Why SAVERS Are LOSERS – ROBERT KIYOSAKI’s NEW RULES OF MONEY!

He's an American businessman, investor, self-help author, and motivational speaker. He's the founder of the Rich Dad Company. He has an estimated net worth of $80 million. He's Robert Kiyosaki, and here are his top 10 rules for success.

So the last thing I want to talk about, debt, is one of the best investments I've made because I started off with no money like most people. You know, my first investment was a little $18,000 condo in Hawaii, and I made a whopping $25 a month. I didn't make much money on that deal, but every time I did an investment, be it real estate or business, I got smarter because experience makes you smarter. So I started with just a little $18,000 unit. I broke out my credit card. I paid the $2,000 down payment with my credit card, so it was 100% financed. Now, most experts will say to you, 'That's stupid. You don't do that.' But if you know what you're doing, you can do it. A number of years ago, I bought a $7 million commercial building. I paid for it with zero down, and every month after everything is paid for, it puts about $30,000 a month income in my pocket, or $360,000 a year for no money down. So that is the price of having a good education or a bad education. A good education is knowing the good debt versus bad debt and how debtors can win if you know what you're doing.

I don't know what the heck people think about money, but that's what I get a lot of, is kind of this, well, you know, money's not spiritual. I'm just saying it's your attitudes, you know, a person's attitude towards money. I make a lot of money, but I give a lot, you know what I mean? It goes to biblical principle, the more you give, the more you receive. So when I meet somebody who's not, doesn't have any money, it just means they're not giving something.

Yeah.

You know, so a lot of times there's people who would like more, but they're not giving anything. So they're like my poor dad. You know, he belonged to the labor unions and he wanted to work less and get paid more. Well, that's anti-religious to me. If you want to get paid more, work more, give more. That's how I see it.

Discipline I had to get into was I always pay myself first, even when I had no money. And when I have all these bill collectors calling me, I use them as inspiration.

You know what I mean?

Really?

Oh, when they're hounding—

the government's hounding you, bill collectors calling— because I've been broke, so I can understand what it feels like to be broke. When those guys are calling you, instead of, you know, shrinking and going into the shell and eating my pizza, I use it as motivation to go out and make more money. So I use it— I use my bill collectors as motivation. And that's why I paid myself first, even though sometimes— What would you pay yourself? I always bought assets. I'd buy a house, or I'd put money in the bank, or things like this. But it was just a habit, exactly what you're talking about.

It's up here.

It's about changing the way you think. That's what the whole book is about. That's it. Because we're our biggest asset, we're also our biggest liability.

But the common wisdom, the old intelligence idea, is to diversify. And what I believe in is something else, is increase your financial IQ, your financial— like intelligence and instead focus. And what focus stands for is this: focus is follow one course till you're successful. So that's what I did in 1973. I signed up for my first real estate investment course, and I just did it and did it and did it. I bought this one little $18,000 place, and I did it again and I did it again and I did it again until the point where I understood it. Then I went into becoming an entrepreneur, and I did it and I did it and did it. I'm still learning, and I'm still learning about real estate. In 1966, I got into oil when I went to work for the Standard Oil Company, so today I'm still focusing. I invest in oil and oil and oil and I don't diversify. You know, it doesn't mean I don't lose. Sometimes I lose. Sometimes I make mistakes and all this, but I just don't buy good with all the bad. If you're going to be successful as an investor, you know, diversification is good for the average investor. If that's what you want to be, have a good life, but what I'd rather do is be able to know the good ones from the bad ones, the good investments from the bad investments, the good advisors from the bad advisors and what's good for me and what's not good for you because what I do is not necessarily what's going to work for you and vice versa here. So that's why I really think instead of diversification or de-worsifying, the new rules of money say follow one course until you're successful and then keep doing it because once you find that way of being successful, you can do it again and again and again.

The thing is, you see, when people, you know, economies go up, economies go down, we might go into a depression worldwide. Like I said, France is in very big trouble. Germany is okay. England is in big trouble. China is in trouble. So if we go with that, we go into a worldwide depression and it might take 10 years, you know, to come out of it. But during these times, this is the best time. I have made more money in the last 3 years than ever before in my life. I bought 5 golf courses last year out of banking. That's impressive.

Yeah.

Well, the bank— Yeah, Donald bought 10. They're giving them away.

No one told me.

Yeah, but you have to know how to operate them, you know, you have to be an entrepreneur. So the banks just call you up and they say— there was this one There was 5 golf courses and 1 hotel. In the States? In Arizona, yeah, golf mecca, you know. And this Japanese company had it and they asked me if I wanted to buy it about 5 years ago for $260 million. I said, "Doesn't make sense." You know, it doesn't make sense at $260 million. So they told me I didn't know what I was doing. I said, "Okay, buy." And then last— one year ago this summer, Citibank called up and says, "You want those golf courses?" And they gave me the money to buy them.

And just to reiterate, was in 19— approximately 1975, I came out with this product and we were extremely successful, but we kept running out of money.

The bit—

the more successful we got, the more we ran out of money. So that's when I went to my rich dad. I tried to borrow $100,000 and he chewed me out. He says, why would I invest in a dumb product when you have a bad business? And so that's when he began teaching me the next level of my entrepreneurial education. It's not about the product, it's about how to design a business that doesn't need me to keep raising the capital. In other words, how do you design a business that keeps raising money automatically? And today the Rich Dad Company is cash rich, cash keeps pouring in because the ability to raise money constantly was designed into the business. Once again, this is the diagram. This is the B-I triangle. These are the 8 pieces that make up a business. When a business is hurting, oftentimes it's because one of these 8 pieces is missing. For example, many times people have a great product, but their legal is really bad, or their communication systems are bad, or their audit— you know, their internal order processing is bad, or the manufacturing is bad, or the marketing is bad. Or they have bad cash flow management.

Another part of your financial IQ is to know there's 3 types of income. So if you're going to say work hard, most people are working hard for earned income, and that's what these guys are working for. The trouble with earned income in America, your tax rate's approximately 50%, or as Warren Buffett says, it's a shame that his secretary pays a higher percentage in taxes than he did, although he makes billions of dollars. So when you say to a child, "Go to school and get a safe, secure job," you're telling them to work for earned income, the worst type of income. The second type of income is portfolio income, and today as I speak, and they're trying to change this, it's about 20%. And portfolio income is generally known as capital gains. So if I buy a stock for $10 and I sell it for $50, the $40 gain is taxed at 20%. Or if I buy a house for $100,000 and I sell it for $200,000, that's a capital gains type event, so you pay a lot of tax for that. And the third type of income, which is the best type of income— excuse me, I can't spell again— is passive income, and this is income that just comes in on a regular basis. One of the reasons I am wealthy and was able to retire at a young age is because I worked hard for passive income, not earned income. I don't flip real estate generally, not portfolio income. I don't flip stocks. I want passive income. So today, the new rules of money is important to understand what are you going to school to become, es, entrepreneur or investor, and what kind of income you're working hard for, earned, portfolio, or passive. And if you know what you're doing, you can pay 0% taxes legally. And this can be done all over the world. People say, "We can't do it in my country." Well, these people can't do it in any country, but in most parts of the world, governments need these people, so they're always giving tax incentives for investors and business owners who are for passive income. So those are some of the new rules of money. You've really got to know what you're working hard at and what kind of work are you performing, what kind of income are you working hard for.

Well, most successful entrepreneurs have gone bust, right? You know, Henry Ford, an old-time entrepreneur, he went bust 5 times. Okay, look at Steve Jobs. Yeah, his own board fired him. Yeah, you know, Bill Gates was taken before the Supreme Court for monopolistic practices, right? Even my friend Donald Trump went down a billion dollars. Yeah, I only went down a million. So the average person is so afraid of those losses, they never get ahead because at school they teach you if you make a mistake or if you fail, you're a failure. But that's not real life. A baby learns to walk by standing up and falling down, standing up and falling down. And our school system punishes you for making mistakes. That's why my poor dad, an academic, was so unsuccessful.

He was terrified of making mistakes.

The key to raising money— this is Ken McElroy's company, it's called MC Companies. Ken McElroy's business is in the business of acquiring assets. That's why his company gets richer and richer and richer. Every year he adds probably 1,000 new apartment units to his inventory. So Ken's company gets richer and richer because MC Company is designed to increase assets. Poorly designed businesses never have any assets, they have huge liabilities. I trust that makes sense to you. So can McElroy's business get stronger and stronger and stronger? Because every year she's increasing more assets. The Rich Dad Company gets stronger and stronger and stronger because every year we add more assets. This year we're adding franchising to our mix. We're also, you know, Rich Brother Rich Sister, the book has come out. We come out with the Real Book of Real Estate, etc., etc. And every one of those products every year continues to send money into our product. So that's an idea of a well-designed business. If you have a well-designed business, I don't care if it's for real estate or making, you know, cash flow board games, if it's well-designed, investors will put, give money to you. Because this is a well-designed business.

I think the big mistake is I hear so many people say it's important to save. That's ridiculous. And the reason that's ridiculous is because what happened in 1971 is crucial. In 1971, the U.S. dollar stopped being money. In 1971, the U.S. dollar became a Currency. And what that meant is Richard Nixon, in 1971, the president, took us off the gold standard. That's like giving an alcoholic free rein to the bar, or it's like giving somebody who can't control their spending unlimited credit cards. So, what's happening is all the savers today are losers. You know, the problem with 1971 is that the federal government keeps printing money, so the value of your money keeps going down. So these people, I'm saving, saving, saving, and if you notice, as the value of the dollar goes down, prices go up. So they call this inflation. You know, you look at in 1997, oil was about, I think, $10 a barrel. 10 years later, it's about $135 a barrel. So they say it's inflation, but really what it is is the dollar's value coming down. So savers are getting wiped out today. So to keep saying to yourself and to your kids to save money, that is not the new rule. That's an old rule. So a very big problem for most people is stop using the word save and use the word hedge. You've got to hedge your money. Hedge against losses. Like when I buy a stock, I put a hedge in. I put a stop loss or a put. Inside of it or a call, whatever I'm doing, I want to stop it. So today I don't save money, I'm hedging. So I, in 1997, I started investing in oil, gold, and silver. So as the dollar dropped, oil, gold, and silver went up. So I'm not betting so much on oil, gold, and silver, I'm betting against the U.S. dollar. And that's why this idea that you're going to tell people you need to save money, That's really, really an obsolete idea because the idea went obsolete in 1971. The U.S. dollar in the last few years has lost almost 80% of its purchasing power, and the prediction is, because this has happened throughout history, it happened thousands of years ago with the Romans, with the Greeks, with the Germans, with the English, the Japanese, and the Chinese, every time they've made money money into a currency, something you could print unlimited. Every time they have— that has happened, the currency has gone to its true value, which is zero. So I am afraid, as this economic volatility continues, the savers who were operating by the old rules of money are just going to get wiped out because the purchasing power of their dollar is going to go down. So even with the banks paying you 5 to 10% interest, You can't keep up with the banks printing money. So that's the old rule of money is saving money. And the new rule is hedge. You've got to be able to see what's coming up as something else is coming down.

Thank you so much for watching. I made this video because the B-Thong asked me to. So if there's a famous entrepreneur that you want me to profile next, leave it in the comments below and I'll see what I can do. I'd also love to know which of Robert Kiyosaki's top 10 rules had the biggest impact on you. Leave it in the comments below and I'm going to join the discussion. Thank you so much for watching. Continue to believe, and I'll see you soon.