Robert Kiyosaki Cashflow Lesson

Robert Kiyosaki speaks of his experiences. During his time with students, he noticed that lack of self-confidence and perpetual self-doubt held his students back more than anything else. He relates an example of a recently divorced woman in one of his classes. He tasks his students with playing a round of CASHFLOW.

The divorcee loses the game and by the end of the class, appears noticeably upset. She is angered by the suggestion that her performance in CASHFLOW mirrors her financial woes in real life. She later calls and demands a refund for the class, which Kiyosaki grants her.

Later, Kiyosaki learns through her friend that the divorcee actually does see some parallels between her own life and her performance in the game upon further reflection. She also begins to suspect that her ex-husband was hiding money from her for the last five years of their marriage.

After the story, Kiyosaki restates the importance of developing financial intelligence. He equates financial intelligence with “having more options.” Rather than waiting for the “right” opportunity to come along (i.e. job offer, promotion, etc.), you can create your own.

As a child, Kiyosaki was told by his rich father that “money is not real.” He explains that this is a major secret to becoming rich – accepting that money is not real. He maintains that your greatest asset is your mind. In the age of the internet, investment banking, and stock-trading, people make millions every day simply by having an idea – a patent, a trade, a strategic financial move.

Kiyosaki relates his experience living in Phoenix during a terrible economic downturn in the early 1990s. Financial advisers suggested that everyone save money away each month to prepare for terrible economic conditions. Kiyosaki did the opposite – he began investing aggressively in the stock market and in apartment houses. Due to the housing market slump, he was able to buy a $75,000 house for $20,000 and then resell it later at $60,000 with only five hours of work. He rolled the profits into his real estate company and was able to use the money to pay for company cars, trips, insurance, and dinners with clients – all pre-tax.

Kiyosaki suggests that it would take much longer to earn the same amount of money through the traditional method of saving money at a job. He asks the reader to imagine which is harder: working hard, paying 50 percent of your paycheck in taxes, and funneling what is left over into savings, or devoting some time to developing financial intelligence and focusing on investing in assets.

He elaborates further on specific examples of his success in generating revenue through real estate and the stock market. He explains that you must accept some risk in investing, but you can also use your financial intelligence to make informed decisions that minimize risk. You have to accept that sometimes your risks will lead to big gains and some will lead to big losses. He claims that winners are not afraid of losing. The secret is to learn to manage risk instead of hide from it.

There are two types of investors – those who buy packaged investments and “play it safe” and those who create investments and compile their own deals. The second type of investor is the one that is more likely to become rich.

In order to become the second “more professional” type of investor, you must cultivate three skills.

  • You must be able to find opportunities that others have neglected.
  • You must also learn how to raise money. Sometimes this will involve a degree of creativity. Most aspiring investors think to go to the bank first – Kiyosaki explains that you might have to consider other capital-raising alternatives to the bank.
  • Lastly, you must learn how to organize smart people and choose your advisers wisely.