Wisdom of Rich Dad

Weakness in leading economic indicators has become so pervasive the Economic Cycle Research Institute now predicts a new recession is unavoidable.

“The vicious cycle is starting where lower sales, lower production, lower employment and lower income [leads] back to lower sales,” co-founder Lakshman Achuthan said.

Whereas Achuthan said the jury is still out in late August, the weakness in leading economic indicators — and ECRI uses a dozen for the U.S. alone, he notes — has become a “contagion” that is spreading like “wildfire.”

Although the recovery has been “subpar” by nearly every measure, Achuthan refutes the idea the economy never got out of recession in the first place. “Just because it looks and feels a certain way doesn’t mean it’s a recession,” he says. “You haven’t seen anything yet. It’s going to get a lot worse.”

It’s too soon to predict just how bad it’s going to get, but he expects another spike in unemployment and further expansion of the federal government’s $1 trillion deficit. This forecast has huge ramifications for the 2012 election and the already struggling U.S. consumer and Achuthan says a “mild” recession is the best-case scenario.

By now you may be wondering what separates ECRI’s recession call from the myriad other recession calls out there. First, ECRI’s primary raison d’etre is predicting recession and recovery calls. Second, and more importantly, The Economist reports ECRI has never issued a “false alarm” on a recession call, meaning many of the Chicken Littles currently declaring “the sky is falling” might actually be right this time around.

Many have said that Robert Kiyosaki’s “Rich Dad, Poor Dad” is a piece of fiction — that he never had a rich dad and a poor dad as described in his book. Or at least that’s what many believe.

But I did.

My parents divorced before I was 2, and both remarried. My father, who lived across town, was my “Rich Dad.” My stepfather was my “Poor Dad.” Let me tell you about them and how they each affected my views toward money, business and life.

My Rich Dad

My father started his business in college. He sold stolen records, and when that didn’t pay the bills, he hustled others for money at the local pool hall. He was apparently a real shark at billiards and pocket billiards. Mom tells the story of the time he played Willie Mosconi (prettiest blue eyes she’d ever seen) and lost. But apparently he held his own.

When he graduated, he moved away from the hot vinyl market and into a wholesale business selling posters and incense (they were big in the ’70s). After cornering the Farrah Fawcett poster market, he upgraded to selling jewelry from Mexico. From Mexican jewelry he moved on to gold jewelry and eventually diamonds.

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Knowledge, taxes, debt, risk, and compensation are the five aspects about money that Robert T. Kiyosaki elaborately discusses in ‘Unfair Advantage: The power of financial education’. Before you jump into these, however, you would need to know how to catch a monkey, as explained in the introduction.

The native trick is to find a tree with a small hole in the tree trunk and place fruits or nuts inside it. What happens then? A monkey comes along, puts its fist in the hole and grabs onto the fruit or nuts, narrates the author.

“The monkey’s fist, now clenched and filled with the fruit or nuts, cannot be withdrawn from the hole, trapping the monkey.  Rather than let go of the fruits or nuts, the monkey twists and turns, pulls and tugs, but refuses to let go…”

The sobering lesson from this tale is that humans are similar to monkeys, clinging to job security, possessions and money, as Kiyosaki frets. He notes that, due to a lack of financial education, like the trapped monkey, most people will spend their lives as wage slaves of their employers and tax slaves of the government.

KNOWLEDGE ADVANTAGE

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I have only one regret about college: I should have started my business earlier.

If you’re in college and want to start a business, you may be like I was and just tell yourself to wait until you graduate.

It may look like it’s easier, but trust me: there is no better time to start your business than while still in college.

Here are 5 reasons why.

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My wife’s parents, both in their early 50s, aren’t very good with money. They make around $80,000, but spend it instantly. One of them finally started contributing to a 401(k) this year at our insistence, but how can my wife and I convince them to save for retirement or emergencies? No offense to them, but we really don’t want them to move in with us in ten or fifteen years. –J.M., Virginia

Your trepidation is perfectly understandable, but you should be heartened by what you’ve accomplished already: After years of doing nothing to prepare for retirement, your in-laws have finally taken a first step toward building a nest egg.

And while your wife’s parents aren’t going to make up for years of foregone savings overnight, they still have plenty of time to improve their retirement prospects significantly — and reduce the chances of later having to settle in with you — if they start now.

So your goal at this point should be to keep the momentum going by persuading them not only to save more, but to come up with a plan that can give them a reasonable shot at being able to achieve a secure retirement within the next 15 or so years.

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In Greek mythology, everything King Midas touched turned to gold. And that’s what entrepreneur and best-selling author Robert Kiyosaki suggests is possible in his new book Midas Touch: Why Some Entrepreneurs Get Rich – And Why Most Don’t, co-authored with Donald Trump.

Kiyosaki has built his empire around financial education and books. He first shot to prominence following the success of his Rich Dad, Poor Dad series of books, which have held a top spot on the famed New York Times list for over six years. Trump is a magnate thanks to his property and casino interests and reality television show The Apprentice.

In Sydney this week, I spoke to Kiyosaki about how business owners can acquire the Midas touch.

Don’t go to school!

Fond of stirring the pot, Kiyosaki says that most entrepreneurs don’t get rich because they go to school

“Schools don’t teach you to be entrepreneurs, they teach you to be employees,” says Kiyosaki. “They also teach you not to make mistakes at school. But the only way I learnt to walk, or ride a bicycle or be a pilot is to fall down a couple of times. Most people that go to school come out risk averse, and rather than becoming entrepreneurs, they become bureaucrats.

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