Robert Kiyosaki - the man, the message

Within the last few years, Robert Kiyosaki has become a fixture of the investment world. He also continues to provoke controversy - understandable, since he has strong opinions and is not shy about sharing them.

But the main controversy stems from the stories in his books - the identity of his "rich dad" and Kiyosaki's Vietnam combat experience. A number of people claim they did the research, and could not substantiate either. Our point of view is that those detractors miss the point - it really does not matter if the rich dad existed, or if Kiyosaki flew combat missions in Vietnam. What matters is his message about financial literacy. And in this respect, he has been 100% on target.

We will review Kiyosaki's books and games a bit later, now we want to give you a quick summary of his message. Fundamentally, he questions advice given to the middle class by Wall Street and real estate industry. His point is that most of the people giving that advice are not rich themselves, or in case of some on Wall Street - became rich because they convinced middle class to put the money into their (often less than stellar) care.

Here are the key points Kiyosaki makes:

  • Understand the difference between assets and liabilities - "assets will feed you, liabilities will eat you".
  • Buy assets.
  • If you want to buy "toys" - first purchase an asset, then use the cash flow from the asset to buy "toys".
  • Create businesses - as opposed to mere self-employment.
  • Income producing real estate provides steady cash flow and tax advantages.
  • Becoming an investor is no longer optional - saving will no longer work, since government is constantly eroding value of the dollar.
  • Lower your taxes by controlling when you receive income, what type of income, and through what entity.
  • Pay professionals for advice - business and investing are team sports.
Most important of all - Kiyosaki's books aim to change reader's thinking about wealth - aim to shift reader's thinking to the way the rich do - once that change in the frame of mind is accomplished, attaining wealth becomes a lot easier.

In addition to his overt teachings, Kiyosaki teaches by example - financial literacy books, games, CDs, live seminars - are all perfect examples of a marketing pro, who knows how to fully exploit different price points and different market niches.
For now, though, we will concentrate on the lessons in his books, games and CD programs.

Rich Dad, Poor Dad - the book that started it all. This book was originally written to promote the Cash Flow game, but when it became a bestseller, Kiyosaki used it to not only sell the games, but also to sell other books, and created a whole "rich dad advisors" series. In this book, he not only introduced the story of his poor (biological) dad and his rich dad (father of one of his friends), but also made two critically important points - he observed that the rich buy assets, while middle class buys consumer items. His other, then very controversial point, was that a house is not necessarily an asset. Today it seems obvious, as hundreds of thousands of homeowners are in danger of losing their homes, and can no longer sell the houses for what they originally paid for them.
Cash Flow 101 is a superb game. We enjoy plaing it even now - years after we bought it. It's both fun and educational. To this day you can find clubs where people get together to play the game and talk about real world investments they are doing. Cashflow 101 is very well designed, plays well, and in the process, teaches the basics of accounting - how to use balanace sheet and income statement, as well as basics of investing. All around winner.
In Cashflow Quadrant, Kiyosaki goes into details of the different ways of earning a living - a job, self employment, business, investing. He points out both the tax advantages of owning a business or being an investor, as well as the lifestyle advantages. Being an employee or self employed keeps one tied to the job. Only owning a business or investing allows one to be free - both in terms of time and physical presence (on a Hawaiian beach, for example).
The Guide to Invesitng makes 5 fundamental points:
  • What is your plan - are you planning to be rich, middle class or poor?
  • The Rich do not work for money.
  • It does not take money to make money.
  • Risk can be controlled through knowledge.
  • Once you figure it out, investing should be boring - just repeat what worked before.
The book also goes in depth into the systems necessary to build a business. It describes parts (structures) that all businesses must have in order to be successful.
Retire Young, Retire Rich is all about leverage - leverage of knowledge, attitude, and actions. Kiyosaki asks the reader to examine reader's attitude towards risk, working less for more, visualizing successful future. He also discusses specific vehicles - real estate, stock market (including options, selling short, and hedging), and building a business. He explores in depth the idea that it does not take money to make money.
This book concentrates on what to do to start a successful business. Kiyosaki reinforces the need to have a team - accountants, lawyers, insurance prfessionals. The key point is about not trying to become a jack of all trades, but rather a master of one. Kiyosaki suggests "communications" as the skill that every entreprenuer should master, since communications (marketing and selling) is the lifeblood of any business.
This one is pretty focused. It deals with investments. According to Kiyosaki, "buy and hold" is not an investment strategy - it's a sales pitch. He explains why old fashioned investing in mutual funds is not a good idea. This ties in with his book Prophecy where he predicts a massive stock market crash, due to the fact the baby boomers will start retiring soon - and estimates are that each month they will withdraw $75 billion from their stock market portfolios. This outflow of money will depress stock prices for years to come.
Cashflow 202 expands on Cashflow 101 to include stock options (puts and calls), short selling, and real estate options. In our opinion it does not live up to the Cashflow 101 quality. It seems to us that it was not as well thought out as Cashflow 101, the rules became so complex that play slows down to a crawl, while participants try to figure out what to do next - with the help of the game manual. In short, complexity increased to the point that playing is not even close to the fun we have playing Cashflow 101.
This 12 CD set covers everything that Kiyosaki has been teaching through his books. It's all there - the mindset, the skills, and exercises to get the listener to take action. If you really paid attention to his other products, you already know the material. But if you only skimmed his books, then this will give you a chance to discover the gems you missed. If you are new to Kiyosaki message - this may be the way to go, especially that you can listen to CDs while doing house chores or driving. The exercises to get listeners to act are vital - all the knowledge in the world is useless if you do not act on it.
Cashflow 101 en Espanol.

 

 


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