Wisdom of Rich Dad

(Money Magazine) — Question: Last year I put my money with an adviser for an annual fee of 1% of assets and told him my only criteria for evaluating him will be whether he beats the market. I have refrained from telling him where to invest, when to invest, etc. as I view that as his job.

He “got into the rally late” last year and underperformed the broad indexes by 10% to 12%, although we did have a decent fourth quarter. This year he’s off to a horrid start, however, and we are already 3% worse than the broad indices. I try not to be a knee-jerk investor and know that every adviser has his ups and downs, but I’m wondering….Is it time to pull the plug?

–Mike, Elkins Park, Pennsylvania

Answer: I can’t tell you whether it’s time to fire your adviser. I don’t feel there’s enough information to make an informed decision about that based on what you’ve told me.

But I do think it’s time for you to pull the plug on the way you work with advisers. Because if you stick to what you’re doing, you’re more likely to end up with an ever expanding list of ex-advisers than you are with a portfolio that will help you meet your financial needs.

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Portland, Oregon – Robert Kiyosaki wrote Rich Dad Poor Dad in 2000 and the advice he gives resonates better today than ever.

Mr. Kiyosaki asserts that we should all have multiple sources of income. Relying on a regular 40 hour a week job, not only keeps you broke, but should anything ever happen to that company or the economy … well you get where I’m going here.

I retired from a successful media career in 2002 at age 50. Way too young to retire. But what to do? Robert Kiyosaki’s idea came to mind immediately, generate a regular monthly income from multiple sources. So off I went, and here are the actual results of my monthly income from a variety of income sources:

– Part time college professor $1,700.00 (teaching business principles)
– Part time affiliate sales income $1,500.00 (products with residual income only)
– Part time selling on eBay $1,000.00 (personal items & yard sales)
– Part time business consulting $1,000.00 (using my business background)
– Real estate income $1,000.00 (buying & flipping properties)

Total monthly income $6,200.00

Remember, I was free to put extra attention on any one of these sources if it felt like the opportunity was there. Affiliate sales income is a great example of that.

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This is why you should never apply for an online payday loan…

A family member of mine who has a complete incapacity for making sound financial decisions turned me on to this one… by accident. She was in a bind and applied for an online payday loan. She was having trouble with the computer at the end of the process, and I was called to figure it out.

It was just a blocked pop-up, and she was able to finish the application. I did notice that the annual interest rate on than was over 1200%, and told her so. She got irate and told me it was none of my business. No that wasn’t a typo, over 1200% annual interest.

She got the loan, paid what needed to be paid, and was happy, for about two days.

Then her account got debited for that little bit that was in it. The account was then overdrawn, and the bank charged a fee. When she went to the bank to sort this out, the banker called the company that debited the account.

It was an online coupon club subscription type thing, and they said she had signed up for it when she signed up for the loan. To keep further unwanted debits from her account, she closed it and opened a new one elsewhere.

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The game that Robert and Kim Kiyosaki (of Rich Dad Poor Dad) developed – Cashflow 101 and 202 can now be played online for free.

This game is a good way to test your financial literacy and see if you have what it takes to get you out of the rat race.  It is a fun way to learn about investing smart without the risk of real money.

The game is designed to teach you how to think like the rich and learn what it takes to get out of the rat race and live a financially independent life.

There’s no software download required.  You can play right from your internet browser.  And you can play by yourself or with other players online.

All you need to do is register for free.

Rich Dad Robert Kiyosaki talks to his Facebook fans about his new Facebook experience.

The first step to change is Awareness.

The second step to change is Understanding.

Find out what current mindset do you have:

POOR CLASS

Who: Employees, Laborers, Wage Earners
Education: High School or College Graduate
Most Valuable Resources: Paycheck salary
Resource Focus: Salary or Hourly wage
Time Setting: Next Payday
Major Financial Goal: To Survive until next payday
Cash Flow Management: “How much do I have in my wallet?”
Investment Sources: The government
Expected Rate of Return: Get Rich Quick
Advisor: Broke Friends and Family

MIDDLE CLASS

Who: Employees and Self Employed
Education:Values a College Education
Most Valuable Resources: Short Term Investments
Resource Focus: Networth (home & personal effects)
Time Setting: Long-Term
Major Financial Goal: To built up a vast net worth by age of 40 to 65 years old.
Cash Flow Management: Understands the value of CFM
Investment Sources: Invest in products or services created by others
Expected Rate of Return: 10% to 30%
Advisors: Financial Planner, accountants

RICH CLASS

Who: Entrepreneurs & Investors
Education: Values only “street smart” education from peers / self learning / what works
Most Valuable Resources: Time and Long Term Investments
Resource Focus: Cashflow, Net worth (real assets) and Network
Time Setting: Adapt to each financial goal or investments Financial and Time Freedom
Cash Flow Management: Understands that Cashflow Management is the key to all wealth foundation.
Investment Sources: Create products and services to sell to the middle class and masses.
Expected Rate of Return: 50% to 300%++
Advisors: Themselves, each others, selected professionals and mentors.