Wisdom of Rich Dad

By Robert Kiyosaki

In the summer of 1932, presidential candidate Franklin Delano Roosevelt promised, “I pledge you, I pledge myself, to a new deal for the American people.”

Today, it is time not for a “New Deal,” but a “New Mission.”

America’s schools need to take a page from the businesses that have been created by entrepreneurs over the past decades. Henry Ford, Bill Gates, Steve Jobs, Sergey Brin and Larry Page have all given us the road map, but the path toward entrepreneurship is often the road less traveled America’s schools.

The U.S. unemployment rate is currently 9.7% in what many call a “jobless recovery.” So what should we do? The problem and the solution can be found in America’s educational system and its current mantra: “Go to school and get good grades, so you can get a good high-paying job.” In simpler terms that means, “Go to school to become a good employee.” But there are too many employees, which is why we have an unemployment problem. Today, kids just out of school aren’t finding jobs. At the same time, many of their parents are going back to school for retraining. But they’re not finding jobs, either.

The idea of a high-paying job for life is truly an American dream — but no longer a reality. With low-priced labor and lower-priced, higher-performance technology, high-paying American jobs will be disappearing at greater speed as they move overseas.

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I want to know what exactly is a retirement plan and is it government funded or..
Is it , for example, $10 you put into the retirement fund every month and at the end of , lets say the year , you have – $120. ??

If that’s the case then why should I even have a retirement fund. I can just put it in my savings account can’t i ? Am i wrong. Please help me.

Retirement plans are basically accounts that are designed to grow and keep up with (or exceed) inflation. You put money into it as you go, and it grows that way, but it also accumulates interest. Most retirement accounts also include stocks and bonds that grow with the economy (or shrink with it sometimes), so it’s like continuously making a little extra money in the background.

Most IRA’s (individual retirement accounts) are tax-deferred. This means that you don’t have to pay taxes on the money that you put into it… yet.

The difficulties are that

1) you don’t get immediate access to the money – in fact, you are hit hard with penalties if you try to withdraw from it before you are officially retired, and

2) when you retire, then when you draw money from the account, you are taxed in a high bracket – as if the money in your account is your annual income (which means you could be in the 50% tax bracket if there’s a lot in there). It’s great for getting to keep more of your money now and also being able to have enough money to live off of when you retire, but if that’s where all of your money is going, then you are going to get creamed on taxes later on.

There are also other retirement account types, including Roth IRA’s and 401(k)’s. Those you get taxed on now, but there is little or no penalty for early withdrawal and you don’t pay taxes on it when you withdraw in retirement. The downside to those? There’s a limit to how much you can put in those.

Then there are pure stocks and investments, not part of IRA’s. The only difficulty with those is that you are taxed 15% of how much they grow (it will be 30% if Obama has his way).

The government funded retirement plan is called Social Security. The Social Security system is incredibly flawed (have you ever heard of a Ponzi scheme? Look it up. Social Security is the biggest one ever, and it’s mandatory). When you get old enough, the government pays you to be retired. The amount, though, is really not very good. You can only live off of it if you also have other retirement income.

The reason you would want a retirement account is because those grow on their own, faster than inflation. Putting your retirement into a regular old savings account, the money will not grow fast enough to keep up with inflation, and you are therefore by default losing money instead of actually keeping it.

Now don’t get me wrong, you do need a regular old savings account because you need a backup stash of money that you can get at quickly (whereas retirement funds you can’t get very easily until you are retired). But to have a savings account as your retirement plan is not a good idea.

If you start it now, then you’ll have more when you retire.

Here is some valuable advice I learnt from famous Investor, Entrepreneur and Educator Robert Kiyosaki; this advice relates not only to business, but all areas of your life. If you want to be successful and achieve your goals I encourage you to be open-minded as you read this article and critique yourself!

Robert Kiyosaki identifies the reasons why financially intelligent people still fail in business, investing and building income generating assets, which create true wealth making the money work for you.

Advice On Starting A Business – Laziness

Busy people are often the laziest! Are you busy? Busy shopping, watching television, reading the paper working too much?

Busy people often avoid things they don’t want to work on!
Deep down you know there is something you could improve, you want to improve or maybe you need to improve? If someone was to ask you about this you would probably get defensive. Do you need to exercise more? Spend more time with your family and friends? Improve your posture? Improve your financial intelligence? Take your dog for a walk?

Your desire is your motivator, your fuel. You need to change the way you think:

“I can’t afford it” should become “How can I afford it?” “How can I afford to never work again?”

You may think this is greedy, that’s OK you have been conditioned to feel guilty about greed.

Robert’s rich dad said “Guilt is worse than greed, for guilt robs the body of its soul”.

Eleanor Roosevelt said “Do what you feel in your heart to be right – for you’ll be criticized anyway. You’ll be damned if you do and damned if you don’t.”

Advice On Starting A Business – Habits

Our every day habits control our behavior.

Robert Kiyosaki believes the best habit when paying bills is to pay yourself first, even when you don’t have enough money to pay all of your other bills.

Why you ask? The reason is simple your creditors, the tax department, the bank whoever it is you owe money to will chase you for payment until you pay. Would you be as good at chasing yourself to get paid? I don’t think so. The debt collectors chasing you become your personal motivators. Forcing you to think and look for alternative forms of income. You may choose to work harder, you may choose to work smarter.

The habit of mental exercise makes you stronger, like anything with practice it becomes easier and you become better at it.

Advice On Starting A Business – Arrogance

Arrogance is your ego plus ignorance. People often use arrogance to try to hide ignorance. When you feel you are being ignorant, don’t be arrogant about it; educate yourself until you are no longer ignorant.

Laziness, Habits and Arrogance are all traits you are responsible for, improving in these areas you will see a positive impact on all areas of your life. My advice on starting a business is to be committed to ongoing personal development now and for the rest of your life.

Does that sound like too much work?

Yes – than read this article again!! I think laziness, bad habits and a little arrogance is holding you back…

No – great than get to it!!

One of the key lessons we learn in life is that it is important to save. There is a big difference though, between what we learn and what we do and many people find saving difficult.

Those people who feel guilty about not saving will be interested in a concept being promoted by Robert Kiyosaki, author of Rich Dad, Poor Dad, who suggests that savers are losers. Before all non-savers get too comfortable with that proposition, his point is not that everyone should spend rather than save. Saving implies putting money away on a regular basis into a bank account where it will earn interest and slowly increase in value with compound interest.

There are three reasons why you could argue that people who save are losers.

• Firstly, the return on your savings is reduced because you pay tax on the interest earned.
• Secondly, over time, the effect of inflation will reduce the purchasing power of your money. In other words, if you save $100 and choose to spend it ten years from now, you will not be able to buy as much with your money as you can today.
• Thirdly, bank deposits offer a low rate of return when compared with other investments. That is because bank deposits are seen to be less risky than other investments.

The point made by Kiyosaki is that if you really want to get ahead financially, you are better to invest rather than save.

Investing in growth assets such as property and shares or investing in a business of your own should give you better protection against tax and inflation, and a higher return over the long term.

In my view, the best approach is to do a little of everything; invest for a good return, save for security and spend to enjoy life.

I would like to announce my latest web property – Real Estate Investment Game.

The game is about buying and selling virtual property. You are presented with virtual apartments in different looks, along with various data, including market value and tenancy count. You can also see who owns the apartments and you can decide whether to buy the properties or not. To increase your apartments’ attractiveness, you can upgrade them with various upgrades, such as apartments’ maintenance to keep yours squeaky clean (and have better market value.)

You can play with either real money or play money.

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Robert Kiyosaki likes real estate investing is because real estate touches each part of his financial statement.

Starting with his best-selling book Rich Dad Poor Dad and continued in many of his subsequent books, Robert explains how real estate gives cash flow to his income statement and on the expense side of the income statement he’s able to deduct the property’s depreciation as an expense.

When seen from the balance sheet, he’s able to gain appreciation on the asset side and the leverage provided by the bank rounds out the liability side of the balance sheet.

Through a property management company you can also access the four parts of the financial statement.  Here’s how:

Balance Sheet:  Asset-side

Every property producing monthly rent is an asset.  It is possible to sell the rights to manage the property to another property manager for a lump sum of money.

Balance Sheet:  Liability-side

Robert uses his banker’s money aka leverage in order to purchase a large property with only a small percentage as a down payment.  When the property goes up in value he is able to keep the entire appreciation amount without having to share it with the bank.  He can use leverage and still get the benefit of 100% of the appreciation.
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