do with well being than with money. Everyone has wealth and abundance, but it may be manifested in a different form for everyone.
 

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Dr John Demartini is a world leading inspirational speaker and author at the forefront of the burgeoning personal and professional development industry. His scope of knowledge and experience is a culmination of 34 years of research and studies of more than 28,000 texts into over 200 different disciplines ranging from psychology, philosophy, metaphysics, theology, neurology and physiology.

Letter to the Editor of The Wall Street Journal
In response to Getting Going article by Jonathan Clements, October 11th 2006

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Robert Kiyosaki
The recent article by Jonathan Clements on the new book Why We Want You to be Rich I wrote with Donald Trump had very little to do with the message of our book, and everything to do, apparently, with his personal agenda.

We wrote the book to stress the importance of and dramatic need for financial education. Why is it we do not teach financial education in our schools?  Through financial education you can become an active investor rather than a passive investor.

Without financial education, you may indeed be best served by being a passive investor and turning your money over to a financial advisor to invest in mutual funds. However Mr. Trump and I stress that by becoming financially educated you can become an active investor and create a better financial future for yourself and your family.

It is your choice. Do you want to be a passive investor, or an active investor? Do you want your financial future controlled by your employer, government, financial advisor, or financial journalist? Or do you want to be in control of you life?

While our advice may fly in the face of the traditional advice (“save money, invest in mutual funds and diversify”) it provides a fresh alternative to this tired mantra. How many people do you really know who have become financially free through saving money and investing in mutual funds — in comparison to people who have built successful businesses or invested in real estate?  We trust your readers know the answer.

Mr. Clements does not argue with the fact that we face a “growing trade deficit, burgeoning national debt, a depreciating dollar and baby boomers with inadequate savings, all of which makes our financial future shaky.” However, in the face of these dramatic economic shifts, his advice is to do more of the same old advice, “purchase funds with rock-bottom annual expenses.” In essence, remain a passive investor, ignore these dramatic uncertain economic times and hope for the best. We suggest that it is time to change the status quo, get educated and become an active investor.

In comparing the differences between the various investments — businesses, real estate and stocks or mutual funds — we stressed the difference in the amount of control you have as an investor. For instance:

Ask yourself, do you have more control over your mutual funds or your own business?
Can you call the mutual fund manager and discuss the investments he is making? Not likely.
As a shareholder of a blue chip company, can you call the president of the company to discuss the corporate strategy? You can certainly place the call… but will the president take it? Not likely.

Mr. Clements fails to even mention the topic of control even though it was a significant part of his discussion with me. Owning your own business not only enables you to have more control over your investment, it also allows you significant tax advantages.

Even more blatant is Mr. Clements’ assertion that you “can borrow against funds held in a brokerage-firm margin account and investors make tax-deferred exchanges all the time, by trading within their retirement accounts.” He doesn’t tell you that when you borrow on margin you are borrowing against your own personal equity, and you are personally liable for any loss. In contrast, when you borrow your banker’s money for a piece of real estate you can receive non-recourse financing, where only the underlying real estate serves as collateral. You are NOT personally liable in a non-recourse loan.

What he also fails to tell you is that by holding stock and/or mutual funds within a retirement account, you are converting the tax rate from a long-term capital gain rate of 15% to an ordinary income rate when you withdraw the money from the account at the much higher level of income tax.  In other words, you are foregoing paying 15% on income today so you can pay up to 35% on it later. (Plus any related state income tax).

Why would anyone ever do this?  Because Mr. Clements would tell you that when you retire your income tax rate will drop and therefore your tax rate will be lower. This may be true if you are not rich… or not planning on ever becoming rich. Do you really want to plan on being poorer?

Why We Want You to be Rich was written because Mr. Trump and I want you to plan on being richer, not poorer, in your retirement years.

Finally, Mr. Clements contradicts himself, providing the very proof that a mutual “fund company ‘receives 80 percent of the returns.’” When he states, “Mr. Bogle does indeed note that, if you invested $1,000 at 8% a year and paid 2.5% in total annual costs, your gain after 65 years would be $32,465, or almost 80% less that the $148,780 your would have amassed if you hadn’t incurred any costs.” You can do the math.

However, we would further state that the same $1,000 a year could generate a much greater return than even the 8% if you become financially educated and become an active investor.

In the final analysis, we would tell Mr. Clements that it is not what you do for your paycheck that is important.  It is what you do with your paycheck that will make you poor or rich.

Financial education can give you back control over your financial life.

 

Julius Apegu 

Becoming financially independent starts with a great desire.  By taking advantage of the opportunities crossing your path everyday, you can begin to claim your share of the good things of life.

The best way to do it is by building your own business.

One writer on financial independence Robert Kiyosaki has advanced three conditions that you must fulfill to become financially independent.

First, by believing that you will become financially independent, second, become aware that your situation will not change magically if you do nothing about it, and third, passionately desire an improvement in your life.

Rich behaviours
The wealthy use a business as a vehicle to pursue their dreams and passions.
After building their business, leading to a strong cash flow, the wealthy begin to invest in assets – things that put more money in your pocket.

Key among the behaviours of the genuinely rich is the ability to take calculated risks.
They don’t fear to make mistakes. Indeed as human beings, making mistakes is how we are designed to learn.

Just remember how you learnt how to ride a bicycle. You probably still have that scar! It took an effort. It took a commitment.

If you are considering building your own business, be aware of whom you spend your time with, who your teachers are, and which books you read. Much of success in life and business is built on trust.

If you’re honest and surround yourself with positive not toxic people, you will grow into a better entrepreneur and leader. You will find means to expand your means, that of your children and family. But also be aware of toxic people – people who want to kill your dream because they have given up their own.

Once you have built a business, build a network. Your network enables you have several branches. The network will use tested and proven services, products and systems.
These services, products and systems will have been built over a period of time and will have produced significant business results in terms of an attractive cash flow statement and expansion.

To build wealth through business, you must adopt a continuous improvement mind- set, skill-set and attitude.

 

 

Hattie Bryant of Small Business School interviews Jim Schell of Opportunity Knocks, a consulting company based in Bend, Oregon; and Noll Hanson of Hanson & Company, a nonprofit consulting company based in Pasadena, California on the Importance of Using Financial Statements:

» Watch Video  

CEDAR CITY – Chris McCormick, a loan officer and financial adviser with Investment Lending, is on a mission to help people realize that financial freedom isn’t as intimidating as some may think.

And he’s using a board game – yes, with little, colorful guys and all – to get his point across. Once a month, he invites people from the community to play in order to better understand their own personal finances.

“We’d like to see people of all ages get involved,” McCormick said. “The key is if you can start having a better grasp of what this is, the better off you’re going to be financially.”

So what is it exactly?McCormick said this board game, which was created by Robert Kiyosaki, author of “Rich Dad, Poor Dad,” might be the answer for those who are interested in investing, but have no idea where to start.

However, Cashflow, as it’s called, is not your mother’s game of Monopoly.

The concept comes from real-life budgeting practices, possibilities and potential opportunities. Through simulations, players learn to calculate their incomes, assets, liabilities and, of course, cash flow. In this game, cash flow is a combination of investment returns and monthly income.

The objective of the game to get out of the “rat race,” as Kiyosaki calls it. Players begin with an assigned profession, which can range from an engineer, to a janitor, to a teacher, and then the wheelin’ and dealin’ begins.

“The thing I like about this is no matter what your job is, or how much you’re making, you can do this,” said Cade Stubbs, of Inwest Title Services, who, along with his co-worker, Cheri Skewes, sat down for a round with McCormick on Wednesday afternoon.

“This is just the best learning (experience),” added Skewes, a first-time Cashflow player.

McCormick said Cashflow is so accurate that he even encourages players to use the game’s worksheet to help manage their personal finances in real life.

Along with the worksheet, which includes lines for salary, taxes, mortgage payments, savings, child expenses and passive income, Cashflow also comes with big/small deal, market and “doodad” cards that players can draw depending on where they land.

To win, a player must be the first to buy their “Dream” or the first to accumulate $50,000 in monthly cash flow. It sounds easy, but there is a fair amount of strategy involved and a basic knowledge of the real estate and stock market comes in handy, too.

McCormick said the next community Cash Flow night is scheduled for Oct. 25 at 7 p.m. at the Crystal Inn in Cedar City. Everyone, he added, regardless of skill level is welcomed to participate, and the group will go as fast or as slow as it takes for people to catch on.

“If we push you, there’s no way you’re gonna learn,” McCormick said, stressing a no-pressure attitude.

Overall, after playing the game, Stubbs and Skewes both agree that Cashflow is a fun way to learn how to obtain financial freedom without fully diving head first into the real world.

Unfortunately, McCormick said, society doesn’t teach people how to think like a money savvy mogul. But, Cashflow does.

“It just gave me a whole new creative look at finances and how we can benefit,” Skewes said.

Kids may learn a lot of things in school, but one thing kids usually don’t learn is basic personal finance skills. Instead, most kids learn about money from Mom & Dad. So how do you raise financially savvy kids? Stephanie AuWerter, Editor of SmartMoney.com, has some advice for teaching kids about money.

First and foremost, talk with your kids about money. “Kids are not going to learn it in school, so it’s really up to the parents to teach some basic lessons,” says AuWerter.

While most parents would rather talk about the birds and the bees than discuss their family finances, money shouldn’t be a taboo topic. Many parents want to protect their kids from the stress that money discussions can bring, so they don’t say anything at all. That’s a big mistake. Open up discussions about money; talk to your kids about credit cards, the family budget, investments, etc. You don’t want your kids to worry if you suddenly start talking about money because a problem crops up. It should be an everyday topic and your children should be involved.

Be sure to start these discussions – and subsequent teachings – at a young age. A child as young as three can have a piggy bank. Buy a clear one so they can see the money grow as they continue to add to it. As a parent, you also should use cash around your young kids when you’re in the stores. This strengthens the association that money is used to buy things, not a piece of plastic.

“Money has become a very abstract concept,” says AuWerter. “We use credit cards for everything.” We even handle our banking online. Kids need to see that money is a concrete thing. Let your kids give the money to the person working the cash register and handle the change.

Another important way to teach your kids about money is to put them on the family payroll. In other words, pay your kids an allowance. It opens the door for all sorts of basic personal finance issues, like spending and saving. However, don’t get too controlling. How your child spends the money is their decision. It’s their money, they can do with it what they want – within reason. If they’re saving for a big purchase, help them figure out how long it’s going to take. Encourage them by helping them earn some extra cash; give them a few extra chores.

Consider creating a “company matching program”. With older kids who can take on part-time jobs or summer jobs, “It can be a good idea to match their earnings and then invest that money on their behalf,” says AuWerter. You can even open up an IRA account. It will look like a brilliant idea years down the road. Get your kids involved in the investment process. Explain to them what stocks and mutual funds are and how they work. The fact is, they probably won’t learn this in school, yet it’s one of the most important life lessons they can get.

Finally, get them some plastic. The average college student graduates with more than $2,000 in credit card debt. Your best bet is to educate your child about credit before they’re off on their own. “You want them to be smart about it even before they head off to school,” says AuWerter.

Get a prepaid card for your high school-aged child. Be sure to include a conversation about budgeting and not buying something until you have the cash in hand. A good debt lesson can save your child a lot of financial headaches later on.