Monday, March 28, 2016

Robert Kiyosaki asks if you should get a MBA

Is an MBA worth it? I hear this question all the time. No doubt, for many middle managers, the idea of a piece of paper that seems to magically guarantee higher pay and movement up the corporate ladder is tempting. And all for the price of two years of your life, lost income, and $25,000 to $105,000 in tuition and fees.

The general consensus is firmly entrenched. An MBA is always worth it. Take a recent study by the Graduate Management Admission Council (GMAC), which meets “the needs of management schools and students like yours through a wide array of products, services, and programs.”

According to their new study of 14,279 graduate school business alumni, as reported by Fortune:
-    MBAs reported base salaries that totaled $1 million more over the two decades following graduation than if they had not gone to B-school.”
-    People who graduate from two-year, full-time MBA programs recoup their investment, on average, in three-and-a-half years.”
-    And ROI after five years range from 221% to 491% depending on whether you’re in a full-time or part-time program.

All in all, Fortune reported that 89% of MBA alums found their degrees “professionally rewarding.”

Well, who can argue against such overwhelming evidence?

Like any investment, you have to look past the surface information. As a real estate investor, I often get slick-looking advertisements from brokers who rely on my purchase to make a living. Never once do any of them say, “This is a bad investment! Don’t do it!” No, they all look like golden geese. But nine times out of ten, when I look beyond the surface, the numbers don’t pan out.

Here’s some below-the-surface information to consider as you think through the value of an MBA.

Follow the money

Let’s start with the sponsor of this survey, GMAC. As they say, always follow the money, and if you do, you’ll find that GMAC is firmly and economically entrenched in the world of graduate studies. Their standardized GMAT test has a monopoly on most graduate school admission requirements. And they do much more than that. Founded in 1953 by nine business schools, they’ve since blossomed into “so much more,” according to their website. In their own words, “The people, events, and innovations at GMAC over past 50-plus years have helped graduate management schools and programs worldwide flourish.”

Notice who they exist to help “flourish.” It isn’t you. With profit margins reportedly greater than that of Apple, the GMAC is “ arguably the most successful educational product of the post-war period. ” As reported by Fortune two years ago:
GMAC says it collected $87.7 million in fees in 2012, yet it cost the organization only $45.7 million to administer the test, according to documents filed with the Internal Revenue Service. The effective gross profit on the actual exam is roughly 47.9%.

Now ask yourself this: would an organization with $45.7 million in profit on the line conduct a survey that said anything other than an MBA was worth it? Again, follow the money.

Count the unspoken costs

Most people who go on to get an MBA end up working as high-paid employees or self-employed consultants—those on the left side of the CASHFLOW Quadrant. I’ve written many times in the past that those who are in the E and S quadrants pay the most in taxes.

While the study by GMAC on the surface seems to show that those who get an MBA are richer, it doesn’t take into account the hidden costs of being a high-paid employee. Because when it comes to being rich, it’s not about what you make, it’s about what you keep.

Indeed, the four wealth-stealing forces of taxes, debt, inflation, and retirement work against high-paid employees and the self-employed. As I’ve written before, “High-earning professionals are some of the highest taxed in the US, don't have any investments that provide cash flow and hedge against inflation, are overly-burdened with debt, and aren't ready for retirement—meaning they need their paychecks or they're broke.”

Consider the alternatives

Many MBA programs tout the education you receive and the network you build as worth the price of the degree. But do you really have to spend hundreds of thousands of dollars for such a privilege?

Dale Stephens, writing for The Wall Street Journal, doesn’t think so:
If you want a business education, the odds aren't with you, unfortunately, in business school. Professors are rewarded for publishing journal articles, not for being good teachers. The other students are trying to get ahead of you. The development office is already assessing you for future donations. Administrators care about the metrics that will improve your school's national ranking. None of these things actually helps you learn about business.

Stephens encourages would-be MBAs to take the money they would spend on a graduate education and to instead invest it learning the skills and building the network necessary to thrive in your chosen industry. He lists websites that have the same courses MBAs take where you can watch lectures for free, using the money you save to move to a city conducive to your chosen field, and networking on your own. By doing so, you’ll create a much more targeted education and network that will benefit you for a fraction of the cost.

Recognize the world is changing

Many people now consider that MBA to be a step behind the business world. Things are changing so rapidly that taking two years off or more to study today’s business management philosophies (and that’s all they are, not real world business skills), already puts you behind the ball.

Rather than rely on institutional education in a fast-paced, ever-changing world, spend your time continually growing and learning. The beauty of the Internet is that there is a wealth of readily-available educational resources at your fingertips at any given moment.

Stay on top of the trends as they happen and put them into practice in real life, learning from your real failures and successes rather than the case studies of others.

Decide who you want to be when you grow up

If you want to be a high-paid employee for the rest of your life, then maybe an MBA is right for you after all. If you’re going to commit to the left side of the CASHFLOW Quadrant, you might as well make as much as you can doing it.

But if you want to be a business owner or investor, the B and I on the right side of the quadrant, you’ll need much different skills than an MBA can give you. And those skills can only come from real world learning and practice, from a self-prescribed course of study, and from networking with likeminded individuals.

In short, I’d say if you want to look rich, get an MBA. If you want to be rich, skip it and double down on your financial education.

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.

Thursday, March 24, 2016

Stock Market investing - Losers VS Winners

Losers cut their winners and ride their losers

Fear of being a loser affects what people do in strange ways. I have seen people who bought a stock at $20 and then sell their shares at $30 because they were afraid of losing what they had gained. And then they watched the stock go up to $100, split, and go up to $100 again.

Ironically, that same person who bought a stock at $20 will watch it go down to $3 and still hang on, hoping the price will come back up. This is an example of a person being so afraid of losing, or admitting they lost, that they wind up losing big.

Winners cut their losers and ride their winners

Winners do things almost exactly the opposite. Often, the moment they know they took a losing position, i.e., their stock price begins to go down instead of up, they will sell and take their losses. Most are not ashamed to say they took a loss because a winner knows that losing is part of the process of winning. When they find a winner, they will ride it up as far as it can go. The moment they know the free ride is over and the price has peaked, they cut and sell.

The key to being a great investor is to be neutral to winning and losing. Then you don't have emotionally driven thoughts, such as fear and greed, doing your thinking for you.

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, March 21, 2016

You must understand the rules of the game of life to play and win

When I was a young man, my poor dad, my biological father, touted the importance of going to a good school, getting a good, high-paying job, and investing in a “diverse” portfolio of stocks, bonds, and mutual funds.

According to a recent report by The Guardian :
- Prosperity has plummeted for young adults in the rich world.
- In the US, under-30s are now poorer than retired people.
- In the UK, pensioner disposable income has grown prodigiously – three times as fast as the income of young people.
- Millennials have suffered real terms losses in wages in the US, Italy, France, Spain, Germany and Canada and in some countries this was underway even before the 2008 financial crisis.

What we are seeing is a generation of middle-class children, now young adults, raised on conventional middle-class financial advice being completely left behind when it comes to their financial future.

The left behind generation?

Make no mistake about it; this is one of the most urgent financial challenges of our time. Today’s millennials are faced with a tale of two economies: will they accept the narrative that the rich have decimated their financial prospects, or will they wise up to the how money really works and educate themselves financially to thrive in a world where the conventional advice about money doesn’t work?

On a grand scale, we are seeing this play out in the US elections. Those who accept the narrative about the rich ruining the financial prospects of the millennials are flocking to a candidate like Bernie Sanders, an admitted socialist, propelling him into prominence and possible a presidential nominee role. They are sick and tired of being poor and are looking to “take back” their country from the rich by replacing the capitalist democracy the US was built on with a socialist democracy.

On the other hand, there are many young people who don’t want socialism. They want a new way of opening opportunity within the capitalist system that gives them a fair playing ground against the corporations that have gotten into bed with the US government. These young people are flocking to the rallies of Donald Trump.

The difference between financial winners and losers

I don’t have a crystal ball, and I don’t pretend to know if betting on any presidential candidate or form of government will actually change the default future of these millennials.

One thing I do know, however, is that the surest way to prosper is the same as it has always been: to understand the rules of the game of money, and to play by them as best as you can.

Today, millennials are increasingly losers at the game of money and investing. The question is, how can they become winners?

A truth that will never change is that there are always winners and losers in life and in business. But have you ever stopped to wonder what the difference is between the two? Is it just sheer luck, or is there something else at work?

In my experience, there is a distinct quality that winners have that losers don't—a certain way of looking at the world. That is not to say that winners don't lose. Everyone does. But the difference between losers and winners is often the way in which they approach losing. It starts with mindset.

Are you a giant or a worm? There is a statement that I've always liked:
Giants often trip and fall, 
But worms don't, because 
All they do is dig and crawl.

The main reason so many people struggle financially isn't because they aren't smart or hardworking. It's because they are afraid of losing. Rather than take a risk to become a giant, and experience the falls that come with the process, they instead choose to stay low to the ground where it's safe and there's no risk of falling. They've already lost because the fear of losing stops them.

Financial education gives confidence

In my experience, anyone who is a winner financially has a great financial education. They have learned from books, seminars, and coaching. Most importantly is they applied their knowledge and learned from the mistakes they've made. Each loss is an opportunity to learn how to gain later on.

To be clear, I don’t think that millennials are losers. They are, however, at a severe disadvantage because they don’t fundamentally know who money and investing works in the real world. The good news is they can rise up and win—if they apply themselves to financial education.

If you want to be a winner, you must be able to put emotion aside and you must always be learning about money and how it works. It never stops, but it does get better. With each lesson learned, your confidence grows and your losses don't sting as much. In fact, sometimes they become welcome and the money lost is worth the lessons learned.

So, if you want to be a winner, invest in yourself with financial education and, most importantly, apply that knowledge.

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.

Thursday, March 17, 2016

The wealthy make more money by paying lesser taxes and its legal

The rich pay very little in income taxes because they don't earn their money as employees do. They know that the best way to legally avoid taxes is by generating passive income out of the right side of the CASHFLOW Quadrant-the business (B) and investing (I) side.

If you earn your income on the left side of the quadrant, the only tax break you have is to buy a bigger house and go into greater debt. But the rich have scores of tax breaks offered to them by the government to encourage investing and business development-which generates more jobs. The rich can make millions of dollars and pay virtually nothing in taxes.

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, March 16, 2016

Success in small business does not necessarily lead to other successes

Just because you’re successful building a small business doesn’t mean you’ll be successful building a big business.

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, March 14, 2016

Housing market is picking up again but not a bubble

About six years ago, I wrote (" Repeat After Me: Your House Is Not An Asset") on an article from The New York Times on real estate entitled, "Real Estate's Gold Rush Seems Gone For Good."

Some interesting statistics and predictions from the article included:
    -It could take up to 20 years to recoup the $6 trillion loss in housing values since 2005
    -Housing values had dropped over 30 percent since the bubble popped around 2008
    -Sales figures for the month proceeding the article, July, were expected to show a drop of 20 percent over last year
    -The supply of housing was predicted to rise 12 months—more than twice what's considered normal and healthy
    -Despite all that dire news, when surveyed, people felt that housing was going rise by as much as 10 percent a year over the next decade

That last statistic was frightening to me. Financial ignorance was so high in our country that they still believed that a house was an asset and a sure way to build wealth.

As many found out, the housing market didn’t rise 10 percent per year. It continued to drop for a couple more years after that. Many people were financially ruined.
Repeating history

I’ve written many times before that economies are cyclical…and that people have short memories.

Today, the housing market is picking up. In my home town of Phoenix, Arizona—one of the worst hit housing markets during the Great Recession— home sales are predicted to rise 20 percent in 2016, and home values are expected to grow by 9.5%. People are starting to get housing fever again.

Nationally, things are looking stable again for the housing market. Prices are rising and so is demand. Nothing is crazy—yet.

With any luck, we won’t see another housing bubble like the one we experienced just a few short years ago, but that entirely depends on whether people have learned their lessons.

Traditionally, when housing prices rise, so do home equity loans. People use their house as an ATM, assuming it is an asset that will always rise in value. And they quickly forget that’s not true.

As CoreLogic reports , “…Home equity lending has been increasing steadily in the past couple of years, with HELOC originations doubling from about a $50 billion 12-month cumulative amount right after the recession, to more than $100 billion in the first half of this year. But keep in mind, overall all volumes are still significantly lower than the peak years of 2002-through-2006 when home equity originations were running at $400 billion-plus per year.”

So perhaps, before things get really bad, it’s time to remember, yet again, that your house is not an asset.
Your house is a liability

I'll repeat here: Your house is not an asset. It's a liability. Very simply, an asset is something that puts money in your pocket. A liability is something that takes money out of your pocket.

The common misconception is that a strong housing market generates wealth for the middle class. In reality it doesn’t. It generates debt. People don’t sell their homes to pay for things like college educations and vacations; they borrow against them, growing a liability by taking on more and more bad debt.
How a house can be an asset

As I mentioned earlier, an asset is something that puts money in your pocket.

To me it only matters if a little property appreciates in price. I care only whether it provides cash flow every month. It's the only sure way to build wealth and assure a secure retirement in terms of real estate investing—and it’s the only true way to appreciate real estate as an investment.

The key is to make your money on the buy, not the sell. What I mean by that is that by doing proper due diligence you can find deals that will provide substantial cash flow for years to come. By doing so you don't have to worry about the price of your asset. If it goes up, that's a bonus. If it doesn't, you still have a great property that puts money in your pocket every month.

Your house is not an asset. But a house can be an asset—if it cash flows.

Wednesday, March 9, 2016

Business owners need team players to do the work | VIDEO

In school cooperation at Test Time is called 'cheating'. In the real world the guys that have the biggest teams win. So all I focus on is putting a good team together.

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, March 7, 2016

Improving on existing ideas can be a quick way to achieve financial success

When I am asked what my first successful investment was, I simply reply, "My comic book business."

As a young man, I worked in my rich dad's convenience store. I didn't like the work, but I did get free comic books out of it, so that was a plus. Rich dad's son, Mike, also worked with me. We noticed that when the comic book distributor came with a new batch of comics, the store manager would cut the covers in half and give them to the distributor for credit.

Mike and I got the bright idea to ask if we could have the old comics. Because we worked at the store, he said yes-as long as we didn't sell them.

Keeping true to our word, Mike and I started a comic book library in his basement. We charged other kids $0.10 a day to come read as many comic books as they wanted.

Eventually, we were making $9.40 a week, which was a lot more than the $0.30 we were making at the store.

In other words, I took comic books that were going to be thrown away and created an asset around them. Starbucks did the same thing with a cup of coffee.

The power of a better idea

Ideas don't have to be new and unique in order to make you a lot of money. They just have to be better.

Now, there is a fine line between making an idea better and simply stealing an idea. There are many individuals who spend their lives stealing other people's ideas rather than creating their own. The price they pay is at the least the respect others lose in them, and at times huge lawsuits.

The fine line between copying and stealing

As my rich dad often said, "There is a fine line between copying and stealing." Many of the most financially successful people are not necessarily people who have created ideas. Rather, they copied ideas and make them better by applying good business systems to them to make millions.

Fashion designers watch young kids to see what new fashions they are wearing, and then they simply mass-produce those fashions.

Bill Gates didn't invent the operating system that made him the richest man in the world. He simply bought the system from computer programmers who did invent it and then licensed their product to IBM. The rest is history. took Sam Walton's idea for Walmart and put it on the Internet. Jeff Bezos became rich much more quickly than Sam Walton did.

What's your better idea?

In other words, who says you need to have creative ideas to be rich? The only creativity you need is to take good ideas, fit them into solid and tested business systems and processes, and make them into great businesses.

This week, take some time to look around. What ideas are out there that you can improve on? The next big idea for your business might be right there under your nose.

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.