Wisdom of Rich Dad

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 a fish, you feed him for a day; teach him to fish, you feed him for life” — Kiyosaki agreed to pay most, but not all, of her medical bills.

“Had Robert paid the entire bill and said, ‘Just call me any time you need help,’ ” she said, “I’d not have learned some important lessons. At 60, I’ve gone back to work. In May I landed a job as a hospice hospital chaplain, working 20 hours a week.”

She is also preparing to accompany her older brother — he’s 62 — on an book promotion tour with stops in Singapore, Australia, New Zealand and Malaysia. Then they’re off to a conference in Florida.

“It’s been wonderful sharing my brother’s world,” she said.

Kiyosaki joined the Marine Corps and served in Vietnam, flying in combat for a year.

“Life is not sponge cake,” he says. “It’s cold, cruel and vicious.”

Kiyosaki, sometimes collaborating with other authors, has turned “Rich Dad, Poor Dad” into a brand.

Tenzin’s path has been far different. She was compelled by pregnancy to marry before completing university studies. After a few years, she divorced and lived in a geodesic dome in a forest. Later, she served as a Buddhist chaplain at the U.S. Air Force Academy in Colorado Springs, Colo.

Kiyosaki, who is based in Phoenix, follows the teachings and wisdom of architect, inventor, author and visionary Richard Buckminster Fuller. Tenzin is a disciple of the Dalai Lama and chose to forsake material wealth in favor of monastic life.

But now, as assistant spiritual director at Thubten Dhargye Ling Buddhist center in Long Beach, troubling questions have been bubbling to the surface since her book was published.

“Am I selling out?” she asked. “What will the conservative monastic order think of me now?

“I take comfort in the Dalai Lama, who urges women to make the most of every opportunity that comes to them. The way I see it, I’m an educated woman and have many skills I can use to help others.”

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, play the slots in Vegas — or take the most common path: running your own business. That’s how half of all millionaires made their money, according to the AmEx/Harrison survey. About a third had a professional practice or worked in the corporate world; only 3 percent inherited their wealth.

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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.

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What makes rich gets richer? We notice that the rich keeps on getting richer while some of the poor gets poorer. Kiyosaki continued his teachings on his “Rich Dad Guide to Investing”. If you are not familiar, there’s this one rule originated by the Italian Economist Vilfredo Pareto in 1897 called “Pareto’s Principle or 80/20 Rule” also known as the Principle of Least Effort.

In business, we can apply it and we can say: put most of our efforts on the 20% of things that bring in 80% of the income in our business. Kiyosaki agreed with the 80/20 Rule for overall success in all areas but not for money. He went on to say that when it comes to money, he believed in the 90/10 Rule.

He noticed that 10% of people had 90% of the money. In the world of show business, 10% of the actors and actresses had 90% of the money. In the world of sports, 10% of the athletes made 90% of the money. The same 90/10 Rule applies to the world of investing. That is, 10% of the investors gained 90% of the wealth in the world. Would you want to be included in that 10% that owned 90% of the wealth?

Kiyosaki differentiated between an average investor vs. rich investor or commonly known as the 90/10 investor with regards to their thinking. This is also what makes the rich even richer. Let’s look how rich investor thinks.

Most investors say, “don’t take risks,” the rich investor takes risks. The world is full of risks and this is also applicable to the world of investing. We all know that a high return involves a high risk. And the higher the returns, the more profitable the investment is. The rich investor thinks about how to improve his skills so he can take more risks. While most investors lives in fear of stock market crashes, the rich investor looks forward to market crashes as an avenue or opportunity to make more money. Read the rest of this entry »

Common advice about controlling spending is to track all your purchases and add them up each week or month. I believe that this is effective, but have been fuzzy on why it seems to work so well. Why can’t people just spend less without the constant reminder of how well they are doing? I got some insight on this question from, of all places, poker.

For poker players there is a certain thrill to dragging in a pot of chips. The thrill is there whether it is a $1 pot or a $10 pot. The $10 pot gives a bigger thrill, but not 10 times bigger. Similarly, losing a $10 pot feels worse than losing a $1 pot, but not 10 times worse.

This leads to some players playing in such a way that they maximize happiness by taking in many small pots, but losing some big ones. As long as they don’t count their dwindling chips, they can actually be happy playing this way.

Counting your chips is a lot like adding up your spending at the end of the month to see what happened. You may feel good about having saved small amounts of money several times, but if you wasted a big amount just once, you’ve had a bad month. If you don’t add up your spending you might actually feel good about all the times you saved money even though you’ve had a bad month overall.

Ignorance can be bliss for a while, but when the debts finally start catching up to you, there won’t be much happiness. The worse your financial trouble, the more often you should be adding up your purchases to take stock of your financial situation.

Some people can get along by assessing their finances monthly, and others have to do it weekly to keep a lid on spending. Then we have the families who appear on Gail Vaz-Oxlade’s television show Til Debt do Us Part who have to assess their financial position with every purchase by abandoning debit and credit cards entirely and using cash.

I’ve read my fair share of financial books but there are a couple which really stick out in my mind as having a major impact on my outlook. One of these is Rich Dad, Poor Dad by Robert Kiyosaki.

There are many things I have been able to take away from this book which have challenged my thinking. The greatest challenge however is Kiyosaki’s idea of “good” debt and “bad” debt. Kiyosaki believes that you should leverage other people’s money to make money for yourself. How you leverage other people’s money is by borrowing from them, another way to say you have to go into debt. Although I understand his outlook and it does make sense to me I really had to stop and match up this concept with concepts from the Bible.

The logic behind leveraging debt makes sense. If you buy an apartment complex with borrowed money from the bank and turn a profit on that regularly, a profit that more than pays for the monthly payment you now have to the bank, then this processes will gain you money in the short term and probably in the long term. Mathematically it’s sound.

Another example is leveraging 0% offers to make money. It is argued that you should take 0% offers on credit cards or other debt opportunities because this can also make mathematical sense. If you have $2,000 on a credit card with 0% interest it would make more sense to put $2,000 in an interest bearing account than to pay off that $2,000 credit card.

I tend to be a very logical person who likes to run the numbers on everything. I think that’s why it was so hard for me to see the truth in this instance. The truth is, the end doesn’t justify the means. Just because going into debt could earn you more money or because it makes mathematical sense when you run the numbers, doesn’t make it right. This was, and sometimes still is, a very hard concept for me to grasp.

God is very clear about his stance on debt in the bible, just check it out for yourself (Romans 13:8, Proverbs 22:7). Although it never says going into debt is a sin, it makes a very clear case for why you don’t want to do it. It doesn’t make any concession for debt that makes you money or for debt that doesn’t have an interest rate.

The really tricky part in all of this is truly applying it to my life. What does that mean about buying a house? It can’t possibly mean that you shouldn’t buy a house until you can pay for it 100%…. right? Well, from reading what the bible says, I have to conclude that’s exactly what it means. The same thing goes for buying cars or furniture or education.

As you know by now, if you’ve been reading this blog, I do have debt. So I have not followed what the Bible has to say on this. To be honest with you, even now knowing what the Bible has to say I don’t think I would follow it when it comes to the house. The truth is I’m impatient and don’t want to wait the 5 or 10 years it would take to save up that kind of money. It’s harsh reality but I have to be honest with myself.

I’ll just leave it as something I’m working on. I’m not perfect yet. I hope to not get into debt again, now that my choices are made. I will work hard on getting out.