Wednesday, September 30, 2015

Action vs Words | Robert Kiyosaki

“Talk is cheap. Learn to listen with your eyes. Actions do speak louder than words. Watch what a person does more than what he says.”



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, September 28, 2015

Understand how 401K works properly

A 401(k) is meant to help you invest for retirement, but how much do you keep?

Here at The Rich Dad Company we spend a lot of time bashing the idea of a 401(k) and its international counterparts. We also tell people that in order to find financial success they need to learn the difference between an asset and a liability.

An asset puts money into your pocket (cash flow), while a liability takes money out of your pocket. Buy assets, not liabilities and you will be successful. Right?

Well… maybe we’ve gone too simple.
What Are You Working For?

We’ve received questions such as: Doesn’t a 401(k) make money and put it into your pocket? Isn’t a 401(k) an asset? All we have to do is buy assets that put money in our pocket so why the hate?

To answer those questions, let’s ask ourselves if a 401(k) puts money into our pockets. A typical 401(k) plan takes 80 percent of the profits. The investor may receive 20 percent of the profits, if they are lucky. Don’t believe us? Ask John Bogle. Yes. John Bogle, Founder of Vanguard Investments.

The investor puts up 100 percent of the money and takes 100 percent of the risk. The 401(k) plan puts up zero percent of the money and takes zero percent of the risk. The fund makes money through fees, even if you lose money.

Generally speaking in a bull market, a 401(k) does put money in your pocket – but only 20%. So if you had $10,000 in your 401(k) and it made 5%, then your 401(k) made a profit of $500 - you only get $100 (before taxes).

Now we have to understand that taxes work against you with a 401(k). Long-term capital gains are taxed at a lower rate of around 15%. Great! The only problem is the 401(k) treats any gains as ordinary income. Ordinary income is taxed at the highest rate, sometimes as high as 35%. And if you want to take the money out early, you’ll have to pay an additional 10% penalty tax.

In real investment assets, tax law is written to your advantage, not taxing you at every turn.

It gets worse. It turns out that when it's calculated correctly, without government creativity, inflation increases faster than any 401(k). That means money is leaving your pocket!

It’s difficult to really call a 401(k) an asset, even by the financial industry’s definition. If you look at a 401(k) using Rich Dad’s definition of an asset - something that continually puts money in your pocket whether you work or not – then it’s downright laughable. That’s not even factoring you can’t touch that money until you’re 59 ½-years-old without an additional 10% penalty.

The mutual fund industry has done a masterful job making it nearly impossible to determine whether or not your 401(k) is an asset. But it doesn’t really matter. We’ve seen that even if it is making you some money, it’s not enough to justify the risk.

Risks? Oh… you did not know?

With a 401(k), you have no insurance if there is a stock-market crash. To drive a car, you must have insurance in case there is a crash. When one invests in real estate, one has insurance in case of fire or other losses. Yet with a 401(k), you have no insurance to prevent losses from market crashes.

So, let’s ask the question again, “Is your 401(k) an asset?”



via http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/September-2015/is-your-401k-an-asset.aspx

Friday, September 25, 2015

Live in the present | Robert Kiyosaki

"Your success yesterday means nothing. It's what you do TODAY that shapes your tomorrow"






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.

Wednesday, September 23, 2015

Yes you can cashflow with stocks

One of the things that makes The Rich Dad Company so different from other financial educators is that we do not tell you what to buy or what to invest in. Instead we teach why an opportunity is good and we show you how many different things there are to invest in.

Real estate may be a good fit for many investors but it’s not a great fit for all investors. Stocks may make a lot of sense to most people, but certainly not all. A good investment vehicle (stocks, real estate, business, commodities) needs to fit with your lifestyle, your personality, and your philosophies. There is no investment vehicle that is one size fits all.
What Are You Working For?

Most people believe that stock investing is at odds with the Rich Dad philosophy of investing for cash flow. The reason people believe this is because they think stocks are simply buying low and selling high. An educated stock investor knows how to cash flow with the stock market, not just invest for capital gains.

Cash flow is better than capital gains for three reasons:

    -It is resilient from market swings and market chaos.
    -It brings money into your pocket on a regular basis (not imaginary “paper wealth” such as net worth)
    -It is generally taxed at a lower rate.

We’ll go over two ways that you can invest in stocks and follow the Rich Dad philosophy of cash flow. The first method of Dividends is pretty direct. The second method of Covered Calls requires quite a bit more financial education.

Dividends

So if you were to buy stocks that pay regular dividends, then you are purchasing assets that add to your cash flow. With enough assets like this, you can eventually have the income to do whatever you like, right now or in retirement.

Covered Call Cash Flow

The covered call strategy is not for the uneducated. This is going to get a bit crazy. But once you get it, it’s very exciting! Now, let’s explain cash flowing a covered call (a stock option):

A stock option is a promise by someone to sell a certain stock at an agreed-upon price until a certain date. In return for this promise, he receives a premium as income. This premium is not just based on the movement of the stock price, but on the movement of time.

Stock options can be confusing so I’m going to use an example as it relates to real estate.

Let’s suppose that you are a landlord who owns a house. You find a family to buy the house, but they don’t want to buy it outright today. Instead, they decide to lease the house for three years with the option to purchase the house at an agreed-upon price at the end of the lease term.

While you are waiting for the lease to expire, you are earning money on the movement of time (rent).

As the owner of a lease-to-own house, you will make money no matter what happens. It doesn’t matter if the value of the house increases or decreases. If the house increases in value beyond the agreed-upon price, the family got a good deal but you still got what you wanted since you set the price.

If the house goes down in value, the family will likely not buy the house at the end of the lease and you get to keep the house.

Now you can go out and lease-to-own the house again. Rinse. Repeat.

While not exactly the same (you don’t receive payments during the term of the option contract), you now have a general idea of how a stock option works:

    -You own Stock XYZ
    -You sell an Option to buy Stock XYZ after a predetermined amount of time at an agreed-upon price
    -At the expiration of the term, you receive the option premium.
    -You either sell Stock XYZ at the agreed price or you retain ownership
    -Repeat.


Cash Flow from Selling a Covered Call Option

Now let’s shift from real estate examples into actual ways we can use this cash-flow strategy to make real money with options in the markets. This is especially useful in difficult markets where buy-and-hold investors are suffering from crazy up-and-down conditions.

Let’s have Rich Dad Advisor on stocks, Andy Tanner, explain a covered call option:

As mentioned earlier, an option is a promise by someone to sell a certain stock at an agreed-upon price until a certain date. In return for this promise, he receives a premium as income. This premium is not just based on the movement of the stock price, but on the movement of time.

As a teacher, I’ve seen how hard it is for many people to grasp the ideas of time decay and cash flow in the stock market. I know it certainly took some time for the light to come on for me. So a few years ago I made a small trade just for the purpose of teaching. I chose to hold a stock for a long time regardless of the fluctuation in its value, just as many real-estate investors hold their rental property regardless of fluctuations in the price.

To show my students the similarities between stock investors selling options and real estate investors collecting rent, I bought an Exchange Traded Fund (ETF) and held it for a year. It’s not my usual practice to hold stocks that long, let alone buy anything that is heading down. But my goal was to prove that it is possible for a falling stock to generate income just as a house that is declining in value can still generate rent. This is not hypothetical. This is an actual series of very small trades I did during the subprime meltdown of 2008.

My first step was to buy 500 shares in an exchange-traded fund called the Spyder Trust (SPY), which mimics the S&P 500. This was very important because the SPY simply mimics the S&P 500. I was going to hold it for a year, come what may. After buying it, I watched it closely to see if it going up, down, or sideways.

Since I owned the shares, I was positioned to be the seller of an option instead of the option buyer.

After buying 500 shares of the SPY exchange traded fund, I then sold five, one-month call option contracts on SPY at a premium of $2.15. I promised the buyer that he could buy the Spy for $154 (which was more than I paid for the SPY) at any time before the expiration date.

The stock could now go in one of three directions:

    -If the stock went up and he wanted to buy at $154, I would have made money since I bought it at a lower price.
    -If the stock went sideways and stayed below $154, the option would expire worthless, and I would have kept my $2.15 (multiplied by 500) premium in cash flow. This is just like a house where the value remains the same. I would still be getting that rent as income.
    -If the stock went down, the option would expire worthless, and I would keep my $2.15 premium (multiplied by 500).

You can see that I have set up a scenario where no matter what happened, I would generate income from an asset I had purchased. To me, this was a very attractive way to generate my own income. I bought 500 shares and then I sold those options. That’s five one-month contracts of 100 shares, each at a premium of $2.15. When you do the math, you’ll see that I created an income of $1,075, less the brokerage fee, so I received a net $1,061.

Even though the stock was falling in value, I continued to sell options on my shares of the SPY month in and month out for a whole year. Why? Because I am not much different than a real estate investor who sees the value of his rental house decline for a season. He is receiving his rent each month and I am also receiving my income every month from options. This income flows in even as we both wait for the underlying value of the assets to bounce back. I get to keep the stock while the time decay is bringing in cash.

This shows you how to own stock assets and generate an income from them.

True cash-flow investing is when the underlying asset, whether it’s a house or a stock, can go down but cash flow stays fairly consistent.

As we said earlier, most people think that stock investing is at odds with the Rich Dad philosophy of investing for cash flow.

If they’re thinking of most people’s idea of stock investing – buy, hold, and pray – then yes. However, an educated stock investor knows how to cash flow with the stock market and knows the rewards of cash flowing the stock market.



via http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/September-2015/how-to-cash-flow-with-stocks.aspx

Monday, September 14, 2015

Robert Kiyosaki on 401K, Taxes, Terrorism, Stock Market,



Robert Kiyosaki explains why the 401K is flawed and is basically a tax on employees. Also Kiyosaki jokes that nowadays suing is the easiest way to make money and which is why he keeps protection against people abusing the legal system.


Wednesday, September 9, 2015

Tax laws favors Business Owners and not Employees | Robert Kiyosaki



Business owners speak on their experiences of Tax, Financial Education and why getting a Job may limit your opportunities.


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, September 8, 2015

Global economies collapsing



The global economy is in a collapse right now and Wall Street is manipulated. The Fed as well as U.S. Treasury keep propping it up.






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.