Wisdom of Rich Dad

In my free time I regularly read Yahoo finance or the CNN Money articles related to personal finance and retirement. People are told that they need to save as much as possible for retirement, because they will be spending somewhat close to 75% of their pre-retirement incomes per year.

In addition to that most so called financial guru’s claim that Social Security and Medicare will be either bankrupt or providing only enough coverage for the elderly that would allow them to enjoy cat food and insufficient health care in retirement.’

In order for people to be able to retire comfortably in those gloomy future years, they have to save as much as possible and invest it all in the stock market, in order to generate one or two million at the time of their retirement, which would then allow them to withdraw fund during their non-working years.

I generally disagree with these articles, since they are way too general. They are written with the intend to target as many people as possible. But they are far away from the truth.

In my opinion, it is important to have paid in full your primary residence at the time of your retirement. Once this is done, the income requirements are much lower than during your working years.

Most financial experts recommend that the annual mortgage payment for a primary residence should not exceed 35%-40% of the family’s income. If you are currently spending 30% on your income in order to be able to pay off your house by the time you retire, then you will be able to live on 30% less income during retirement.

In addition to that, if dividend and capital gains income continues to get a preferential tax treatment, you will need less investment income for each dollar of job income that the investment income is replacing. The best thing of investment income is that you don’t have to pay Social Security and Medicare on it.

Finally, in order to determine your income needs in retirement, you should subtract the amount of money which you normally contribute to your salary every pay period. I wouldn’t expect that you will need to save for retirement, in retirement. If you contribute 10% of your salary to a 401K plan for example, then you need to subtract that percentage from your income needs.

A potential wild card that could possibly derail one’s retirement is the rising costs of healthcare. We are constantly reminded how healthcare costs are rising exponentially and how they would become even more expensive in the future. I do think however that in the future health costs increases will not rise more than the rate of inflation, after stricter insurance reimbursement policies require health management organizations to be more selective in their billing to patients and the procedures that are recommended.

After one’s retirement needs have been estimated, it is a good idea to create an investment plan, which would help you in your quest to reach your goals. A solid mix of dividend stocks and some bonds would be a good place to start. Don’t have time to play a stock picker- then select a mix of index funds. Then set it up on autopilot by investing a fixed amount from your paycheck every pay period.

By: Dobromir Stoyanov

Millions of people have sought Robert Kiyosaki’s advice on investing in real estate. The author of Rich Dad, Poor Dad believes America’s financial dilemma is directly related to the rest of the globe.

” I think the world economy is contracting which is why oil is coming down, gold is coming down, property is coming down all over the world,” said Kiyosaki.

When it comes to investing, Kiyosaki said too many people get their advice from someone trying to sell them something.

“So you’ve really got to be careful who you take financial advice from because ultimately that six inches between your ears is your greatest asset so be careful what you put in there.”

Kiyosaki has made his money in real estate – primarily commercial real estate like apartment buildings. And his decision about what to buy might surprise you.

“Real estate is based upon jobs. If the jobs are good, real estate’s good. If jobs are bad, real estate’s bad – it is that simple.”

Good jobs, he says, indicate economic stability.

“It really has to make basic business sense. So I’m buying real estate, apartment houses in Oklahoma. Why Oklahoma? Oil. That’s the number one reason – it’s a pretty stable economy, oil is always there.”

If you are thinking of investing in real estate, Kiyosaki says there are three important considerations.

“Number one, you have to have good partners, that’s smart partners. Number two you have to have good financing and the sub-prime was bad financing. And three with real estate you have to have good management.”

He also stresses the importance of financial literacy.

- Robert Britt

I was reading Robert Kiyosaki’s book “The Business School for People Who Like Helping People” in which he talks about the tremendous learning opportunity in having your own business.

Specifically he writes about having a network marketing business and how that can teach you to be a successful sales person. In order to be a success at life you have to be good at sales. Now, I know there are going to be people who will be totally turned off by that statement, and I think the only reason that would be true is because of misunderstanding.

There is a misconception about sales in general. “Oh, no, here comes the sales pitch” might be something that comes to mind. BUT everyone loves to buy things, so the logical step is that something sold them on whatever you are buying. So do you really hate sales, or do you hate being sold to? The answer is pretty obvious or people wouldn’t be buying.

How do you decide what you are going to eat? There is the taste factor, but there is also information on nutrition that enters into the picture and also commercials on TV, radio, billboards and what else? Opinions of people in your life.

The opinions you share are actually a sales pitch. If people listen to you and go to a restaurant, or try a recipe that you recommended; you have sold them on that idea. So you are doing sales, but not getting any commission on it. The reason that you are comfortable doing this type of sale is exactly because you don’t feel like you are selling and the person who is ‘buying’ your opinion doesn’t think you have ulterior motives.

Wouldn’t it be great if you could earn a commission every time someone followed your suggestion for a book, movie or restaurant? On the web, this can often happen. If you have links to products you recommend, and they are affiliate links, this brings you a small commission.

In life, the only way you earn money this way is if you have a sales job, or a network marketing affiliation. The difference between the two is that in a traditional sales job, you only earn money on your efforts. In a network marketing company you earn on the efforts of those you bring into the business, as well as on your own efforts. This is the power of leverage.

There is apprehension in people about network marketing, or multi-level marketing as it is sometimes known, but in truth the concept has come a long way since the concept was first introduced. Many companies once thought to be fringe are now accepted as common place. In fact, most people don’t even think of Mary Kay or Tupperware as MLM, just as household names.

What does all this have to do with your growth as a business person? The right network marketing company will provide training to teach you how to grow a business. They will teach you how to become a leader and get over your fears of approaching people.

The people in your organization will help you make your business a success and will truly care about you as a person. You will learn, grow and become the person you always knew you could be, because you will have self-confidence and know you are a winner.

Robert Kiyosaki wrote that there is a winner and a loser inside of everyone and if you let your doubts, fears or low self-esteem win, the loser inside you wins.

If you force yourself to get past your inner barriers and out of your comfort zone, the winner inside you will come out.

Author: Alex Anderson

Robert Kiyosaki, author of the Rich Dad book series, has said more than once that you don’t have to have money to make money. In “Cash Flow Quadrant” however, he reveals how much money he paid for his first investment condo. What if you want to buy a condo but you don’t have a few thousand spare dollars lying around to make it happen?

You can still make your purchase. The trick is, you just have to think about things a little bit differently.

If you have not seen the movie “Schindler’s List,” you probably should. Not only is it a great bit of social consciousness, its writers did a good enough job on Schindler’s character to give you a glimpse into his business know-how.

The man wanted to build a factory because he knew it could make him a lot of money during the war. Thing was, he didn’t have the capital to build that factory.

But the Jewish community did.

He went to them and presented his idea about how, in return for their investment capital, they could take some of the goods produced and sell them on the black market. He talked to a lot of investors. He raised a lot of money.

You can do the same thing, and indeed a lot of people do. If you see a good deal on a building and you haven’t the spare millions lying around to purchase it, put together a cooperative to buy the property. Even if you receive only 10 percent of the property’s earnings, that will be a nice, tidy sum if it’s the right property.

That is why you shouldn’t content yourself with starting too small.

According to Ken McElroy, who authored Rich Dad’s “The ABC’s of Real Estate Investing,” there is nothing wrong with small bits of real estate. He simply says that there is no reason to relegate yourself to them out of fear that you don’t have the skills to go larger, because it doesn’t really require more skills. You wind up outsourcing a lot anyway.

What a larger chunk of real estate will do, however, is allow you to interest more investors, as they stand to make more money off the deal. A larger piece of real estate will also be very unlikely to slump into zero occupancy.

As McElroy says, if you rent out a single-family unit and that family moves out, you have an occupancy rate of zero, and the property becomes a liability until you can rent it again. If you own interest in a 50-family building and 10 families move out, you still have an occupancy rate of 80 percent. The property is still an asset. You’re still making money. And you know you stand to make more again when you get those 10 units refilled.

All of that doesn’t even begin to take into account the relative ease of getting a bank loan for the purpose of purchasing an investment property. The bank knows they can make money off that property if you default, regardless of your credit history.