9 Success Habits of Wealthy People

There is a reason that some people are more successful than others. Here are nine habits of wealthy people that have helped them get to the top:

1. They meditate.

Meditation, more than anything is one of the biggest ingredients to the most successful people’s success. Oprah, Rupert Murdoch, Russell Simmons, Arianna Huffington, Bill Ford and Padmasree Warrior have all attributed mediation as a huge component to their success.

Taking care of your body and mind by relaxing, exercising, healthy eating and getting enough sleep are all ways to improve your chances of success.

2. They wake up early.

Howard Shultz, Richard Branson, Elon Musk, Larry Schultz and Jeff Bezos are known to be early risers. How has this attributed to their success? Because early risers are able to start their days ahead of everyone else by exercising, making calls, responding to emails and finding some personal time, early risers also tend to be happier and are more proactive.

3. They network.

Successful people realize the importance of networking. In fact, research has found that networking can lead to people performing better at work and increases the chance of landing a job. Networking helps our successful people be more innovative. It’s not what you know; it’s who you know.

4. Keep themselves busy.

Successful people are rarely idle. Achievers like LBJ and Robert Moses were known to work 60-65 hours per week. Elon Musk works 80-100 hours per week and has said, “That’s the type of work ethic an entrepreneur needs to have.”

5. They know when to say “no.”

“The difference between successful people and really successful people is that really successful people say no to almost everything.” – Warren Buffett

Successful people realize that by saying “no” to negativity, extra work and activities that waste time, they can focus on increasing their productivity. If they say “yes” to everyone or everything, they’ll be too distracted and will not accomplish tasks that have to be done.

6. They don’t watch TV, they read.

According to Thomas Corley, author of “Rich Habits: The Daily Success Habits Of Wealthy Individuals,” 67 percent of rich people only watch TV for one hour or less per day. Corley also found only 6 percent of the wealthy watch reality shows, while 78 percent of the poor do.

Additionally, 86 percent of the wealthy love to read with an impressive 88 percent claiming that they read for self-improvement for 30 minutes or more per day.

7. They write to-do lists the night before.

Successful people are known for writing their to-do-lists the night before so that they are able to set priorities for the following day. They number their lists as well to identify which tasks are the most important.

8. They set goals and visualize.

95% of the successful achievers that have interviewed practice writing down their goals, plans, or visions for success on a regular basis. Successful people do this the night before, or first thing in the morning so that they are prepared to tackle the challenges that await them.

9. They manage their money.

Successful people have gotten where they are because they were able to manage their finances well. This means that they invest their money wisely, look for new opportunities and set aside emergency funds. They are more generous and willing to donate to those who need help.

The most successful people set themselves up for success by preparing all the time. Successful people expect success and great things to happen to them and they do.

#successfulhabits #millionairehabits howtobecomewealthy #successfulceohabits

The Key To Cash Flow And Getting Rich

I have two stories to share with you today.

Here is the first story:

Here is the second story:

They say that a picture is worth a thousand words. Study the diagrams above and see if you can pick up some of the distinctions between the two stories. If you’re financially intelligent, you can see important distinctions in the diagrams above.

The Power of Cash Flow

The first diagram depicts the actions of those who pay themselves first. Each month they allocate money to their asset column before they pay their monthly expenses.

The second diagram depicts the actions of those who pay everyone else before they pay themselves. Each month they allocate money to their expenses column and then invest with whatever is left over—which is usually nothing.

If you understand the power of cash flow, you will understand what is wrong with the second diagram. It’s the reason why 90 percent of people work hard all their lives and need government support like Social Security when they are no longer able to work. The reason is they pay themselves last.

The self-discipline of the rich

In order to be rich, you must have the self-discipline to pay yourself first. By this, I simply mean using your income to invest in cash-flowing assets before you pay your bills or buy anything fun. This in turn will create more income that you can use to invest in more, cash-flowing assets. Do that and you’ll have more money than you know what to do with.

 

Paying yourself first is not easy. In fact, it can be scary, especially when the bills are piling up. But you must develop the self-discipline to do it.

Simply put, those who have low self-esteem and low tolerance for financial pressure can never be rich. The world will push you around, not because people are bullies (though some of them are) but because it’s natural for those with no or low internal control and discipline to be pushed around. People who lack self-discipline are often the victims of those who do have self-discipline.

The three most important self-discipline skills

In the entrepreneur classes I teach, I constantly remind people not to focus on a product, service, or widget. Rather, I tell them to focus on developing management skills, and the three most important skills I tell them to focus on are:

1. Cash flow
2. People
3. Personal time

Whether you own a business or not, these are the three most important self-discipline skills you can master in life. It takes self-discipline to increase your cash flow by paying yourself first, to deal with people who want to take your money before you pay yourself and to negotiate deals, and to spend your personal time wisely by increasing your financial education and finding great deals and opportunities.

If you can master these three self-discipline skills, you can be rich.

Use pressure to grow your self-discipline

Now, I can hear some of you objecting because you believe in paying your bills first. I am not saying don’t pay your bills. All I’m saying is pay yourself first. I have been doing this for years and reaping the benefits. Were there times when I came up short and didn’t have the money I needed to pay my bills? Yes.

When I occasionally came up short, I still paid myself first. The government and creditors would call and howl. I let them. I like it when they get rough. Why? Because they do me a favor. They inspire me to go out and create more money. They grow my self-discipline through pressure.

So, I pay myself first, invest the money, and let the creditors yell. I generally pay them right away and have excellent credit. I don’t cave into the pressure of liquidating or spending my savings to pay consumer debt. That isn’t the financially intelligent thing to do. Instead, I grow my cash flow.

To successfully pay yourself first, keep the following in mind:

1. Don’t get into large debt positions that you personally have to pay for.

   Keep your expenses low. Build up assets first. Then buy the big house or nice car. Being stuck in the Rat Race is not intelligent.

2. When you come up short, let the pressure build and don’t dip into your savings or investments.

   Use the pressure to inspire your financial genius to come up with new ways of making more money and then pay your bills. You will have increased your financial intelligence and ability to make more money.

To learn more about increasing your cash flow and creating multiple streams of income to become financially independent, visit my Business Opportunity website.

Why The Rich Don’t Save Money

The power of paying yourself and getting out of the rat race

Being rich may mean different things to different people? Most people would say that being rich means having lots of money and nice things like fancy cars, big homes and expensive jewelry.

But it’s not how much money you make that makes you rich. Take, for instance, the lottery winner who has lots of money but burns through it on all sorts of knick knacks. There are plenty stories of broke lotto winners. In fact, nearly one-third of all winners declare bankruptcy.

The same can go for young athletes who make it to the pros. One day they are broke, eating top-ramen for lunch and dinner, and the next day they are millionaires. Many of them simply don’t know how to manage their money.

But it’s not just lotto winners and athletes that don’t know what to do with money once they have it. Take a look at the findings of a recent survey of 7,000 people on their saving habits:

Of those whose incomes were less than $25,000, 38% had $0 saved, and 35% had less than $1,000. People who earned more fared better, but still reported low amounts of savings in savings accounts. Of those with incomes of $100,000 to $149,999, 18% had $0 saved in a savings account, and 26% had less than $1,000. And for earners of $150,000 annually or more, those numbers dropped slightly to 6% and 23%, respectively.

It may surprise you to see that those who are considered “rich”, those making over $100,000 a year in salary, save nearly as little as those who make $25,000. It does not surprise me.

Welcome to the rat race

The rat race is the cycle of poor financial habits that most people make in order to keep up with the Jonses. Most people, no matter how much money they make, can’t escape the rat race. Instead, they increase their lifestyle spending to match their new income.

There isn’t a problem with increasing lifestyle spending. I like nice things as much as the next person. Rather the problem is how that increase in spending is financed—mainly through a salary.

As an employee, most “rich” people are one bad economic downturn or disastrous decision by a company CEO from their own economic ruin. One exercise I like to ask people to do is to list out every expense they have in one column and then their income in another. Then I ask them to cover the income column. “How long,” I ask, “Would you survive without your salary?” For most people this is a moment of truth…and panic. It’s their first insight into their rat race.

The reason most people don’t save, including the so-called rich, is that they don’t understand how to make money work for them. They are poor when it comes to financial intelligence.

Cut expenses?

Unfortunately, most people’s initial reaction to the rat race is to cut their expenses. This can work for a time, but the reality is that you can never cut all your expenses. And let’s face it, cutting the fun things out of your budget is a miserable thing to have to do.

Cutting expenses is what the poor do. The rich do not cut expenses. Rather, they ask,   “How can I afford it?”

The rich, instead of cutting expenses, increase them. The key is that they increase a certain type of expense that will later make them richer.

The power of paying yourself first

A while back, I shared two stories that illustrate what I mean.

Here is the first story:

Here is the second story:

They say that a picture is worth a thousand words. Study the diagrams above and see if you can pick up some of the distinctions between the two stories. If you’re financially intelligent, you can see important distinctions.

The first diagram depicts the actions of those who pay themselves first. Each month they allocate money to their asset column before they pay their monthly expenses.

The second diagram depicts the actions of those who pay everyone else before they pay themselves. Each month they allocate money to their expenses column and then invest with whatever is left over—which is usually nothing. This is the diagram of those in the rat race, no matter how much money they make, they are poor.

If you understand the power of cash flow, you will understand what is wrong with the second diagram. It’s the reason why 90 percent of people work hard all their lives and need government support like Social Security when they are no longer able to work. The reason is they pay themselves last.

In order to be rich, you must have the self-discipline to pay yourself first. By this, I simply mean using your income to invest in cash-flowing assets before you pay your bills or buy anything fun. This in turn will create more income that you can use to invest in more, cash-flowing assets. Do that and you’ll have more money than you know what to do with.

Paying yourself first is not easy. In fact, it can be scary, especially when the bills are piling up. But you must develop the self-discipline to do it.

Saving is not paying yourself first

It’s important to note that saving does not equal paying yourself first. I’ve written a lot about why savers are losers. If you simply save money each month, you will never get ahead financially.

Rather, you must save with a purpose. Both Kim and I have some savings set aside in the form of liquid assets like cash, gold, and silver, which we can use in an emergency. But the majority of our money goes into saving for investing into cash-flowing assets. It is these cash-flowing assets that then put money into our pockets each month. And it is cash-flowing assets—i.e., money working for you—that gets you out of the rat race.

When you have passive income coming in each month from your investments, you don’t need a job and you don’t need a salary. You are financially free, and only then are you truly rich.

Lower Your Taxes Like The Wealthy

Tax season always means a deluge of tax advice. Unfortunately, most of it is futile and lightweight.

I say that because most people work for their money rather than have their money work for them. The problem with working for your money is that you pay more in taxes as your income goes up. In fact, if your income passes $65,000 as a W-2 employee, you may find yourself being double-taxed with the Alternative Minimum Tax, or AMT.

Working hard to earn more money and then giving it away in higher taxes isn’t financially intelligent, even if you do put some of it into a retirement account. On the other hand, making your money work hard for you means your earnings are taxed less, if at all.

Better Financial Advice

Recently, on a popular morning TV show, a personal finance expert recommended putting half of your tax return into your IRA, which she claimed may yield (for the average person) a whopping $25,000 gain over 40 years.

The problem with this advice is the likely decline in the purchasing power of the dollar — inflation — over that 40 years. I estimate that in 40 years, $25,000 will probably have the equivalent purchasing power of $250 today. Try getting excited about living on $250 when you’re old.

To me, it’s better to inform people about who pays taxes and who (legally) doesn’t pay taxes. If you can minimize taxes or avoid paying them altogether (again, legally), you can make a lot more money today instead of having to wait, with your fingers crossed, for 40 years.

Playing by the Rules of the Rich

Years ago, my rich dad told me, “When it comes to taxes, the rich make the rules.” He also said, “If you want to be rich, you need to play by the rules of the rich.” The rules of money are skewed in favor of the rich, and against the working and middle classes. After all, someone has to pay taxes.

There are many ways that the rich make a lot of money and pay little to no money in taxes, and anyone can use them. As an illustration, here’s a real-life situation in which I played by the rules of the rich and minimized my taxes:

• 2004: My wife, Kim, and I put $100,000 down to purchase 10 condominiums in Scottsdale, Ariz. The developer paid us $20,000 a year to use these 10 units as sales models. So we received a 20 percent cash-on-cash return, on which we paid very little in taxes because the income was offset by the depreciation of the building and the furniture used in the models. It looked like we were losing money when we were in fact making money.
• 2005: Since the real estate market was so hot, the 380-unit condo project sold out early. Our 10 models were the last to go. We made approximately $100,000 in capital gains per unit. We put the $1 million into a 1031 tax-deferred exchange. We legally paid no taxes on our million dollars of capital gains.
• 2005: With that money, we purchased a 350-unit apartment house in Tucson, Ariz. The building was poorly managed and filled with bad tenants who had driven out the good tenants. It also needed repairs. We took out a construction loan and shut the building down, which moved the bad tenants out. Once the rehab was complete, we moved good tenants in and raised the rents.
• 2007: With the increased rents, the property was reappraised and we borrowed against our equity, which was about $1.2 million tax-free, because it was a loan — a loan which our new tenants pay for. Even with the loan, the property still pays us approximately $100,000 a year in positive cash flow.

Kim and I are currently investing the $1.2 million in another 350-unit apartment house in Flagstaff, Ariz., a hot property market.

Move Money, Don’t Park It

This is an example of an investment strategy known as the velocity of money. As I’ve written before, moving your money makes more sense than parking it in cash, bonds, equities, or mutual funds — the strategy most financial advisors recommend.

Kim and I have several such scenarios active at any one time. We have lots of monthly cash flow, which we reinvest, but we rarely have any liquid cash sitting around to be taxed.

In the above example, we started with $100,000 we earned tax-deferred from another investment. The $100,000 eventually allowed us to borrow over $20 million from banks, tax-free. How long would it take you to save $20 million by parking your money somewhere, as most financial advisors recommend?

Chipping Away at Taxes

Clearly, one of the reasons the rich get richer is because they earn a lot of money without paying much, if anything, in taxes. They know how to use banks’ tax-free money to become richer.

Anyone can do the same. For instance, instead of paying capital gains tax on the sale of our condo units, real estate laws allowed us to defer paying these taxes and invest them into another property instead. The cash that does come from this property goes into our pockets at a lower tax rate because there’s no Social Security or self-employment tax to pay, and the tax rate is further reduced by the depreciation of the property.

On the flip side, the poor and middle class toil away for their money, pay more in taxes the more they earn, and then park their earnings in savings and/or retirement accounts. In the meantime, they receive little or no cash flow on which to live while waiting for retirement — when they’ll live on their meager savings.

Doesn’t it make more sense to play by the rules of the rich, and earn more while paying less in taxes?

written by Robert Kiyosaki

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We Are All Born Rich

There are three types of investors in the world. They are:

1. People who do not invest at all expect their family, the company they work for or their government to take care of them once their working days are over.
2. People who invest not to lose generally invest in what they think are safe investments. This is the vast majority of investors. These people have the saver’s mentality when it comes to investing.
3. People who invest to win are willing to study more, want more control and invest for higher returns.

Interestingly, all three investor types have the potential to become very rich, even those who expect someone else to take care of them. For example, the CEO of Exxon recently retired and was paid nearly half a billion dollars as a going-away present.

There Is a Difference Between Savers and Investors

Robert’s View

Many people invest in mutual funds. When I talk about not being a saver, many of them respond, “But I am investing. I have a portfolio of mutual funds. I have a 401(k). I also own stocks and bonds. Isn’t that investing?”

I take a step back and explain myself a bit more, “Yes, saving is a form of investing. So when you buy mutual funds or stocks or bonds, you are sort of investing, but it is more from a saver’s point of view and a saver’s set of values.”

Let’s look at the passive investor philosophy. Once again, most financial planners will advise you to

• Work hard
• Save money
• Get out of debt
• Invest for the long term (primarily in mutual funds)
• Diversify

Putting this in financial planners’ language, it often sounds like this. “Work hard. Make sure the company you work for has a matching 401(k) program. Be sure to maximize your contribution. After all, it’s tax-free money. If you own a home, pay off that mortgage quickly. If you have credit cards, pay them off. Also, have a balanced portfolio of growth funds, a few small cap funds, some tech funds, a fund for foreign equities, and when you get older, shift into bond funds for steady income. Of course, diversify, diversify and diversify. It’s not smart to keep all of your eggs in one basket.”

While not exact, I am sure this sales pitch, disguised as financial advice, has a familiar ring to you.

Donald Trump and I are not saying everyone should change and stop doing this. It is good advice for a certain group of people–people who have a saver’s philosophy or are passive investors.

In today’s environment, I believe it to be the riskiest of all financial advice. To the financially unsophisticated, it sounds like safe and intelligent advice.

Getting back to the difference between a saver and an investor, there is one word that separates them, and that word is leverage. One definition of leverage is the ability to do more with less.

Most savers do not use financial leverage. And you should not use leverage unless you have the financial education or financial training to apply it. But let me explain further.  Let’s look at this standard advice from the viewpoint of a saver and then an investor.

Work Hard

Let’s start with the advice “work hard.”

When most people think about the words “work hard,” they think only about themselves working hard. There is very little leverage in you working hard. When Donald and I think about working hard, while we both work hard individually, we mostly think about other people working hard for us to help make us rich. That’s leverage. It’s sometimes known as other people’s time.

Save Money

While I covered saving money in the last chapter, there are a few other points that are worth mentioning.

The problem with saving money is that the current economic system needs debtors, not savers, to expand.

Let me explain with the following diagram, as originally described in Rich Dad Poor Dad:

Take a moment to study this diagram. Your savings are a liability to the bank even though those same savings are an asset to you. On the other hand, your debt is an asset to the bank, but it is your liability.

For our current economic system to keep growing, it needs smart borrowers … people who can borrow money and get richer, not people who borrow money and get poorer.  Once again, the 90/10 rule of money applies–10 percent of the borrowers in the world use debt to get richer–90 percent use debt to get poorer.

Donald Trump and I use debt to get richer. Our bankers love us. Our bankers want us to borrow as much money as we can because borrowers make them richer. This is called other people’s money (OPM). Donald and I recommend more financial education for you because we want you to be smarter when it comes to the use of debt. If we have more debtors, our nation’s economy will grow. If we have more savers, our economy will shrink. If you can understand that debt can be good, and carefully learn to use debt as leverage, you will gain an advantage over most savers.

Get Out of Debt

Most savers think that debt is bad and that paying off the mortgage on their home is smart. And for many people, debt is bad and getting out of debt is smart. Yet, if you are willing to invest some time in your financial education, you can get ahead faster using debt as leverage. But again, I caution you to first invest in your financial education before you invest with debt.

There is good debt and bad debt. The purpose of getting financially smart is to know when to use debt and when not to.

Donald and I love real estate simply because our bankers love to lend us money to buy good real estate–real estate that is well-managed. Of course, there is good real estate and bad real estate.

Savers who invest in mutual funds have a difficult time using leverage, simply because most bankers will not lend money on mutual funds. Why? Apparently bankers think mutual funds are too risky and consider real estate a safer investment.

Just as my poor dad fell behind financially in the early 1970s because he was a saver, millions of people today are falling behind financially for the same reason.

In this economic environment, savers are losers and debtors are winners. You should always be careful when using debt for any reason.

Invest for the Long Term

“Invest in the long term” has many meanings.

Many people invest in mutual funds for the long term. However, mutual funds provide no leverage. As I said earlier, my banker will not lend me millions of dollars to invest in mutual funds, simply because they are too risky. There is also the lack of control (a subject that will be covered later).

One of the differences between mutual funds and hedge funds is leverage. Hedge funds often use borrowed money. Why do they use borrowed money? With borrowed money, you can increase your ROI, your return on investment, if you are a smart investor. In other words, the more of your own money you use, the lower your returns.

There is a time and a place for mutual funds. I invest in them occasionally. But to me, mutual funds are like fast food; it’s OK occasionally, but you do not want to make a habit of consuming it.

Diversify, Diversify, Diversify

Warren Buffett, reportedly the world’s richest investor, has this to say about diversification: “Diversification is protection against ignorance. (It) makes very little sense if you know what you’re doing.”

So the question is, whose ignorance are you protecting yourself from? Your ignorance or your financial advisor’s ignorance?

Again, there are multiple meanings for the word “diversify.” Generally, it means not putting all of your eggs in one basket, which is what Warren Buffett does. To this, I once heard him say, “Keep all your eggs in one basket, but watch the basket closely.”

Personally, I do not diversify, at least not in the way the financial planners recommend.  I do not buy a lot of different assets. I would rather focus. In fact, the way I get ahead is by focusing, not diversifying.

One of the better definitions I have heard for the word “focus” is using the word as an acronym.

F  =  Follow

O  =  One

C  =  Course

U  =  Until

S  =  Successful

This is what I have done. Years ago, I invested in real estate until I was successful.  Today, I still invest in real estate. When I wanted to learn about bonds, I invested in them until I was successful. Once I was successful, I decided I did not like the bonds and so do not invest in them anymore. I have successfully taken two companies from startups through IPOs. I made millions and was successful, but decided I did not want to go through that process anymore. Today, I still prefer real estate.

To me, diversification is a defensive posture, so I see very little offensive leverage in diversification.

For most people, diversification is a good strategy only because it protects investors from themselves and from incompetent or unscrupulous advisors.

This traditional financial planning advice of working hard, get out of debt, invest for the long-term and diversify is good for the average investor–the passive investor who simply turns a little bit of money over each month for someone else to manage. It is good advice also for the person who is rich, but rich professionals, pro athletes and rich children with inheritances fall into this group. The key is to find a good financial advisor.

Know, however, that there is very little leverage in following this path–and leverage is the key to great wealth.

Leverage Is the Key

Ever since humans lived in caves, humans have sought leverage. Two of the first forms of leverage were fire and the spear. Fire and the spear gave humans leverage over their harsh environment. When a child was able, the parents would teach the child how to make his or her own fire and to use the spear as protection and for killing animals for food. Years later, the spear was reduced in size and the bow and arrow was developed, a higher form of leverage. Again, one of the definitions of leverage is the ability to do more with less.  A bow and arrow is an example of doing more with less … over a spear.

As time went on, humans continued to use their brains to develop more leverage. Learning to ride a horse was a powerful form of leverage. Not only was the horse used for transportation and the tilling of soil for planting crops, the horse also became a powerful force in warfare.

When gunpowder was developed, the ruler who had cannons conquered rulers who did not. Indigenous peoples such as the American Indians, Hawaiians, Maoris of New Zealand, the Aborigines of Australia and many other cultures were conquered by gunpowder.

Only a hundred years ago, the automobile and the airplane replaced the horse. Again, both new forms of leverage were used for peacetime purposes and for warfare. Today, the countries that control the world’s supplies of oil have leverage over much of the world.

Radio, television, telephone, this computer I am writing on and the World Wide Web are all forms of leverage. Each new breakthrough adds more wealth and power to those who have the access and the training to use these leveraged tools.

If you want to become rich and not be a victim of global changes, it is important that you develop the greatest lever of all: your mind. If you want to be rich and keep your wealth, your mind–your financial education–is your greatest lever of all.

Donald and I both had the advantage of having rich dads who introduced us to the world of money. But all our rich dads could do was introduce us. We still had to do our part.  We still had to study, learn, practice, correct and grow. Just as the father and mother in the cave taught their children to start fire and use a spear, we had rich dads who taught us how to use money and our minds to become rich.

I can hear some of you saying, “But I don’t have a rich dad. I wasn’t born into money. I don’t have a good education.” This type of thinking may be the reason why your chances for attaining and, more importantly, keeping great wealth are slim. Your chances may be slim because you are using your greatest asset, your mind, against yourself. You are using your mind to make excuses rather than to make money. Remember, your mind is your greatest lever. But all levers can work in two directions–for good or bad. Just as debt can be used to make you rich, debt can be used to make you poor.

I did not have a great education, nor was I born into a rich family. The one thing I did have was a rich dad who taught me to use my mind to make money … and not to make excuses. Rich dad hated excuses. He used to say, “Excuses are a dime a dozen.  That’s why unsuccessful people have so many excuses.” He would say, “If you cannot control your mind, you cannot control your life.” Today, whenever I meet someone who is unhappy, unhealthy and “unwealthy,” I know it is simply because he or she has lost control of his or her mind, the greatest tool given to us by God.

Although Donald and I have money today, we have both experienced financial losses. If we had used our mind to blame other or to make excuses, we would both be poor today.

We Are All Born Rich

So our message to you is the same message we received from our rich dads: “We are all born rich. We all have been given the most powerful lever on earth, our minds … so use your mind for leverage to make you rich rather than to make excuses.

1. People who do not invest at all
2. People who invest not to lose
3. People who invest to win
   1. Look at this advice as a sales pitch: “Turn your money over to me for years, and I will charge you fees for the long term.” I call it a sales pitch because “invest for the long term” is like the airlines offering you a frequent-flier program. They want you as a lifetime, loyal, paying customer.
   2. It also means they can charge you fees for the long term. This would be like paying your real estate broker a commission for selling you your house and then paying the broker a residual commission for as long as you occupy the house.
   3. Mutual funds may not perform as well as other investments due to the fees paid for management of the fund.  While I do not mind paying fees, I do not like paying fees for sub-par performance.

The above is from Robert Kiyosaki and Donald Trump’s book, Why We Want You to Be Rich: Two Men–One Message.

It’s Time to Get Rich

If you’re serious about getting rich, now is the time. We’ve entered a period of mass-produced pessimism, when bad news is everywhere, and the best time to invest is when optimists become pessimists.

The Weird Turn Pro

Journalist Hunter S. Thompson used to say, “When the going gets weird, the weird turn pro.” That’s true in investing, too: At the height of every market boom, the weird turn into professional investors. In 2000, millions of people became professional day traders or investors in dotcom companies. Mutual funds had a record net inflow of $309 billion that year, too.

In an earlier column, I stated that it was time to sell all nonperforming real estate. My market indicator? A checkout girl at the local supermarket, who handed me her real estate agent card. She was quitting her job to become a real estate professional.

As a bull market turns into a bear market, the new pros turn into optimists, hoping and praying the bear market will become a bull and save them. But as the market remains bearish, the optimists become pessimists, quit the profession, and return to their day jobs. This is when the real professional investors re-enter the market. That’s what’s happening now.

Pessimism vs. Realism

In 1987, the United States experienced one of the biggest stock market crashes in history. The savings and loan industry was wiped out. Real estate crashed and a federal bailout entity known as the Resolution Trust Corporation, or the RTC, was formed. The RTC took from the financially foolish and gave to the financially smart.

Right on schedule 20 years later, Dow Industrials and Transports struck their last highs together in July 2007. Since then, nothing but bad news has emerged. In August 2007 a new word surfaced in the world’s vocabulary: subprime. That October, I appeared on a number of television shows and was asked when the market would turn and head back up. My reply was, “This is a bad one. The worst is yet to come.”

Many of the optimistic TV hosts got angry with me, asking me why I was so pessimistic. I told them, “The difference between an optimist and a pessimist is that a pessimist is a realist. I’m just being realistic.”

As we all know, things only got worse in early 2008, with the demise of Bear Stearns and the Federal Reserve stepping in to save investment bankers. In February, many of those optimistic TV (and print) reporters became pessimists — and when journalists become pessimists, the public follows. By March, mutual funds had a net outflow of $45 billion as investors fled the market.

written by Robert Kiyosaki

To Get Rich, Seek Out Rich Financial Advice

I’ve been on television recently discussing the U.S. financial crisis. These shows often feature a panel of so-called financial experts who rarely agree with each other. The reason their advice is different is simply because each expert speaks to a different segment of the population.

Giving Credit

For example, Suze Orman, Dave Ramsey, and Larry Winget speak to people who are deep in credit card debt. Their advice is excellent, direct, practical, and to the point. I should know — in the late 1970s, I was one of the debt-ridden people they’re speaking to. I was deeply in debt because my business was suffering and I was using credit cards to live on. Instead of paying off my credit card, I’d get a new credit card and use that one to pay off the old credit card. I, too, once used a home equity loan to invest in my business — and lost it all.

At my lowest point, I was nearly $700,000 in debt. One evening, I attempted to check into a motel in upstate New York and my credit card was declined. I slept in the car that night. Many people might say that this was a horrible experience, but that isn’t true — it was a wake-up call. It was clearly time to look in the mirror and face who I really was. I realized that if I wasn’t going to be tough on me, the world would take on the job.

Today, older and wiser, I have tremendous respect for the power of debt and the value of credit. Credit is another word for trustworthiness. I’m currently millions of dollars in debt, but it’s good debt invested in income-producing real estate. While millions of homeowners are threatened with foreclosure, my investment real estate is doing very well. In fact, I’m doing even better because more people are renting than buying.

The Strata of Financial Advice

If you’re deeply in debt like I was and want to get rich someday, I suggest you start by following the advice of Orman, Ramsey, and Winget. For a certain portion of the population, their advice is very rich indeed.

But there are other types of financial advice, some of it not nearly as beneficial. The lowest kind assures people that the government will take care of them. This is what the people who are counting on Social Security and Medicare have been led to believe. The problem is that the U.S. government is the biggest debtor in the world, and those depending on it to take care of them will only become poorer.

Another type of bad financial advice tells us to get a safe job, save money, live below our means, buy a house, get out of debt, and invest for the long term in a well-diversified portfolio of mutual funds. On those financial TV shows, I get into the most head-butting with the so-called financial experts who subscribe to this philosophy. That’s because, according to the Census Bureau, in 1999 the average U.S. income was $49,244. By 2006, the average income declined to $48,201. This means that U.S. workers haven’t had a pay raise for seven years. So much for the advice about getting a safe job — it’s the opposite of rich advice.

Diversify at Your Peril

Moreover, in January 2008 the Federal Reserve Board dropped the interest rate twice over a period of just eight days, by a record 1.25 percent. If my crystal ball is accurate, I expect another .5 percent drop sometime later this year. Savers are actually losers, then, because interest rates are low and inflation is high. So urging people to save money isn’t rich advice, either.

Finally, the S&P stood at 1,352.99 in March 2008, which is below its mark of 1,362.80 in April of 1999. So much for the advice of investing for the long term in a well-diversified portfolio of mutual funds — that’s also not rich advice.

Warren Buffett has said that diversification is for people who don’t know what they’re doing. And my rich dad once told me, “Diversifying is like going to a horse race and betting on every horse. The only way you win is if the darkest of dark horses wins.” So my concern is that people who follow this second type of financial advice may actually wind up poor in the long term.

Get Rich, Stay Rich

So there’s different financial advice for different people, and the price of poor advice is that millions will be poor if they follow advice that isn’t aimed at them.

To become rich, I recommend investing in your financial education. There’s a difference between that and financial advice. A solid financial education allows you to know the difference between good advice and bad advice, rich advisers and poor advisers.

If you want to become rich — and remain that way — it’s important to know what financial advice is best for you.

written by Robert Kiyosaki

Own an Insurance Agency to Create Wealth and Financial Independence

If you really want unlimited earnings potential, you should become an entrepreneur in the financial/insurance industry. Why this industry? Financial services is the #1 wealth earning opportunity according to Forbes. Financial services is a recession proof career. Kind of like the alcohol industry – people drink when they’re happy and they drink when they’re sad. In the Financial industry – people need the help of a financial professional when the market is doing good and they need to move money when the market is down.

Financial services and insurance are very lucrative businesses. When you combine them together you have a powerhouse business. Financial and insurance professionals get compensated very well by insurance and financial companies. These companies usually pay a whole year’s commissions in advance. Then you have residuals that are paid to you every year that the policy is in force. If you provide great customer service to your clients they will continue to be loyal clients and refer you business.

You can make good money working as an agent for an insurance company or financial institute, but the real money is in owning your own agency. When you own your own agency you can recruit a sales force as small or as large as you want. You can only service so many clients on your own, but what if you had a sales force of 50 agents all selling insurance policies and financial products? That is 50 more pieces of business that you can do in a shorter amount of time than you can do all by yourself.

Now you are earning passive income! You are making money from your own pen, plus you are earning passive income from 50 different income streams. All of that income from those 50 income streams are being paid to you from the broker dealer and not coming out of  your agent’s commissions so you don’t have to worry about taking money out of their pockets.

The difference between being a business owner and being self employed is when you own a business (agency) you can step away from the business for a period of time and the business is still making you money. When you are self employed (agent), when you stop working you don’t make money.

When you are an agent you have to chase sales in order to keep the income rolling in. You are unemployed after each sale until you make the next sale.

When you own an agency your business is making money whether you’re at the office or sitting on the beach in Cancun.

In other words, agent = working until you’re able to retire. Agency (business) owner = retire whenever you want to, if you want to.

Learn how to own your own Insurance/Financial Agency.

Lazy People Don’t Get Rich

The No. 1 reason people aren’t rich is because they’re lazy. This is purely my opinion and no one else’s, and I have no scientific proof to back it up.

Why the sudden honesty? I’ll tell you.

The Best Policy?

One of the things I loved most about the Marine Corps was that I never had to worry about what anyone was thinking. When I was preparing to be an officer, there was no sensitivity training. When superior officers spoke to you, they didn’t have to wrap their words in ribbons and bows, and didn’t worry about hurting anyone’s feelings.

In fact, we often went out of our way to hurt others’ feelings just to test their core toughness. (I’d repeat some of the more choice comments I’ve treasured over the years, but I’m not writing for a military audience.)

When I returned from the war and entered the civilized world of business, I was shocked by the phoniness, the covert hostility (disguised as caring), and the fake smiles that are rampant to this day. It’s been over 30 years since I was discharged from the Marines, and I still haven’t adjusted.

Today, I’m still hesitant to let my employees know exactly what I’m not satisfied with for fear of being sued, or to compliment a pretty woman for fear of being accused of sexual harassment.

But I’m happy to say that things are changing. We now have reality TV instead of Father Knows Best, a phony show about fake family harmony from my era. Today, commentators like Bill Maher and Jon Stewart rip into politicians under the guise of humor.

We also have Donald Trump, who has millions of people from all over the world tuning in just to hear him say the magic words “you’re fired” to an apprentice wannabe. And of course there’s Simon Cowell of American Idol, the critic of all critics, whose book of brutally honest dismissals I was recently tempted to buy.

An Honest Assessment

All of this overt honesty, while sometimes contrived, encourages me to be more honest about my favorite subject — getting rich, and who’s most likely to do so.

Most of you who follow my books and this column know how I make my money. First of all, I’m an entrepreneur. I’ve been starting companies since I was a kid. I never wanted to be an employee — I always wanted to be in control. I didn’t want someone like me telling me what to do. Consequently, I now have companies, agencies, or strategic partners all over the world.

Second, I love real estate. Not only do I think it’s the best investment in the world, I can prove it. What other investment is there that has bankers lining up to lend you money? They won’t lend you millions of dollars for years at a time to buy stocks, bonds, or mutual funds. And what other investment will your insurance company insure against losses? Surely not mutual funds or a 401(k).

Third, I love commodities like oil and gas. Why do I love them? Because they’re in short supply and in great demand. Wars have been fought over oil and gas for years. What do you think the war in Iraq is about?

Finally, I’ve loved gold and silver for years. Why? Because I don’t trust the U.S. government to be good stewards of money. As you may know, the Bush administration has printed more funny money — over a trillion dollars’ worth — in six years than all past U.S. presidents combined.

Wars have been fought over gold and silver, too. Why do you think the Incas lost their empire to the Spaniards, or the American Indians lost their land to the European settlers? The conquerors may have said that they were acting in the name of God, but remember — there’s only a single letter’s difference between “God” and “gold.”

No More Political Correctness

The recent outbreak of honesty also inspires me to be more forthcoming in general, and less politically correct. This is the web, after all, where honesty is respected, not suppressed, censored, or forced to be “sensitive” like our old, more traditional forms of media.

You wouldn’t be reading Yahoo! Finance if you weren’t serious about being rich or becoming rich. So I owe it to you to be more truthful. And I’m not worried about offending the financial losers of the world, because financial losers don’t read this column.

So, rather than tell you week after week about real estate, entrepreneurship, gold, silver, oil, and gas, I’ve decided to occasionally run a less-than-politically-correct column and tell you exactly what I think about the subject of getting rich.

The L Words

It’s in this spirit that I opened by saying that lazy people don’t get rich. I also said that the difference between “God” and “gold” is a simple “L” — as in “lazy,” or “looting.” The conquistadors who looted the Inca Empire in the name of God weren’t lazy. They were thugs with guns, but they had ambition.

Another word that begins with “L” is “loser.” Over the years, I’ve met many losers who pray to God to give them gold. They’ll never get it that way because, as the Sunday school I went to taught me, God helps those who help themselves. Again, the conquistadors may have been killers and thieves, but at least they knew how to help themselves.

I do, too. As some of you may be aware, I wasn’t born rich. And I’ve written openly about my failures as an entrepreneur and my losses as an investor. I haven’t hidden my horror stories. The reason I don’t keep them secret is because my failures are the best learning experiences of my life. We learn by making mistakes — except in school, where we’re punished for making mistakes. This may be why most schoolteachers aren’t rich.

I’m not recommending that you become an ambitious looter, as Ken Lay and Jeff Skilling were convicted of being. I only want to point out that if you’re not a lazy loser, you may find yourself with more gold in your life without having to resort to looting.

 

written by Robert Kiyosaki