Today I read an interview MarketWatch did with Robert Kiyosaki: “‘Rich Dad’ author Robert Kiyosaki: If you’re investing for the long term, ‘you’re crazy’”
I’ve never read Robert Kiyosaki’s Rich Dad Poor Dad but I have read Unfair Advantage. From what I understand from speaking with folks who have read Rich Dad Poor Dad the principles in Unfair Advantage are very similar.
Robert Kiyosaki
I learned from reading his book. I didn’t learn a lot about specifics actions I could take but I did learn about mindset and principles of the wealthy.
For specifics he pushes his paid training classes and seminars pretty hard. I went to one of his “free” real estate seminars and it is sales heavy and content light.
I’ve never been to a paid Rich Dad seminar but I hope they have a lot more actionable content than the free one I attended.
Based on my exposure to the teachings of Robert Kiyosaki I will say that I agree with what he is saying. I just think he overcharges for training and actionable information.
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Summary of Kiyosaki’s Interview
In the MarketWatch article above he says a few things:
Money isn’t money because it isn’t backed by gold
The rich don’t work for money they work for assets
He is predicting a 2016 market collapse
Describes himself as a “gold bug” and views gold not as an investment but an insurance policy and hedge
He states who he’ll vote for with the caveat the president doesn’t make any difference at this time
You know what, I agree with all of that, with the exception of calling 2016 as the year of the crash. It could be but I don’t know when stocks will crash and when they do I believe the Fed will step in and prop up prices.
Kiyosaki in Comment Pillory
But what I’m surprised by is the comments below the article. They weren’t all negative, but it seemed like most of the ones I read were.
Not a lot of substance besides name calling. I think the comments could provide some insights into how some retail investors think. They don’t want anyone raining on the stock rally parade.
These quotes are from people who, in my opinion, don’t understand the stock market or the economy.
Why I think Kiyosaki is Right
The Federal Reserve’s unprecedented action in propping up assets has created a huge bubble. The bubble is bigger than the dot com bubble in 2000 and the housing crisis of 2008.
Even if you think that the $4 trillion fed balance sheet is no big deal, there are other metrics that indicate the S&P 500 is overvalued. On average the P/E ratio of the S&P 500 has been around 15. It’s currently up to 25. Not exactly a bargain.
Source: http://www.multpl.com/
Gold is a hedge against Federal Reserve and central bank insanity. I don’t think gold should be the sole asset in one’s portfolio but could very well have an important place depending on your risk tolerance and other factors impacting suitability.
Gold (dark red) has outperformed each of the 3 main US indices by nearly 300% since 2000
I also know several people personally who have done very well investing in real estate. I think real estate is a great way to grow wealth with lot’s of tax benefits.
In the article Kiyosaki also discusses one practical strategy for buying a stock, first buying an option, as well as the importance of buying stocks at a great discount. Buying companies for less than their book value is classic Benjamin Graham.
I can appreciate if people don’t like Kiyosaki’s sales tactics as I don’t particularly care for them either. But I would like it if people could discuss ideas without immediately resorting to name calling.
If you think stocks are fairly valued based on fundamental factors, why?
On the Fourth of July the United States celebrates Independence Day. Just a few days ago, on 23 June, a majority of British voters elected to initiate the exit of Britain from the European Union in what some are calling Britain’s Independence Day. Coming up on 15 August is India’s Independence Day.
Make 4 July 2016 the day you declare Financial Independence!
While the United States, Britain, India and many other countries around the world celebrate their independence days, it’s an opportunity to reflect on one’s own personal financial situation, and if necessary, make a Declaration of Financial Independence.
Financial Independence
My notion of Financial Independence means making enough money via passive investments so that I don’t have to work a traditional 8-6 job. Financial Independence means I’m free to pursue my hobbies and interests full time and I’m not reliant on my employer to sustain my standard of living. Financial Independence means the freedom to choose what to do with my time.
What does Financial Independence mean for you? What is your “why” for growing and protecting your wealth? Is it to go on a dream vacation? Be able to retire before age 112? Volunteer full time? Spend more time with family or friends? Have more control over your own life? Be able to support your favorite charity?
Progress to Goals
What does Financial Independence look like for you?
I lead a modest life. I live in a single bedroom apartment in a safe but not very glamorous part of town. I drive a 14 year old car with over 200,000 miles on it. Not very flashy or impressive at face value.
What else do I have?
Zero debt
Steadily growing investments
Several months worth of income in an emergency fund
I’m reliant on my job and money from my employer to maintain my standard of living. So I don’t consider myself to be financially independent but I am well positioned to become so. How have I done it so far?
Specific savings goals
Dogged commitment to paying down non-productive debt (such as my student loans)
Living below my means
Continual Financial Education
By paying off my debts, saving in smart investments, and living below my means, I’m confident that one day I will achieve financial independence.
Mid-Year Resolutions
When the American Colonies Declared Independence from Britain they still had to fight and win the Revolutionary war in order to BE an Independent Country. Just Declaring Financial Independence doesn’t GET you there. You need actionable goals that you work towards every day!
Friday 1 July marked the beginning of the second half of 2016.
The second half of 2016 is your time to pay down debt, save more (or start saving!), and working towards living the lifestyle that empowers you to pursue your dreams, whatever they may be.
It’s not easy. It does take sacrifice and discipline.
Take Action!
What can you start doing today to start working towards Financial Independence? Here are some ideas:
Create a Budget and get an accountability buddy to help you stick to it
Include a reward for sticking to the budget
Set a realistic monthly savings goal you want to reach by 31 December 2016
Research a new investment for the money you save
Create a realistic plan for paying down debt
Find recurring discretionary purchases and cut a few of them out
If you have Netflix and Amazon Prime perhaps you cancel one. Maybe you cancel your cable or satellite TV plan and just pay for Netflix. Perhaps you buy a coffee maker and thermos instead of going to Starbucks each day.
Choose 1-3 financial goals that will lead to Financial Independence and write these goals down on a piece of paper. Post the paper in a prominent place in your home where you’ll see it ever day. The second half of 2016 is when you’re going to work for and achieve these goals.
Money Can’t Buy Happiness
Money certainly can’t buy happiness, but having enough to meet your needs is important for a happy life. Use the second half of 2016 to Declare Financial Independence and then take practical steps to work towards the life of freedom that you desire.
One of the ways I increase my financial liberty is through passive income.
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