Rich Dad, Poor Dad thread

[spesmilitis]

Do you understand how performance driven teams work?

Are we even on the same page???

These are the types of organizations I am talking about
http://www.sec.gov/answers/ponzi.htm
http://www.sec.gov/answers/pyramid.htm

 

[STR8UP]

Hmmm....where to begin.....

In short, the guy pushes Real Estate investing as the holy grail.

In short it is. Business has a higher potential rate of return, and the stock market has its advantages, but all in all real estate provides the safest, highest rate of return with the least amount of headaches.

However, if you would have read his materials you would know that one of the biggest themes is NOT that you should invest invest INVEST in real estate, but that you should understand what each asset class is (stocks, real estate, business) and that possibly more importantly that you should understand the difference between being an employee, being self employed, being a business owner, and being an investor. He tags it as the cashflow quadrant and it's not rocket science, but most people have never taken the time to distinguish between them all.

I only know of him mainly through many trusted people I know to be very financially adept. However I have seen him on PBS and I listened to the entire segment.

Let me guess. Those "financially adept" people are probably lawyers, accountants, and **gasp** financial planners?

Do any of them have self made wealth at a young age? Or are they simply high income earners, or people with a title behind their name?

Are any of them business owners? Do they have a decent amount of experience with real estate?

Ask yourself all of these questions before you claim that they are "financially adept" and/or qualified to review one of the best selling books of all time.

For someone who knows what they're doing, a lot of money can be made in real estate. However, his methods generally include using lots of leverage which can burn you really fast.

You really should read his stuff because he advocates investing for cash flow, not appreciation. If you have cash flow it doesn't matter how much debt you have on the investment. It is GOOD debt.

I've been in real estate and business for over a decade and I can tell you with 100% certainty that there in no safer investment in the entire world that can provide you with a fat return than real estate that throws off positive cash flow.

So, in short, I try to dissuade beginning investors from reading books like Kiyosaki's. I'd much rather then read a general financial management book and learn some basic techniques, such as debt management, budgeting strategies, safer passive investment strategies, etc.

1) That's a very narrow view of investing. Fact is, the wealthiest people in the world have made their fortunes by combining investments in all of the asset classes. Start a business. Use it to buy commercial real estate. Sell stock to investors to expand your operation. Repeat.

2) Basic techniques are what average investors use. If you don't have something else up your sleeve you will be plugging away at it for a long time....

>But a great many things at that website have been repeated/confirmed at many other places. That site and info on him is so exhausive, I wont try to repeat it here.

I could care less about that site and any of the information on it. If I remember correctly 75% of what Reed used to try to discredit Kiyosaki was on whether or not the fact that "Rich Dad" ever exisited. What a bunch of baloney. Doesn't he have anything better to do?

I read some awhile back and it was pretty entertaining to see the lengths Reed went to to try to discredit his competition. Like I said, could you trust K-mart to give Target a fair report card?

>I cannot/should not list my net worth, so you are just going to have to imagine "better than most" (at my age). In Kiyosaki's opinion, I would be a "middle class" guy (because I use stocks, bonds, and mutual funds).

Ahhh....so now we are getting somewhere. You ARE The Millionaire Next Door (or eventually will be).

Not that there is anything wrong with that, but you are taking the slow road. I want to make my money before I get too old to enjoy it.

My main silver bullet is that I find ways to do everything very cheaply and I manage to save over 30% of my income, but I live a rich life anyway.

Bingo.

You are a high income saver. Like I said, nothing wrong with that, but anyone with disciple can pinch pennies and stash them away in safe, low/average return investments.

The only, and I repeat ONLY problem I have with your POV is that you discount and discredit other ways to build wealth that you know nothing about.

What you are doing isn't wrong, it just isn't the fastest and most efficient way. And by slamming Kiyosaki (especially when you haven't read his materials and have no experience in what he talks about) you are cheating others who might have a different personality when it comes to money out of a valuable education.

Real Estate (investing) is not an investment, it is a job (with the exception of something like an REIT mutual fund).

And you have owned how many pieces of property?

Fact- there are many ways to invest in real estate, and owning rental property is only one of them. And even rental properties can be turned over to management companies which makes them a pretty passive investment.

My kind of investing is "set it and forget about it". No tenants, no work involved, no leveraged monies to worry about.

High rates of return don't generally come from reading a magazine about mutual funds and clicking your mouse to make a purchase.

If you are content to pinch pennies and work until you are old, go for it. Personally I am not content with that plan for my life, so I choose to make learning about and practicing business and real estate my life passion.

I'll bet you go to work every day, no? So if you have a passion for building wealth, why would you want "easy" investments? Doesn't make sense to me, but like I said, this isn't a right or wrong thing, just a matter of how long you are willing to take and how much you are willing to sacrifice for it.

 

[Francisco d'Anconia]

Huh? No I'm saying just the opposite. We're at the peak of the market right now. The secret to getting rich is buying low and selling high. Anyone buying real estate now is not only buying high, but buying VERY high. Prices are just now starting to fall and will continue falling for likely several years as it now looks like we're entering the start of a recession.

Where in the States are real estate values high? From what I've seen values have been dropping from average homes being on the market for at least 9 months to a year. Add to that a glut of foreclosures and the market is saturated driving costs even lower. This has been going on for at least the past year.

 

[Francisco d'Anconia]

Are we even on the same page???

That's what I'm asking you.

These are the types of organizations I am talking about
http://www.sec.gov/answers/ponzi.htm
http://www.sec.gov/answers/pyramid.htm

Capitalism, Democracy and organized religion can also be demonized if exploited. That's why I asked if you understood performance driven teams which is the same concept and is completely legitimate.

 

[Francisco d'Anconia]

...However, if you would have read his materials you would know that one of the biggest themes is NOT that you should invest invest INVEST in real estate, but that you should understand what each asset class is (stocks, real estate, business) and that possibly more importantly that you should understand the difference between being an employee, being self employed, being a business owner, and being an investor. He tags it as the cashflow quadrant and it's not rocket science, but most people have never taken the time to distinguish between them all...

Real good post STR8UP. I'll just add that that the difference between being an employee, being self employed, and being a business owner (basically shifting from an earned income to a passive income is the cornerstone of his teachings, not real estate which many people mistakenly believe.

 

[spesmilitis]

That's what I'm asking you.

Capitalism, Democracy and organized religion can also be demonized if exploited. That's why I asked if you understood performance driven teams which is the same concept and is completely legitimate.

Apparently we are not on the same page. We are talking about two completely different business models. You are probably talking about cohesive teams and organizations, where the reward goes towards the diligence of one subordinates. I'm talking about organizations and teams who reward people based on recruiting strangers, and getting rewarded for people several notches down the ladder from you. If you actually read any of the link I posted you would have figured this out already.

Or, you are talking about the same business model I am talking about. In that case you are either a crook or an idiot.

 

[WORKEROUTER]

Huh? No I'm saying just the opposite. We're at the peak of the market right now. The secret to getting rich is buying low and selling high. Anyone buying real estate now is not only buying high, but buying VERY high. Prices are just now starting to fall and will continue falling for likely several years as it now looks like we're entering the start of a recession.

Foreclosures are on the rise. Business for what I'm trying to get into seems better than ever. BTW, I don't plan on buying any property.

 

[azanon]

In short it is. Business has a higher potential rate of return, and the stock market has its advantages, but all in all real estate provides the safest, highest rate of return with the least amount of headaches.

You should expect a higher rate of return from a job than an investment. If you're into real estate in any other manner besides passively buying a property then doing nothing, then you have yourself a job there. Jobs=work. Simple investing = minimal/no work. Thus, you're really comparing apples and oranges to compare real estate "investing" to other passive (read=no work) investments.

However, if you would have read his materials you would know that one of the biggest themes is NOT that you should invest invest INVEST in real estate, but that you should understand what each asset class is (stocks, real estate, business) and that possibly more importantly that you should understand the difference between being an employee, being self employed, being a business owner, and being an investor. He tags it as the cashflow quadrant and it's not rocket science, but most people have never taken the time to distinguish between them all.

This is baby stuff. I'm not most people, especially when it comes to investing. Only a serious beginner cannot distinguish these things.

Let me guess. Those "financially adept" people are probably lawyers, accountants, and **gasp** financial planners?

those are professions that make a lot of money, so.... yeah, you have the idea.

Do any of them have self made wealth at a young age? Or are they simply high income earners, or people with a title behind their name?

No, and neither did Kiyosaki until he started selling books about how he got rich. (Kiyosaki figured that by the time the book sold enough copies, it wouldn't be a lie. He gambled right).

Are any of them business owners? Do they have a decent amount of experience with real estate?

Most millionaires are business owners, so yes. I can't say I recall any of them that said they did it in the real estate market.

Ask yourself all of these questions before you claim that they are "financially adept" and/or qualified to review one of the best selling books of all time.

Logical fallacy: Appeal to Popularity.

You really should read his stuff because he advocates investing for cash flow, not appreciation. If you have cash flow it doesn't matter how much debt you have on the investment. It is GOOD debt.

Incorrect. I know for sure Dave Ramsey would laugh at that as would many other investment professionals. Playing with significant debt on multiple properties is asking for it. (it=bankruptcy).

I've been in real estate and business for over a decade and I can tell you with 100% certainty that there in no safer investment in the entire world that can provide you with a fat return than real estate that throws off positive cash flow.

.... during one of the best periods for real estate in history. The equilivent to claiming being an expert stock picker in the 90s. Give it time, cause the real estate market is just about to go the other direction. In some areas, it already has

That's a very narrow view of investing. Fact is, the wealthiest people in the world have made their fortunes by combining investments in all of the asset classes. Start a business. Use it to buy commercial real estate. Sell stock to investors to expand your operation. Repeat.

FAR more businesses fail every day than succeed. This is common knowledge. You're encouraging these fellows to try to beat the odds too, so statistically you would have the average person here fail.

2) Basic techniques are what average investors use. If you don't have something else up your sleeve you will be plugging away at it for a long time....

I like my job, as far as jobs go. What's the rush?

Ahhh....so now we are getting somewhere. You ARE The Millionaire Next Door (or eventually will be).

You said that like its something I should feel bad about. Are you serious?

Not that there is anything wrong with that, but you are taking the slow road. I want to make my money before I get too old to enjoy it.

Spoken by someone who's momma never read him the story of the tortoise and the hare. Here's an image for you; your running, huffing and puffing... imagine me leisurely smelling some flower with a smile.

You are a high income saver. Like I said, nothing wrong with that, but anyone with disciple can pinch pennies and stash them away in safe, low/average return investments.

You say that.... "anyone can", yet out of the large pool of people I know... maybe one is doing the same thing. The rest are one paycheck away from doom. You're one bad real estate market away from doom.

The only, and I repeat ONLY problem I have with your POV is that you discount and discredit other ways to build wealth that you know nothing about.

I discredit Kiyosaki, like so many have before me. I follow real experts like Bernstein, Bogle, Buffett, Scott Burns.

What you are doing isn't wrong, it just isn't the fastest and most efficient way.

Tortoise and Hare. Read it.

And by slamming Kiyosaki (especially when you haven't read his materials and have no experience in what he talks about) you are cheating others who might have a different personality when it comes to money out of a valuable education.

My post is so that third parties can hopefully learn this lesson the easy way. Its clear you will likely have to learn it the hard way (statistically). I wish you the best if, for no other reason, because someone who dabbles in risky strategies could use a good wish.

And you have owned how many pieces of property?

One; my personal residence.

High rates of return don't generally come from reading a magazine about mutual funds and clicking your mouse to make a purchase.

Question; which has a higher historical rate of return; stocks or real estate. I'll give you a hint.... it isn't the second thing i listed.

If you are content to pinch pennies and work until you are old, go for it. Personally I am not content with that plan for my life, so I choose to make learning about and practicing business and real estate my life passion.

70% of 120K/year is hardly pinching pennis in AR, especially when you're efficient with money. And I'm just 35 (meaning that income hasn't stagnated yet).

I'll bet you go to work every day, no?

Heck no! Try ~ 35 hours a week. I kid you not. How do you think I post so much, at all times of the day! Kiyosaki would have you do nothing BUT work. Of course you should make a lot if you bust your ass 80 hrs a day working, excuse me, "investing" in real estate! I like working the least amount possible (despite "liking" my job - I prefer not working period!, which I will someday do in my 50s, max).

 

[Francisco d'Anconia]

Apparently we are not on the same page. We are talking about two completely different business models. You are probably talking about cohesive teams and organizations, where the reward goes towards the diligence of one subordinates.

No, we're talking about the same thing but you're not familiar with the concept in the corporate world. It has nothing to do with diligence, it's based on sales performance.

 

[azanon]

Geez, i just scrolled up and realize just how huge that response of mine was. Ok, i said my peace on Kiyosaki.

If str8up/others make it big in real estate, man more power to you all. Just be careful because all i hear about all the time on the news is the hundreds, no thousands, of foreclosures all across the US. Again, Dave Ramsey launched his big shin-dig over telling his past horror story from his past Real Estate life, filling bankruptcy, and that guy is VERY knowledgeable about it. So if you think you can beat Dave at it, more power to you!

 

[Luthor Rex]

oh nevermind, what I said hss been covered

 

[spesmilitis]

No, we're talking about the same thing but you're not familiar with the concept in the corporate world. It has nothing to do with diligence, it's based on sales performance.

Yes, I meant sales performance, good job on your correction Francisco.

Say whatever you want about my knowledge of the corporate world, but I'm pretty sure the FTC has a very good understanding. Since you're obviously too lazy to read the any of links I posted, here is the quote directly from the FTC website:

"If a plan offers to pay commissions for recruiting new distributors, watch out! Most states outlaw this practice, which is known as "pyramiding." State laws against pyramiding say that a multilevel marketing plan should only pay commissions for retail sales of goods or services, not for recruiting new distributors."

Source: http://www.ftc.gov/bcp/conline/pubs/invest/mlm.shtm

 

[GQ_Confidence_1]

I agree I read RDPD and i thought it was pretty motivated. After i read it i wanted to start right away but the book didnt leave me any foundation to start. It just made me not wanna work a 9 to 5 job. its a good motivational tool but not worth the money.

Rich Dad lives in a world where there's no angry tenents, no bad neighbors, interest rates never go up...etc.

Not saying you can't make it in real estate. Certainly you can.

But wealth creation doesn't come by applying a magic formula. Presto.."invest in X" and you'll retire wealthy and you'll ride off into the sunset.

I would be very, very, VERY leery of anyone with a "system". Anyone that has a "university" with students trying to teach secrets. Any kind of classroom setting.

Logically, it's going to be hard to make money in a competitive business by doing what everyone else is doing. What's good for the teacher isn't always good for the student. It'd be like getting on a crowded highway in bumper to bumper traffic and expecting to go somewhere. You've got to have some kind of advantage.

 

[spesmilitis]

Nothing can guarantee wealth. But the more educated you are, the more likely you are to make good decisions.

Anyone catch 'The Fast Money MBA Challenge' on CNBC? Its about students from the top MBA schools competing about their business knowledge. I was impressed.
http://youtube.com/watch?v=badLkyA8x6o
These guys know a lot of detail about the current events and histories of businesses. By learning from the mistakes and successes of others, they can make better decisions.

There is so much to learn ( psychology, economics, history, statistics, science). Don't waste time reading a book just to be 'motivated'. There are much more productive uses of your time.

 

[Francisco d'Anconia]

Yes, I meant sales performance, good job on your correction Francisco.

Say whatever you want about my knowledge of the corporate world, but I'm pretty sure the FTC has a very good understanding. Since you're obviously too lazy to read the any of links I posted, here is the quote directly from the FTC website:

"If a plan offers to pay commissions for recruiting new distributors, watch out! Most states outlaw this practice, which is known as "pyramiding." State laws against pyramiding say that a multilevel marketing plan should only pay commissions for retail sales of goods or services, not for recruiting new distributors."

Source: http://www.ftc.gov/bcp/conline/pubs/invest/mlm.shtm

I read the links but what you failed to take into account was the fact that any system can be demonized if exploited. I can easily denounce your very source for a myriad of ways which it has exploited the common man by fear too. It's not the systems that are corrupt, it's the people who misuse the systems and the uninformed people who don't understand how the system should work.

 

[STR8UP]

If str8up/others make it big in real estate, man more power to you all. Just be careful because all i hear about all the time on the news is the hundreds, no thousands, of foreclosures all across the US. Again, Dave Ramsey launched his big shin-dig over telling his past horror story from his past Real Estate life, filling bankruptcy, and that guy is VERY knowledgeable about it. So if you think you can beat Dave at it, more power to you!

Although I would love to, I don't have time to give a point by point reply to your entire post. But let me address a couple of things.

First of all, if I go bankrupt in real estate or business, SO WHAT?

Is it the end of the world?

No. I get back up, brush myself off, and either try again or try something else.

Just ask your buddy Dave Ramsey, the guy who is now probably making millions based upon his EXPERIENCE. I will touch more on this later.

Maybe real estate was not for him. Maybe he got in over his head and a couple of bad turns made the difference between his failure and his success. I don't know. And I don't care. The only thing that matters is that he got back on the horse and now he's on top.

What I don't like about the guy is that his "system" is based upon his experience, but he has parlayed it into something that is worse than Kiyosaki has ever done- he had demonized leverage and real estate to sell his own sh!t, when the fact is, most of the people who become very rich do so through the proper use of such.

He and Suze Orman have basically become the middle class money superheroes. Why? Because their material doesn't fly in the face of convention. It is easily digestible by the masses. It sells. And people who follow their teachings are better off than the person with BELOW average money IQ, but it's the long, slow, and often painful way to get ahead.

The tortise and the hare, huh? Great little fable to teach patience, but I wouldn't want to apply it to every aspect of my life ESPECIALLY money.

Now, about what I mentioned before- EXPERIENCE.

I believe Henry Ford was once asked how he would feel or what he would do if if lost everything he had worked for. And he replied that it would be no big deal. He knew what to do to make it all over again in a very short period of time.

I have no college degree which makes me unemployable in most high income professions. But if I were to lose everything, or choose to take a step back, people would pay TOP DOLLAR for my EPERIENCE and knowledge. I could consult businesses on any number of things.

Over the years I have picked up so much useful knowledge I will NEVER EVER fail. I might be temporarily set back, but i will get up and keep going.

So your Dave Ramsey example holds no water. He sells a mediocre product and plays on your fear to sell it. If was honest and told you that his real estate failure had actually HELPED him get to where he is at today, he wouldn't sell too many products, now would he? Think about it.

And one last thing. Everyone is so quick to point to the business failure rate statistics as if one business failure would spell doom for the person who dares try.

Listen close- you NEVER fail until you quit trying. You take your lessons, swallow them no matter how bitter they may be, and you MOVE FORWARD.

Do I encourage the average person to beat the odds? Absolutely. It probably won't happen the first time around. Maybe not even the second or third. but if you STICK WITH IT it will pay off handsomely.

Put it this way. I started buying real estate and fixing it up with my own two hands. Then I started a business at a flea market. Then I moved to a retail location. Then I put together an off site sale which failed miserably (I felt like it was the end of the world losing $20k) That lead me to open a much larger retail location. It did well in the beginning but I got complacent and made some bad decisions on that one, which led me to have to COMPLETELY revamp my concept. New name, logo, slogan, remodeled the store, created an infomercial that is basically a television show to promote it complete with multiple characters.

Now I know how to do my own graphic design work that is better than anything I ever paid anyone hundreds of dollars an hour to do. I bought video production equipment and I am learning to shoot and edit. I create ad copy. I write my own comedy material for the infomercial skits that promotes the store.

I now know how to create logo's and slogans. I designed one of the most incredible retail stores you will ever see, from the theme to the displays to the colors and designs on the wall.

I could keep going but you should be able to get the point.

If I fail tomorrow, I smile and say, "what can I do better next time?"

What would you do? What would you suggest someone else do if they fail? Crawl under a rock?

I doubt you would give that advice, which shows me that you haven't put too much thought into the concept of risk and failure. And that's probably a big reason why you are giving bad advice on something you don't know about.

 

[spesmilitis]

I read the links but what you failed to take into account was the fact that any system can be demonized if exploited. I can easily denounce your very source for a myriad of ways which it has exploited the common man by fear too. It's not the systems that are corrupt, it's the people who misuse the systems and the uninformed people who don't understand how the system should work.

If you want to denounce my source, you should be more worried about the opinions of judges rather than of opinions of sosuave posters. The law doesn't change just because you 'denounce' it.

Show me a pyramid system that is not corrupt.

 

[Francisco d'Anconia]

If you want to denounce my source, you should be more worried about the opinions of judges rather than of opinions of sosuave posters. The law doesn't change just because you 'denounce' it.

Show me a pyramid system that is not corrupt.

You keep bringing up the bastardization of systems used daily by pharmaceutical companies to market brokers working on commission. You keep referencing penny anti thieves who take advantage of the naive. That's the reason for the laws, to protect the uninformed.

 

[Francisco d'Anconia]

...Listen close- you NEVER fail until you quit trying. You take your lessons, swallow them no matter how bitter they may be, and you MOVE FORWARD.

For most it's easier and more manageable not to try.

 

[spesmilitis]

You keep bringing up the bastardization of systems used daily by pharmaceutical companies to market brokers working on commission. You keep referencing penny anti thieves who take advantage of the naive. That's the reason for the laws, to protect the uninformed.

I did not know pharmaceutical companies are behind some of the illegal MLM's. I'm curious, which pharmaceutical company are you talking about and how do you know they are using the pyramid schemes? It would seem that the doctors and drug stores would sell all the product they need to sell.


If its only 'penny anti thieves' (did you make this word up?) who exploit the system, then how come the whole system is illegal? If MLM's are so great, simply show a legit MLM company. You give the impression you've seen it work in the corporate world, surely you can name at least one organization.