Wednesday, August 31, 2016

Stock market is on the edge of the biggest crash

We’re on the edge of a cliff right now. We have never been here before. If you’re still saving money when interest rates are negative, you’ve got to be crazy. When you’re investing for the long-term in the stock market, where there is no connection between stock price and reality, you’re crazy.

As Bernie Sanders said, ‘wealth and income inequality is the greatest moral crisis facing America as well as the world today.’ The gap is growing between the rich and poor. The rich don’t work for money. If you went to school and got a job, and you’re saving money and investing in the stock market today, you’re going to lose.”



Robert Kiyosaki is a Japanese American investor and author of popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.

Monday, August 22, 2016

Paying taxes could be unpatriotic in some cases

Donald Trump is alleged to have paid 0 taxes in 2015

You can tell that the presidential race is heating up because the attack ads are heating up too. In the past, much of political advertising happened on the television. If you didn't like it, you could change the channel. 

Usually, the candidates choose to release their tax returns if they are running for president. Donald Trump has elected, so far, not to do this.


Last week, Hillary and Bill released their 2015 tax return to the public. This was most likely the reason they are attacking Trump on his tax returns. As The New York Times reports, Hillary and Bill paid "$3.6 million in federal taxes for an effective tax rate of about 35 percent." Most of this income came from speeches and Hillary's memoir.


I find it interesting that Hillary would choose to attack Donald Trump for not paying anything in taxes and celebrate that she paid so much in taxes. This to me shows that Hillary is a career politician, while Donald is a career entrepreneur. It also shows me that Donald is doing what the tax code was intended for while Hillary and Bill are being penalized for not doing what the tax code was intended for.


As I've learned from my Rich Dad tax advisor, Tom Wheelwright, the most patriotic thing you can do is not pay your taxes!


As you probably know, the tax codes in the US and in many different countries are long and complicated. The question is, why?


The reason is that government leaders learned a long time ago that the tax codes could be used to make people and businesses do what they want by utilizing the tax code.


In short, the many credits and breaks that are found in the tax code are there precisely because the government wants you to take advantage of them. For instance, the government wants cheap housing. Because of this, there are many tax credits for affordable housing that developers and investors can take advantage of that minimize their tax liability, put more money in their pocket, and in turn, create affordable housing. Everyone wins.


There are many scenarios like this in the tax code that incentivize investors and entrepreneurs to do activities the government is looking for while rewarding those who take those actions with lower-or zero-tax burden.


Because of this, limiting your tax liability actually means you're doing what the government wants you to do through the tax code. And that is the most patriotic thing you can do.


This is why it is insanity for Hillary to criticize Donald for not paying taxes. The only way in which he would not pay taxes would be by doing things like investing and creating jobs to receive tax benefits created by the government! Conversely, the fact that Hillary and Bill paid a 35% tax rate and millions in taxes shows they are not doing what the government wants. They are not providing jobs, starting businesses, or investing in a meaningful way.


Personally, I'd rather have someone who understands how money and taxes work, how to create jobs and invest in ways our own tax code incentivizes, than one who doesn't. This is not an endorsement of either candidate, but it is a true observation regarding this one issue.


Hillary's tweet is capitalizing on the general ignorance around money and taxes that much of our country has. In that way, it is actually a lie and a form of fear mongering. It is an attack without legs to stand on, preying on emotions rather than appealing to logic and intellect.


But that's what most of our politics has devolved to these days, so I'm not surprised. During the election season, you'll hear lots of things that sound right, but fall apart upon further analysis. That's why it pays to do your own homework, especially when it comes to money and taxes.


And that's why you should read Tom Wheelwright's book, Tax-Free Wealth.


Tom is a genius when it comes to taxes, and I encourage you to read his book- and to begin looking at how you can be patriotic by not paying your taxes by investing and building businesses that the government rewards with tax breaks and credits for doing exactly what they want.


Also, for more information on using the tax code to get rich, take advantage of our Rich Dad education and coaching classes that will help increase your financial education and your wallet, while decreasing your tax bill.

Wednesday, August 17, 2016

Rich are getting richer in USA


Watch the video above by pressing play. Apologies for the low audio volume. Pls turn your speaker bit higher.


Robert Kiyosaki is a Japanese American investor and author of popular book 'Rich Dad Poor Dad' where he wrote of his two dads. His rich dad taught him to think differently, inspired and helped him get rich on his own.

Tuesday, August 16, 2016

Is rising trend of self-employment positive or negative indicator of our economy ?

A promising headline from "The Christian Science Monitor" this week read, "Why entrepreneurship is on the rise."

The article reports on a recent report from the Kauffman Index of Startup Activity, which reports that 550,000 Americans start a new business each month. This is part of a upward trend over the last couple years.

But, as with everything, context is key. Kauffman calls these businesses "adults switching into self-employed business ownership," and as Professor Edward Roberts tells reporter Gretel Kauffman, "What Kauffman is seeing may in fact reflect the lousy state of the economy outside of the innovation sector. It may reflect the move by so many unemployed or poorly employed in desperation to start their own companies as the equivalent of second jobs, i.e. to produce a living family income."

In short, much of these new businesses aren't businesses at all. And the people starting them aren't entrepreneurs. They're desperate people who have turned to owning a job in order to survive.

In essence, these people have rushed out and start a new business, moving from being an employee to being self-employed-moving from the E quadrant to the S quadrant, the left side of the CASHFLOW® Quadrant.

The difference between owning a job and owning a business

The problem is that there is a big difference between being in the S quadrant and owning a job and being an entrepreneur in the B quadrant.

While one is not necessarily better than the other, S-type businesses and B-type businesses have different strengths, weaknesses, risks, and rewards. Many people who want to start a B-type of business wind up with an S-type of business and become stalled in their quest to move to the right side of the CASHFLOW Quadrant-the B for big business and I for investor side.

Many people attempt to move from the S quadrant to the B quadrant, but only a few who attempt it actually make it. Why? Because the technical and people skills required to be successful in each quadrant are different. You must learn the skills and mindset required by a quadrant in order to find true success there.
S-type vs. B-type business skills

If you own a B-type business, it's possible to go on vacation for a year, come back, and find your business more profitable than when you left it. In an S-type of business, if you take a one-year vacation, you'll have no business to come back to.

What's the difference?

Saying it simply, an S-type of business owns a job. A B-type of business owns a system and then hires great employees to operate that system. This is why if a B-type business owner is on vacation, income still comes in.

To be successful, a B-type business owner requires:
-    Ownership and control of a system, and
-    The ability to lead people

For S's to evolve into B's, they need to convert who they are and what they know into a system, and many people aren't able to do that...or they're often too attached to their self-contained system to let go and let other people in.

Can you make a better hamburger than McDonald's?

To illustrate my point, I'll share a technique I use to determine whether someone is an S or a B when they ask me for advice on starting a business.

Usually, these people tell me they have a great idea for a new product or idea. I listen, usually for about 10 minutes, and within that time I can tell where their focus is, whether it's a product or a system. In those 10 minutes, I usually hear words like these:

-    "This is a far better product than XYZ makes."
-    "I've looked everywhere, and nobody has this product."
-    "I'll give you the idea for this product; all I want is 25 percent of the profits."
-    "I've been working on this product for years."

At this point, I usually ask one thing: "Can you personally make a better hamburger than McDonald's?" So far, everyone has said yes. They can all prepare a better hamburger.

I then ask, "Can you personally build a better business than McDonald's?"

The burger vs. the business

Some people see the difference immediately...and some don't. The difference is whether a person is fixated on the left side of the quadrant, the E and S side, which is focused on the idea of a better burger; or on the right side of the quadrant, the B and I side, which is focused on the business system.

I do my best to explain that there are lots of entrepreneurs who offer a better product or service, just as there are billions that can make a better burger than McDonald's-but only McDonald's has created a system that has served billions.

If people begin to see this truth, I suggest to them to visit a McDonald's, buy a burger, and sit and observe the system that delivers that burger. Take note of the trucks that deliver the beef, the rancher that raised the beef, the buyer who bought it, and the TV ads that sell it. Notice the training and the employees. See the decor, the regional offices, and the whole corporation. If they can begin to understand the whole picture, then they have a chance of moving to the B-I side of the CASHFLOW Quadrant.

The reality is that there are unlimited new ideas, billions of people with products and services to offer, and only a few people who know how to build an excellent business system.

Monday, August 8, 2016

Business owners are optimists and see the glass half full

When I left the Marines I had to decide which father’s advice to follow. My real father— my poor dad—wanted me to go back to school and get a good job with a big corporation so I could “climb the corporate ladder” as an employee. My best friend’s father—my rich dad—advised me to “build my own corporate ladder” as an entrepreneur.

I’ve started many businesses. The one I write about most was my first big hit, my nylon-and-Velcro surfer wallet. I write of this company so much because of the painful lessons I learned about patents and protecting your intellectual property. I failed to do that with my nylon-and-Velcro surfer wallet company and ultimately lost everything to competitors stealing my idea.

But I’ve also had a seminar company, real estate investment companies, and of course The Rich Dad Company. Today I want to tell you about a lesson from my seminar company. This company was very different from the wallet company as it was more service based as opposed to production or manufacturing.

In manufacturing you work with a few clients who buy your product wholesale and then turn around and sell your product to their many customers. In service, you tend to work directly with your end-user-customer. If you are successful you will have a lot of these customers. And while that sounds great it can be one of the biggest traps you fall into as an entrepreneur.

What I learned is that about eighty percent of my good business came from twenty percent of my clients. And eighty percent of my problems came from another twenty percent. If you can figure out which clients are the twenty percent problem creators, then you can fire them and spend most of your day growing your business.

The trick is, of course, identifying which clients are the problem clients. My Rich Dad Advisor, Garrett Sutton has a saying, “like pollution or a disease, Toxic Clients are destructive to your business and your health.” As a lawyer, Garrett has seen his fair share of “Toxic Clients.” He’s seen so many that he has created a strategy to spot them and avoid them.

Are Bad Clients Ruining Your Business?

Garrett says, “A Toxic Client is a person that sets you back in a significant way. More than a mere nuisance, they are a distinct detriment to you, your team and your company’s morale. In terms of time, money and effort the Toxic Client is a drain on resources and a drag on revenue. The damage wrought by a Toxic Client can be severe. These are not people who simply bother us. These are people capable of poisoning and contaminating entire organizations”

If your business is going to succeed you must learn to recognize problems, or Toxic, clients before it’s too late. You must understand why such clients are toxic, learn how to extract yourself from a current problem client and, ultimately, avoid working with a toxic client ever again.

There are a lot of people chasing dollars to start a new business or launch a new product. The biggest problem most of them have is that they personally lack experience or they have no team behind them. If the team is weak or lacks experience and a track record, they are much more likely to become victims to the Toxic Client.

As an entrepreneur and business owner you are an optimist. You see the positives and plan for the successes. You must also be a realist. You must plan for the inevitable challenges associated with running a business. You must be aware of all the dark corners. And when it comes to darkness, one of the biggest challenges you will face is the problem client. But once you learned to identify and avoid such clients your team will soar, you business will soar and your businesses won’t be a job, it will become your freedom.

Monday, August 1, 2016

Diversification vs Stock Picking | Which is better ?

Have you ever heard this advice: "Invest in a diverse portfolio of stocks, bonds, and mutual funds"?

Seems like good advice, doesn't it? What could possibly be wrong with spreading your risk among a number of different investment vehicles?

Could diversification be bad ?

For one thing, what most people consider as diversification isn't really diversification. Rather it is spreading your money across one asset class. Stocks, bonds, and mutual funds are all part of the same asset class-paper assets. That is not true diversification.

There are actually four asset classes: paper, real estate, commodities, and business. A truly diverse portfolio would have stakes in all or most of these.

Beyond that, diversification is a zero sum game. Gains in one class offset loses in another. Sure, it can be safe, but rarely does someone become wealthy by diversifying. As Warren Buffet says, "Wide diversification is only required when investors do not understand what they are doing."

The most successful investors don't diversify. Rather, they focus and specialize. They get to know the investment category they invest in and how the business works better than anyone else. For example, when investing in real estate, some investors focus on raw land while others focus on apartment buildings. While both are investing in real estate, they are doing so in different ways.

When diversification could be of use

So why do financial advisors recommend diversification when the world's greatest investors choose not to diversify? I believe there are two answers to this question:

1. Active vs. passive investing. There are active and passive investors. Warren Buffett is an active investor. Most people are not. Active investors should focus. Passive investors should diversify.

2. Risk. Some investments are riskier than others. Stocks, bonds, mutual funds, and real estate investment trusts (REITs) are very risky investments; therefore, you should diversify if you invest in them. If you invest in businesses, as Warren Buffett does, or real estate, as I do, you should focus.

The real question is: Do you want to become a professional investor or remain an amateur? If you choose to remain an amateur-a passive investor-then, by all means, diversify. Diversification keeps you from "putting all your eggs into one basket," so if one industry collapses-as tech did famously in 2000-only a portion of your portfolio will be affected.

If, however, you decide to become a professional investor, the price of entry is focused dedication, time, and study. Warren Buffett dedicated his life to becoming the best investor he could be. That is why he focuses and does not diversify. He does not need to protect himself from ignorance simply because he has invested time and money to understand what he is doing.

Intense Focus, Intense Rewards

In Hawaii, there is a great organization known as Winners Camp. It teaches teenagers the attitudes and skills required for success in life. Winners Camp uses the word "focus" as an acronym, standing for "Follow One Course Until Successful." I believe all children should be taught to focus, as should any investor who wants to be a rich investor.

If you look at anyone who has achieved great success and wealth, they have all focused intensely in order to win.

Rather than practice diversification, I encourage you to practice focus. In the process you will take control of your financial future in ways that amateurs simply cannot.

Monday, July 25, 2016

Money Paradox - could spending money make you rich instead of saving ?

Why spenders are winners and savers are losers in the new economy

Now that it’s available to stream on Netflix, I’ve heard a lot of people talking about the movie The Big Short, which came out late last year. If you haven’t watched it yet, you should.

The movie is based on the true story of against-the-grain traders who bet against the housing market right before the housing collapse in 2008. At the time, everyone thought they were crazy.

One great scene depicts trader Dr. Michael Burry, the founder of hedge fund Scion Capital, leaving a meeting with Goldman Sachs where he convinced them to sell $100 million in swaps against Goldman’s CDO holdings in the housing market. The Gold-man team members are laughing, hysterically, thinking they just took money from a baby. In the end, Dr. Burry had the last laugh. And so did the others betting against the hot air balloon that was the housing market in the mid-2000’s

Those who spent their money betting against the housing market made billions of dol-lars. Those who saved money or believed that the value of their house would always go up, lost…and lost big.

Savers are still losers

All this illustrates an important concept that I’ve been teaching for many years: savers are losers.

In an economy where almost everything is built to take your money, saving it is of little value. From inflation to taxes to hidden fees in your 401(k), the system is stacked against you.

In today’s economy, spenders are winners. By this I mean people who know how to spend their money in the right places and in the right investments. Why is this?

Why spenders are today’s winners

Money is not backed by anything. It is a currency, which like a current of electricity, is always moving. Today, money flows from one sector to another. If it stops moving, like a current it dies. If your money isn’t moving, it is dying, slowly, losing value day by day.

The rich know they must keep track of where money in the markets is moving, and they must move their money accordingly. This is why the traders who made the big short profited so spectacularly. They were paying attention and saw where money was moving. But more than that, they saw the assets it was moving into and understood the value of those assets was garbage. They knew that they could get ahead of the curve and move their money to where others eventually would. And in the world of money, the first always feast and the last always starve.
Know where to spend, and you’ll win

This is hard for the average person to wrap their mind around. For generations, we’ve been taught to save our money wisely. Today, that advice is no longer good or wise advice. Today, if you want to get ahead financially, you must know how to spend your money wisely.

Spending money wisely, of course, takes financial intelligence. And that takes financial education. In order to see and understand the markets, you must teach yourself the language of money and the concepts that make the markets run. You must study, and hard.

The good news is that information is plentiful. All you have to do is look. Today, start thinking less about saving your money and more about spending it. This subtle mind shift will make a huge difference in your financial future.

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