Secrets of the Wealthy Seminar | Robert Kiyosaki

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Rich Dad Poor Dad a very simple story starting at age nine of my two dads like I said my dad was a schoolteacher well-educated hard-working man where’s my Rich Dad was my best friend’s father and he was a man who started with nothing but he ultimately became when the richest guys in Hawaii when you look at the white sand beaches the blue water the palm trees and the hula girls he’s the big hotels in the background rich dad owns some of the land under those hotels so they estimate for seven generations none of his kids kids kids will have her have to work again it’s not that not working is that big ideal it’s just that it was for me amazing that one man could start with nothing and accumulate such wealth in a short period of time so Rich Dad Poor Dad is a very simple story of what two fathers tell their sons about money and I wrote this book in 1997 published it everybody said I mean I submitted it around people says we don’t want this book who are you you can’t write you suck all that other stuff in heaven what do you know about money and excuse me I’m sold marina you can tell here you know if I make those slips forgive me you know well anyway so I published I printed a thousand copies of this book nobody bought it so I shipped it to a friend’s gas station in Austin Texas and I put the book and he says put it in the gas station so we don’t sell books and gas stations I said no good that’s a good place for it no competition you know and he says if that silly book of yours doesn’t sell you get it back I said don’t worry don’t worry I’ll get it take it back and the book sat there for that while I think I think it’s shipped in 12 or 18 of them and they sat there for a whole week and he called me up he said you’re gonna get them back none if sold I said just patience patience and aside by the second week all we’re gone and that’s how it started it went by word-of-mouth it’s now in 38 different languages thirteen million copies and it just kept going so that was a story of how this book that started thank you so anyway I’ll go into what Rich Dad Poor Dad is about for those that haven’t been there for those who’ve seen it please bear with me but very simply my Rich Dad began teaching me by drawing the simple diagram here he said if you want to be a rich person you have to understand accounting basic accounting here so the Rich Dad Poor Dad is a book on accounting of all things so I was talking to a banker the other day and he says what’s the what’s the book about says it’s about accounting and he was going that’s ridiculous I said Arthur Andersen’s ridiculous right now they’re supposed to be accountants you don’t have this and I said I said the issue with Arthur Andersen was people could not read a financial statement and so it’s not so much about accounting but it’s being accountable accountability personal accountability so for those who haven’t read it as income expense asset liability it’s really simple you know started at age nine start talking me off bought all this and then my Rich Dad said to me the most important word in business if you’re going to be a rich person you must be able to control and this is the single most important word what’s the word – flow it’s a single most important word you can know so very simply my Rich Dad said to me oh he’s talking about assets and liabilities and my poor dad always said son our house is an asset and my rich dad said to me see your father may be smart and can read books but he can’t read a financial statement he says your father could read financials he would see that your house is not an asset it’s really a liability and that’s where the problem starts with everybody here the one of the problems is and what most of us go through our lives buying liabilities we think our assets because we cannot read a financial so very simply because those nine years old my rich dad said to me simply assets put money in your pocket so what are assets do put money in your pocket that’s all they do whether you work or not so basically this is the cash flow pattern of an asset so when I read a financial I can see what real assets are much liabilities are the definition of a liability as liabilities take money from your pockets this is a cash flow pattern of a liability it’s not rocket science so simply put my Rich Dad said the house we live in as a family is a liability because every month it takes money from our pocket whether we work or not it flows out now I hear people saying but what if I pay off my mortgage it doesn’t make any difference because it’s still a liability because if you for small business or specialist B stands for big business like Bill Gates or Michael Dell or in Forbes you find that as 500 employees or more and I stands for investor the point my Rich Dad made is all four of these quadrants attract four different kinds of people there are not the same people he says you can tell by the words or vocabulary they use whether their employee so big business self employer of investors as an employee will always whether the President or janitor of the company will see the same words the words are I’m looking for safe secure what job with benefits it that’s what they want now you meet s a self-employed person a lot of times when a person says I’m gonna quit my job and go out on my own they go from a to s and S stands for cycle land you know I mean it’s one of the hardest positions of all you know because your employees pick on you the government picks on you and you pick on you you know know this so you can always tell a self-employed person is because they always say the same thing they say if you want it done right do it by yourself that’s why they do it on their own or their theme song is nobody does it what better or the other thing they say is I am the best am I the past you know I go to my reflexologist and massage with my foot is always going am I the best is yeah you’re the best hole thank you very much you know this s also stands for satisfied oftentimes self-employed people they in fact most of these people love them make lot less employees per hour but they love what they do is I just love what I do I just love what I do I just love what I do I said what you’re going broke yeah I love what I do you know and a big businessperson their theme is they’re looking for a team you know they’ll think they put a football team together they gonna look at the best players best see if all of best CEO best presidents best sales to their team players these people believe in other people’s time they don’t want to work hard because they want other people to work hard for them an investor does everybody thinks that thinks everybody should it has to be invested but a true investor their words are what’s my return on investment ROI that’s all they care about okay simply put is in my poor dad always said get a job get a job climb the ladder you know make your way through the top yeah I don’t want to do that’s like I want to get rich and my mother would say I know your father your father really you know he has the best intentions of mine and he wants you to follow in his footsteps become a schoolteacher and so finally my mom said you know son I know you want to get rich so though she was a nurse registered nurse she says why don’t you become a doctor you know become one of the smart guys over here because these are the smart guys here these are where the doctor is an attorneys and accountants and the architects and the engineers come from she says you should become a doctor and I said to my mom there’s only one problem with a she says what’s that you have to be smart just you have a good point there you know I mean I don’t think you can become my doctor so yeah I’m a C student you know I am a straight I’m just like a c-minus students he goes yeah you’ll never make it so I went to my rich dad and I said you know I’m kind of in trouble so he draws this diagram here he says you know Robert are you basically lazy I said yeah real lazy sis are you fundamentally incompetent I said yeah I can’t do anything he says are you a C student I said yeah I’m uh C student he says good you’ll do well in business here [Laughter] so there’s a saying in my book these are the a students these are the B students and these are the C students here and the same my rich dad said to me a long time ago he says the a students work for the C students and the B students work for the government [Laughter] so the reason the cashflow quadrant is so important is that will not be talking a little while about the 401k which I think is one the risk is of all investments and so I am a professional investor the reason I know which quadrant I am is again by the most important word that word is cashflow so the reason I know I’m an investor is if I stop working my cash flow comes from my investments here many people invest but many most people are not investors a reason you know you’re an investor is you can live from this quadrant here so whether I work or not my wife and I have about a million dollars annually coming in from our investments so we can stop working we keep working because I sort of like this work here things like this you know thank you the problem with the 401k is people are putting money in and they’re not getting any back so they’re investing but they’re not what in faster because the cash is flowing out not flowing in here and that’s the different definition here the reason this quadrant is important for those are willing to make changes here is because if you’re going to make a change you may want to change from here to here or here to here or here to here the message is in the book is that at the core you’re different people these people values security and that’s why they want job security these people value independence these people will value teamwork and these people value laziness they want they want to work they want the money coming back here so I’m going to ask to do something a little bit different because I really personally did not like school I graduated from the u.s. Merchant Marine Academy here at Kings Point I have a Bachelor of Science degree which stands for BS and though than that they but I really didn’t like school simply because I wasn’t learning what I wanted I remember that my I said why am i studying poetry I said because it makes you a better human being I said well let’s study money make me a better human being and they wouldn’t talk to me the other thing I don’t like about school was that every time a test time I wanted to cooperate yeah and one of the teacher called cooperation a tense time shading you know and yet that’s the world of the school see these guys here they are they’re the good students here they don’t cheat they do things on their Oh these guys are a bunch of chronic cheat sheet right here and you’re gonna find out tonight how true that is the rules are different for all four people the tax laws are different for all four people the rules are different big part of it here so one of the things I learned if I wanted to be a business owner I need it to talk I need to communicate I need to have other people around me so I’m going to be doing something different well the things that my rich dad taught me so the reason your poor dad is poor is that he takes tests on his own so he says you know every day we have money problems we all that money process if you’re rich if money problems you poured money problems the difference is is how we handle that money policin my poor dad held his money Popeye sitting there all by himself talking to no one because you’d be cheating if you talked I’m the man of the house leave me alone so yeah but Dad you’re an idiot you don’t know anything about this and I don’t leave me alone and just because you’re a man doesn’t mean you know anything about money you know most women know that but they don’t tell the guy that and my Rich Dad did it differently he cooperated he sat around with his banker his accountants his attorneys his real estate brokers his financial planners you know his insurance agents and they would talk and twice a month I saw him do it he would sit he don’t hold up several restaurants he would sit at his restaurant table by a lunch for all of his advisers and he sat down he showed him his financial statements he says tell me what I’m doing and he got the help of some of the brightest minds around otherwise my rich dad being a C student got help from the a students here and he said that’s where he got his education from so I got the best education of all because I surrounded myself with smart people but my poor dad said that was what cheating and he did it all on his own here so tonight I want to ask you to cooperate or cheat the way you look at it a little while I’m going to ask you to talk amongst yourselves and we ask you a very simple question what did your mommy and daddy tell you it’ll be this this this did they talk to you about money here like this and did your mommy and daddy were they poor people middle-class people are rich people buy their cash flow patterns that’s the question so I don’t ask you to talk amongst yourself because every because today so many people in here that I don’t have time to answer questions and so by talking myself if you have a question the person sitting next to you can help them say well the idiot said this about this thing you know then I don’t agree with him but this is what he did so you can help each other out you talk you can clarify but the important part we’re starting simple right now at the second half of tonight we’re going to go into much more complex financial things and you’re going to need help you sit there by yourself you may miss some very important points two minds are better than what one except in school it’s absolutely ridiculous so I’ve being a C student I surround myself with the smartest people that can finds focus on how hard they can work for me what can I do my career men climb the corporate ladder so they’re focusing on working for money but to have money work for you requires financial intelligence the financial intelligence is defined as not how much money you make but how much money we keep how long that money works for you how hard it works for you and how many generations can you pass it forward to so most people don’t have that because they just focus on going to work and making money but they never have in financial intelligence when I was having trouble in school and I was having F’s you know my mother went hysterical my father went a little bit upset even my rich dad said to me it’s a shape-up and get your grades up because you have to as I’ll tell you a big very big secret and the big secret was this he’s my bankers never once asked me for my report card yet you know my banker doesn’t care what grades I have my banker doesn’t care what college I went to my banker wants to see one thing is how smart I am with my money and if I’m smart with my money my bank will give me more money if I’m an idiot with my money my banker will turn you down so I don’t want lend you the money so financial intelligence is what your banker looks for your schoolteacher looks for academic intelligence and they’re two different things coming rich most people just don’t want to lose and that’s why they lose it’s just really a tragic you don’t want to play it safe I don’t want to take risk you know let somebody else invest my money for me I say it again people turn the money over to these mutual fund managers it’s a stupidest thing you can do because you don’t learn anything you know the fund manager gets your money and they get all the experience but you get nothing all you do is get an empty 401k statement so if you’re going to become a great investor you’re the one who has to start the investing if you want to turn it over to somebody hope this smarter than your good life in the 19th century there was a French philosopher named August clumped comt II and he said this demography is what destiny in other words how can I predict the future and the way I can predict the future is look at the demographics it’s really that simple what’s really going on with the population as they age and move along some people say excuse my artwork I didn’t this is a snake they call it the pig and the Python okay and this little pig over here is called the baby boom generation there was this big boom because Johnny came marching home from war and they had sex they had a great time over here so a few years ago he was initially for this 1946 to 64 at the start there was 75 million baby boomers but due to in migration is now up to 83 million in this category so what’s going through the Pythian like this big thing so this caused the boom in housing prices you know consumer goods credit cards head-on and all this stuff so the problem is when you look at this thing if you look at the stock market the stock market went up in 1980 it started going up because the baby boomers due to a 401 K again signed into law in 1974 they started to come in now the same thing that caused the boom which we just fell through in 2000 is that pretty soon in 2016 by law they’ll will exit okay and that’s sort of the problem now the problem that’s not being a bail because there’s more kids coming along and all this but they may not be as stupid as we are you know to put up with a self here so this is the thing and the problem with a big 401 K and I look at as a full professional investor it’s a problem with it we all know this except the guys who wrote the law the problem with a 401 K is it ever took in market forces and with all markets markets go up this is called a bull market so all markets move in three directions how many directions three this is number one it’s called the bull when the market moves down it’s called a what bear three directions in the next direction it goes sideways and that’s called a channel market okay very simple here now as a professional investor I love bull markets but they say is the bull comes up by the stairs and the bear goes out the window and what that means the bull market comes up very very slowly and then this time it was a year 2000 when it hit it dropped like a rock that’s the problem of bulls and bears the reason I can predict the stock market crash is because this I will guarantee you markets always go in three directions Marcus always go up Marcus always go down and Marcus always go sideways as a kid I used to surf this is a wave here every ear waves come up and waves come down its economic cycles I will guarantee you there’s gonna be a crash I’ll also guarantee you there will be a boom its market cycles predicting a crash is no big deal absolutely no big deal anybody can do it because it’s part of economic cycle redic tier crash is like projecting winter in Nova Scotia hurricanes in Florida tornadoes in Texas their part was a part of weather cycles while booms and busts are part of economic cycles now the fallacy in the 401k it was written by lawmakers and things like this people are not professional investors people not from the AI quadrant so a 401k does exceptionally well here okay it does well in a bull market it does horrible in a bear market so what happens is they say well on average don’t worry Market goal is hit up that’s true but it comes down so quickly that you know the average investor in the last from 2000 to 2002 lost 35 percent of their value in just two years something that took 20 years to accumulate was wiped out in two years and the fallacy is they don’t think these bear markets exist the Enron guys they got wiped and something got wiped a lintel there’s one guy who we took early retirement he’s now 68 years old when he retired prior to everyone crash he had 2.2 million in his 401k after the Enron cash one year ago is now down to 6,500 bucks so he wrote into one of these famous financial planning magazines I won’t mention his name they asked him for advice they said invest for a long term thank you this guy is out of time he’s out of time they said no buy-and-hold invest for the long-term market we’ll come back what they don’t tell you is when the market goes into a sideways channel it may stay down for 10 to 20 years after the stock market crash in 1929 it took 25 years to come back to zero again that’s how long you can stay down and the lawmakers who wrote this law did not take into account crashes there’s also something the reason I can predict a crash is this inside this law you know it goes up like this but what the 401 K does it handcuffs you if you take your money out early what happens you’re penalized you cannot get out of this they’ll be like me I was a helicopter pilot you know that’s just like riding the old airplane up it goes over the top and what that looks like is this here’s a little 401 K person oh this is good and putting my hundred dollars a month in and the market is going up going up but huh this is so wonderful I must be intelligent you know yeah when the Dow hurt 12,000 people thought that was their IQ you know I’ll tell you as a professional investor what causes a boom is amateurs piling into the market so they saw their 401ks going up they thought they’re intelligent they thought their investors they put their savings into it and that’s what savings went down to negative people poured their money in and suddenly the market turns down it goes like this I’m sorry if you take your money out I’ll penalize you go back to the don’t worry invest for the long term okay [Applause] [Music] don’t worry the market comes back on average am i right the stupid law handcuffed you to the airplane professional investors don’t my handcuffs to the airplane you know they want a parachute not handcuffs and the law handcuffs you so today I see people this is your for one case a oh no no I’ll just pretend it’s okay it’s like kyocho’s called that denial you know so would you take a moment right now and discuss the insanity of handcuffing people to an airplane 30 seconds discuss the insanity a bit I think one of the things that we develop as we grow older czar emotional intelligence we all have fear we all have doubts well black like a self-confidence the difference is most people a lot of people run away from their fear and what I was taught to do both by my dad’s both my rich dad and my poor dad was to learn to overcome my fears but we all have fears but we shouldn’t let fear what our lives and the Marine Corps I learned to overcome my fear because you know we flew dangerous missions and the night before every mission you had to make peace with yourself because if I didn’t fly well not only did I die but my crew members died and so I had to make peace with my soul and overcome my fear of dying there’s one guy said oh I’m afraid tomorrow died on the dime gonna die and I would say to him I says your job description says kill people not die anything because what really destroys people not only at war but in life and in money is fear and if we never learn to overcome our fears that’s why people are not successful and so when I came back from Vietnam my rich dad said to me if you’re gonna be a business owner the number one skill you have to have because you have to be able to sell whether it’s you’re selling your products you’re asking investors for money and my problem was I came back from Vietnam and I could kill people but I couldn’t sell them anything and so I’d overcome my fear of having people shoot at me but now the new fear was how do you go and you know knock on the door and say hi I’m here to sell you something and the fear of rejection is one of the greatest fears all of us have and that’s why I went to work for the Xerox Corporation when I came back from Vietnam was to overcome my fear of knocking on the door and the fear of being rejected so a couple more points okay this thing comes down here what did all these people shift there because the mutual funds allow you to shift your money they now shift it into bonds down here at the bottom getting what two percent short-term maybe five percent thirty year that’s ridiculous you see buying a bond at the bottom is just as insane as buying high tech at the top you should have been buying bonds when they were paying seven percent and not buying it when it’s two percent he asked backwards scientific terms but don’t worry don’t worry human nature we know what’s good about human beings if short memories and maybe around 2004 2005 you know it’ll chug along here for the couple of years and then it’ll check check check check check check check check check check check check check check and maybe till 2008 then all the people who forget will climb back in they think their IQ went up again and then he’ll go so don’t worry there’s another boom coming but there’s also another what bust I guarantee it because it’s part of economic cycle it has happened throughout history another piece of good news is this is that the studies have shown for the last three or four hundred years if a person lived to 75 years of age he went through two recessions and one depression okay so my parents the ww2 generation the good thing for them is they went through their depression early in life right the Vietnam era generation they’re going to go through it late in life because if it happens approximately every 75 years let’s see the last depression was 72 years ago and so that’s what the good news here is the rich will get richer and the rest will be depressed you know they say to see our recession is when your neighbor loses this job and depressions when you lose your heart [Laughter] excuse my laughter why I’m sick individual and I’ll tell you why I’m a sick individual because if I could use a scientific term every time I talked to what is considered the average investor or a stockbroker or a financial planner with some what some disbeliever in the whole thing you know somebody was under 38 30 years old it’s not yet done the right you know they always say well on average the market goes up I said yeah it goes up on average but averages are for average investors I would never do take an average never professionals cannot take averages the last two years I said the average investor lost 35% something lost everything that’s why you don’t want to be an average investor here I never take sometimes I take an average but I can’t afford – so rather than get in – and by the way my rich dad said you want to be successful be careful who you take financial advice from most people take financial advice when their brother-in-law is an idiot and they wonder why they were in trouble you know I mean or somebody at the something a co-worker in the lunch room eating a bologna sandwich telling you how to get rich you know this is really ridiculous here nothing and then the best part about the ticket buy some stock brokers financial brokers real estate brokers insurance brokers my rich debts the reason they call them brokers is because your broker than you are you know and I love my stock broker I love my real estate broker I love my insurance broker but ultimately it’s my brain and I’m careful what advice I put in here’s that clearly guys here so I get into these arguments you know they calls on the phone cause guy says well you know this will never happen because the Asians will be coming into the US stock market so it will not dampen the effect of this you know as the baby boomers exit the agents who are dummies will come in here and the South Americans and the Mexicans they’re going to jump in here so that’s good good news you know well what they say is on average the transition and 2016 will be a peaceful one oh that’s good okay so that’s a standard line of BS blue sky they hand out here professional investors cannot take that advice so I want to give you I think four tips tonight of how a professional investor looks at this here okay and rather than get into like I said the scientific term a pissing match with all those guys I’ll just tell you how I look at it excuse me sola marine but i sit there and argue with people my rich dad said if you argue with an idiot there’s now two idiots so i’m gonna give you a point of view a professional investors versus average investors and point number one there’s a lot of them but this is the main one professional investors know markets go up and down professional investors do not care if markets go up and down simply because a professional investor will make money going up as well as coming what down they don’t care when I say this a market crash people start hyperventilating on me and you know seeing Aztec temples or something whatever they see you know I know they’re an average investor because they’ve taken a position that the market has to go a pro doesn’t what’s up another thing too is a rule of a professional trader is don’t take a position I never see the markets gonna go up or down I don’t really care because the moment you see it’s going to go up then you have to psychologically be right on a prove I’m right and that’s when you get stuck so pros never take a position this is it going up and down so I don’t care okay average investors care pros don’t care that is a very big difference because I can make it in all directions there more than personal responsibility people attitudes my poor dad always said to me go to school and get a job with a government because the government has good benefits good pension good medical and I think there’s too many people out there with that say managers my poor dad they expect the government to take care of them the company to take care of the boss to take care of him their fund manager to take care of them you look at the president knighted States he gets a huge pension and all that the government takes care of him I think in the world today and especially in America we have too many people to take care of me attitude and it’s not just the people on welfare there’s a lot of people in government and service and all this who would to take government jobs or big corporations jobs expecting people to take care of them it starts with a change of responsibility I don’t anybody to take care of me I’ll take care of myself okay the worst thing about a 401k it works well when it goes up doesn’t work well when it comes what down and if you believe if you actually believe that stock markets always go up you know in the 401ks will there’d be protecting you then you’re probably a big Harry Potter fan you know I mean and you haven’t quite grown up you have to look at the reality of markets going up and down so I would never have a strategy a single strategy only goes up you got to have at least three strategies one for up one for down one for sideways the second point is this I invest like my banker okay when I look at investing I look at the jaundiced point of view of a banker not that bankers are rich some of the worst people I know what bankers as far as investors go but they have certain good traits they have certain things you look at for example if I went to my banker and I asked my banker would you loan me a million dollars to put in my 401k so I can retire what’s the bank on this idea no it’s too risky and yet the government puts everybody into a 401k something a banker would not lend you money on ask your banker this would you lend me money to buy mutual funds answer again is no okay no because they’re too risky now if I go to my banker and I say to my banker will you lend me money to buy a real estate generally they say what yes at least he’ll look at it they’ll to come talk to you but they won’t talk to you for 401k or mutual funds that is absolutely ridiculous so one of the reasons I get rich or quicker is very simply I don’t use my money you know the middle class like I said there are different values they believe in saving money and getting out of debt the rich don’t believe that they say borrow your borrow you borrow because what’s your if I know this good debt and there’s what bad debt the middle class is stuck in bad death the rich have good debt but when if somebody says it’s good to save money and get out of debt I say this to them I said how long right now my wife and I closing on a property this week eight million dollars almost a hundred percent financed I ask the people so how long would it take you to save eight million dollars how long would take us aviate million dollars you know but most people they can’t do it they can pay eight million in taxes but they can’t save eight million dollars you know it takes me two weeks to borrow eight million dollars on top of that because it’s good debt every month it puts a minimum of fifty thousand dollars in my pocket every month so I get ahead faster by using my bankers what money well the middle class is trying to get out of debt and save money okay the next point is this 0.3 a professional investor will never invest without insurance say when I when you look at insurance here you know the trouble with the 401k there’s no insurance on it when I go to my banker and I say I want to borrow I wanna buy a piece of real estate the banker requires me to have what assurance they require me to have it ok now a couple of years ago I had an apartment house burned down thank God nobody was hurt now was I upset yes but I wasn’t wiped out financially very simply because the insurance company replaced it in fact they gave me a better in part my house because it wasn’t you and they maybe they paid all my back rent I didn’t get and all that so I invest with insurance the same thing the same thing in the stock market hmm as in real estate a professional investor when the market goes up like this they’ll invest with insurance give an example really quickly let’s say the stock is at $50 and the investor senses the trends about to change down what they might do is put in what’s called a trailing stop now if you don’t want to put a stop in what you can do is you can buy a put here and very simply a put is insurance that in case the stock let’s say plummets on down to let’s say 10 dollars here what the put allows you to do it may cost you two bucks what the put allows you to do is still tell you the socket $50 so you don’t lose any money the more you understand puts and calls or options the less I’ll buy stock anyway because puts and call are less expensive and higher returns the trouble is you need to spend about three or four years studying this stuff so today when I buy a stock I’ll buy a put the scientific word in my market is called a hedge hedges insurance look we don’t drive our cars without insurance we don’t buy houses without insurance but the 401k asks us to invest without what insurance for our future it makes no sense to me as a professional investor when people say I don’t have time to invest I know they don’t really think like an investor I’m investing in my head I mean as I can be talking right now to this camera but in my head I’m still doing a deal I’m here right now I am putting two deals together one to sell one to buy so most of the time I’m in my head investing takes no physical time investing takes mental time the other message you have for people is this if you want to become a good investor you have to start off a bad investor if you want to be a good golfer you start off a bad golfer and unfortunately most people I’m not willing to go through the part of being a bad investor so they can be a good investor my wealth today doesn’t really come from what I buy my wealth building comes from who I became in the process of making so many mistakes in our maker God Allah Mohammed Buddha designed us to learn by making mistakes and unfortunately school system teach people not to make mistakes and so they don’t make mistakes if you don’t make mistakes you don’t become good and that’s the tragedy so let me ask you this people who invest in 401ks and all this put their money in for increase what kind of insurance do they tell you to do what do they tell you to do to protect yourself in crashes diversify I call it D worse a fight I mean spiritual risk so thin you don’t get any gains in it I’ll say this much professionals insure or protect average investors diversify it is not a good strategy from a professional point of view now I want to say one thing I’m not saying get out of your 401k I am NOT saying that it’s still for the average person it’s still the best that’s all you got so if you want to become a professional investor in this thing called education that needs to be done if you’re not willing to get educated diversify invest for the long term buy hold and pray and read Harry Potter books you’ll be fine you know I mean you believe in the magic kingdom here Warren Buffett defines says this about diversification he says diversification is a protection against ignorance you do not have to do it if you know what you’re doing so please hear it don’t get out of your 401k unless you’re willing to get what educated okay very important point so now the fourth point I’ll bring up and then this is doing a professional investor an average investor it’s called the money-back guarantee whenever I hear a financial planner tell me so don’t worry the agents are going to come in the South Americans and Mexicans they’re gonna prop up this market you don’t have to worry about that crash in 2016 the first thing I asked that guy is this will you guarantee it and generally they say what no they said they say well the market always goes up I say will you guarantee it the answer is what no they will not guarantee it so that any way you want you want to detect BS or blue sky just ask them for a guarantee ask them if they’ll give you your money back and if they don’t you know it’s blue sky look when I go to Sears I don’t like the product they would give me my money back so professional investor always asked for a money-back guarantee going back to your banker your banker asked you for money back guarantee it’s called a mortgage in other words the banker doesn’t give you a mortgage you give the bank a mortgage and it’s securitized buy a piece of property and what they do is this the thing is $100,000 they’ll do an LTV a loan to value so it’s worth $100,000 an appraisal they give you $80,000 for it but the mortgage says if you mismanage it we want our money back they take the property back and they sell it in it’s called a foreclosure so the problem I have with a 401 K is they don’t give you a what money back guarantee no insurance your banker won’t touch it and it’s not it’s not good for an up and down market so a lot of people have this idea you have to go to college you’d be rich and you know going to college is okay but you don’t learn anything about getting rich in college and my Rich Dad oftentimes said to me it says if going to school major rich then school teachers would be millionaires so going to school doesn’t make you rich it’s what you learn after school that makes you rich and in fact what I say to most people is that if you want to get rich you don’t get rich at work to get rich at part-time you know what are you doing a spare time most people are kind of wasting their spare time look at the number of people like Michael Dell founder of JAL computers richest men under 40 he started Dell computers in his dorm room when he should have been studying Henry Ford started Ford Motor Company as garage hewlett-packard started in a garage and most multimillionaires didn’t get rich at work they got rich of their spare time it’s what they did after school or after work that makes you rich so ladies and gentlemen I’m not blaming this problem on Wall Street the stock market or that I think the problem of this fiasco right now is found in this word here education our school system is still in the dark ages it can barely teach people to read and write now much less teaching anything about money and I think that’s gonna cause a lot of pain and heartache man they didn’t pick up on the credit card they sure didn’t pick up on the 401k so today our educators you know there in America there’s three kinds of education that’s pretty good one is academic America’s not doing that kind of job on it but it’s okay you know but if you do well in academic they consider your genius and a students and all that stuff the second type of education is professional and I see where America excels American excels in professional education when you become a doctor or a lawyer electrician or computer programmers professional education but where the school system failing right now is providing no financial education and that’s going to be the demise of this country because we have a bunch of people who are not they don’t have the life skills to handle life if you’re gonna be successful today you need all three cups of Education not just two the difference is as my poor dad thought this was important and my Rich Dad thought this was important that was a big difference so before I go any further I’m going to talk to you what I’m gonna give you an example right now what financial education looks like because you don’t have to go to Harvard you don’t have to go to Wharton get on the go to Stanford you don’t need to be an A student to get a financial education maybe stare taught me most of it just play Monopoly for green houses one rate Oh tell it’s not that hard you know the reason I created this cashflow game over here is very simply to make it fun and easy the big part of the cash flow game here is a financial statement so you learn two principles here you learn to be an accountant p-nut be not callable you learn the principles of accounting but also you learn the four levels of investing over here is the rat-race this is what when you say to a child go to school and get a job you sentence them to the rat-race here you know so this is one level of investing these people are stock pickers or mutual fund buyers right in here the next level is a small deal and this when you buy a small duplex or something like this next come to bigger deals when you start buying maybe 12 flexes 25 units and all this the fast track out here really exists this is where the SEC says you must be an accredited investor 1933 law you must be a millionaire this is where the best investments are found this is where the rich invests and the fourth level of investing is found in this one here is called cashflow 202 you need both you need this working to play this and cashflow 202 goes into day trading and options the pollen most people doing day trading and options they don’t know this part about here they don’t know this part about it here that makes sense you guys here so I just made it fun that’s the kind of education so for my wife and I to retire young and retire rich what we had to do okay very simply we had to have a goal we had to have a plan choose our products and we had to have skills now it was very simple for Kim and I misspelled goal if I still can’t spell I told him a creative person I’m really a designer at heart here so our goal was a very simple goal we started in 1985 and our goal was to have $100,000 a year or more coming in whether we work or not and so that if you look at the game sheet over here this is passive income of a hundred thousand and was added to a regular income our total expenses at that time we had we lived in a very modest house we paid a hundred seventeen thousand dollars for it and our total living expenses was approximately three thousand dollars a month so we had we had a let’s say a hundred thousand coming in at thirty six thousand going out so we could live very well we kept investing in stuff like that’s not really big stuff so we started in 1985 and it took us nine years to achieve this and the plan was very simple it’s the same plan I had that my rich daddy gave me years ago build business by real estate build business by real estate that was as simple as it came the reason I buy a building business versus this is growing up in Hawaii real estate is extremely expensive like it is out here in New York many people can’t even afford a house because low-income housing in Hawaii starts at three hundred eighty five thousand and the average per hour early wage is five bucks so the differentials they can’t afford it and even apartment houses so expensive so the only way I could afford to buy how property in Hawaii will start a business because my income was unlimited there so when I talk to young people about you know I can’t afford a piece of property I say you know keep your daytime job but start a part-time business and today that’s network marketing and things like that a lot of his franchises there’s a lot of businesses you can start like Cecilia came up here she bought a laundromat she buys three of them should triples our income without working that much harder so this thing is he can do so I like business and buying real estate so it took me nine years took Kim and I nine years then I retired it took two years off and then we said well that was pretty easy less than another goal and the goal was then 1 million a year without working and that that took us five years to achieve and the reason it took five years to achieve was basically because was the same plan and the same skills the benefit of staying in is when you know by staying over here what increases is our knowledge you’ve got easier and easier and easier so when I say to people is this it takes about five years to learn to be a business person it takes you five years to get through college it takes you five years to learn to build as a business person so you may want to join a network marketing company or do something to you know get rich all right to start a business the facts are that most multimillionaires started part-time Henry Ford started in his garage Michael Dell started Dell computers in his dorm room hewlett-packard was started in a garage so the reason that people get rich is not what they do at their work they get rich at what they do have their spare time and so there’s a very same principle here now so our goal was the million line it took five years and we just keep with the same plans like him this year is gonna put away about 16 million dollars worth of property putting an extra hundred thousand a month in our pocket and we just add more property we don’t work anymore we just do the same things that make sense you guys here that’s the that was the way it is now we’re gonna go into a plan here and all this one of the biggest things I hear from people is I go oh I got $10,000 what should I do and so what they’re focusing on is a product you know should I buy stock should I buy mutual funds should I buy bonds you know should I build a business and really what they should ask themselves are what are my what skills what is my plan and what are my goals so I get I get nausea SIF is the most common question I have I got $10,000 what should I do with it I go holy mackerel you got to know your skills and when it comes to skills it’s really simple the people who are S is over here they have a really hard time because they think they have to do it on their what oh and that’s the problem so what you have you have personal skills and if you don’t have the skills being a C student the thing I learned is but just because I don’t know how to do something doesn’t mean I can’t find somebody on my team who has the skills so if I don’t have the skills I hire somebody who does does it make sense you guys here so that’s what my rich dad taught me never say I can’t afford it or I can’t do something because you nobody can do everything except people who are asked those things they have to do everything I just get different skills depending upon different products different plans and different goals merchants those two ways get rich by being greedy how much money gonna make you know and what’s in it for me and what you gonna give me there’s another way you get rich is by being generous you know given you shall receive most people are focusing on receiving versus giving well how much pay raise am I gonna get or what’s my salary what my benefits rather than saying how can I be of most contribution it’s really simple you want to smile you give a smile you want a punch in the mouth give one first you know give and you shall receive so the world is though in the word is karma what you put out does come back and I trusted that I want to say one more thing for the people who like to save money okay and as I talked it earlier as a professional investor this is one of the tips here its debt versus equity question is when you look at these two deals what happens when I use more debt what happens to my ROI cash on cash return when I use more debt and there was a borrowed money what happens to my return how many people think it goes up how many people have no idea what I’m talking about okay I want you hear something guys that is the most expensive thing you can know right now if you don’t know the difference between what happens when you use debt versus equity see the problem with a 401 K are using debt or equity equity money you using your money so the more equity you have your ROI actually goes down and the more debt you use your ROI goes up so when I say the people I get a 50% return they go oh you’re a liar I said no you’re a loser and the reason I can jump my return so high is because I’m not using my money I’m using my bankers money if you don’t understand that ladies and gentlemen you’re in serious trouble today financially the next thing I want to talk about is this the reason Kim and I could get up to our goal faster and was products and one of the some of the products we have right here are these when I wrote when I wrote Rich Dad Poor Dad over here this is an asset every month it puts money in my pocket whether I work or not this is an asset and as intellectual property I’m what I’d like to bring out really quickly just for a brief moment is my intellectual property attorney because this is an asset my clicker so hanford mic here please and Microsoft were protecting a number one asset how many people this room have had a million dollar idea yeah now is an idea good without protection how many of you made money from it know if you don’t protect your ideas it’s worth zip so what he does is he protects my ideas how many trademarks do we have 327 worldwide how many patents do I have oh let’s see around 30 worldwide no how much do would you say my ideas aren’t worth today on the open market my patent seniors about 100 million dollars and if I hadn’t protected it with MS help would be worth what zip so the thing is people think I’m a real estate guy that’s not really true I’m a products guy and I can change the product you know most people only product they have is a mutual fund I can do real estate businesses ideas patent trademark and all this I took the word Rich Dad which everybody knows gave it to Mike he put a trademark around it and is worth millions of dollars that make sense you guys here for those of you have patents or ideas or things you want to protect he’s a guy because if he hadn’t protected it it’d be worth what this is it thank you us a handful Michael here you the most satisfying thing about this work as I see the spirit go on I see people get excited you know they see the light at the end of the tunnel that’s what I see inside each and every one of us is a poor person there’s a part of me that’s still cheapest they come there’s a middle-class person that wants security security security and as a person who’s rich and what I think I see in people who are turned on is my work or the products hit that person that’s rich and said oh the spirit comes alive so the rich spirit comes out you can see it in their eyes they get so excited they’re so excited they have a potential to get rich and what rich means being financially free and not worrying about paying the bills all the time so the most satisfying thing is to see the lights go on inside person the spirit comes out you you

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