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Well here are short power notes. There not pretty or nice, but there here!
ROBERT KIYOSAKI - LIVE IN NEW YORK CITY
===================
- Rich Dad, Poor Dad Book
About accounting:
Income
Expenses
Assets
Liabilities
Being able to read a accounting statement
Most important word in Biz/Investing - CASHFLOW
Asset put money into income
Liabilities take money into expense
===================
- CF Quadrant Book
E = Employee (B students->Gov)
S = Self Employed / Small Biz (A students->Lawyer/Doctor)
B = Biz Owner (C Students-> A students work for the C students)
I = Investor
Can tell who they are by their words:
E = I want a safe and secure Job (with Benefits)
S = No one can do it better
B = I need a great team (Best CEO, Best CFO, etc)
I = What is my ROI
RK knows he is an Investor because the CF flows from assets into income.
Problem with a 401K is that money flows out but not in, so people are 'investing' but are not Investors.
Values:
E = Value security
S = Value Independence
B = Value Teamwork
I = Value money working for them
Rules / Laws are different for each quadrant
Rich co-operate/"cheat" with advisors
Poor don't "cheat" (or co-operate with advisors).
===================
- Prophecy Book
DB Plan:
> Defined by the benefits you get
> Payed by employer
> Included/s Medical care
> Dependant on Company and/or Government
DC Plan:
> Defined by your (& Employers) contribution
> The money can and will run out
> No Medical benefits
> Dependant on Stock Market
Fin. planners say don't worry because peoples expenses fall when they get older, But their medical costs go up.
IRS wants their tax dollars back so mandated to withdraw when people hit 70.
===================
Fin. intelligence is based on:
How long money works for you
How hard money works for you
& How many generations can it last
But most people don't have fin. intelligence so all they can do is work harder.
A banker doesn't care about grades or degrees but wants to know how smart one is with money
& if you are smart with your money your banker will give you more money.
(Fin. intelligence)
===================
WW2 Generation didn't have credit cards, and that has decimated the savings of the middle class.
Middle class have a huge amount of debt - credit card, mortgages, car loans, school loans, medical loans, etc
Year - Workers - Retires
1965 - 11(+DB+DBMedical):1
2000 - 3:1
2025 - 2:1
To pay for 2:1 they will have to raise (social security and/or other) taxes by 25%.
===================
People turning money over to fund manager creates no learning experience.
To become a good investor you have to start investing and get learnings.
===================
Demography is Destiny
You can predict the future by looking at the demographics.
Baby boomer generation is the pig in the Python.
83M baby boomers which caused the boom in housing prices, consumer goods, credit cards.
1980 stock market started to rise because Baby boomers had to invest in 401K/IRA by law
(based on the 1974 ERISA law).
In 2016 by law they will start to withdraw money from their 401k/IRA and exit the market.
Stock boom will last until 2016, until it will crash.
--
The 3 Directions of the Stock Market
-Bull
-Bear
-Channel (/sideways)
Bull go up the stair
Bear go out the window
It's Part of the economic cycle (just like a weather cycle).
401k does well in a bull market
But it does horrible in a bear market
So when the crash came in 2001 in just two years 35% was wiped off
And it took close to 20 yrs to accumulate
401k handcuffs you & You get penalized if you try and pull your money out
When Enron crashed one employee went from $2.2M in his 401K to $6,500.
Thats how fast & hard the wipe out is.
He wrote into a financial magazine and they recommended he invests for the long term.
He is out of Time.
And they say invest for the long term and don't worry because on Average markets go up.
But a sideways market can last for 10-25 years
In the stock market crash of 1920's it took 25 years for the stock market to return to zero again
(Channel market)
Boom, Crash, Sideways
^
^ /
/ |____________________/
2001 4yrs 2007
Crash Sideways Boom
===================
After the crash people then go and buy bonds that average 2%
It is as crazy as buying high tech stocks at the top
75 yrs = Depression and two recessions.
WW2 generation went through their rescission early, Baby boomers will go through the depression late in life.
Last depression was 72 yrs ago.
'Average' investor / Financial Planner - on Average the stock market goes up
Rich investor - yes but Averages are for Average people/investors
The average investor lost 35% over the last two years.
You do not want to be average!
Be careful who take you financial advice from.
===================
People expect the Government to take care of them or their fund manager or their company.
And their is too much of an entitlement "take care of me" mentality.
===================
Professional Investors Vs Average Investors
--
1. Know that markets go up & down
> Don't take a position (up or down). Pros don't care, Average investors need to be 'right'
> Need 3 strategies for up/down/channel market.
--
2. Banker
> Banker won't lend at all on 401K - too risky but people are betting their financial future on them!
> Bank won't lend on Mutual Fund
> Middle class believe in saving and paying off debt
> Rich believe in borrowing.
> Borrowing $8M it takes 2 weeks, how long to save $8M?
> Because it's good debt because it puts $50K cashflow into pocket
> Plus tax break
--
3. Insurance
> 401K has no insurance
> RE Insurance
> When stock is @ $50 they will put a trailing stop or a put (or call) option
> Hedge
> Driving a car requires insurance
> 401K protection strategy is to diversify. RK/Professional investors calls deworseify, spread your risk so thin you make no money.
Professional Investors take insurance, Average investors deworseify.
> Warren Buffet says "Diversification is protection against ignorance"
> Buy, Hold & Pray
> Non Recourse Loan/Note (so if property fail bank can't come after Pro investor)
--
4. Money back Guarantee
> "Will the market go up?" Yes! "Will you guarantee it?"
> Asians/Mexicans will save the US stock market because they will invest in it! "Will you guarantee it?"
> If you need to detect B.S. simply ask them if they will give a money backed guarantee.
> Consumer goods come with a guarantee; Department stores give money back guarantees.
> Bank manager gets a money back guarantee, using a LTV ratio and then can sell the property via foreclosure.
> 401K has no money back guarantee.
===================
Investing takes no physical time but mental time.
Made wealth on not what I buy but who I have become.
To be a good investor you have to start being a bad investor.
Our God made us learn by making mistakes, our school system teaches us not to make mistakes.
And if you don't make mistakes you don't be come good.
===================
Get rich in your spare time
Dorm Rooms (Dell/Google) / Garage (Ford/HP)
What they did after work, not while in work
===================
Financial Education is what can save us.
If school made you rich, teachers would be millionaires.
School can barley teach students to read & write, much less give financial education.
Gov/School/Edu. didn't pick up on credit cards, much less on 401Ks.
1. Academic Edu
2. Professional Edu (jobs)
3. Financial Edu
4 Steps of Fin. Education of CF Game: Rate Race - Small->Big Deals - Fast Track - CF202(options)
1. Rat Race - Stock pickers & Mutual Fund buyers
2. Small/Big Deals - Houses/Multifamily, Small biz/Big biz
3. Fast Track - SEC "Accredited investor" (1933 law)
4. Cashflow202 - Options, Day Trading
===================
50% of women over 50 years of age are single.
50% of Marriages end in Divorce.
Women usually take the Kids.
Women's standard of living drop by 74% the year they divorce.
Of the Elderly who live in poverty 75% are women.
===================
Goal = $100K passive income (total expenses $3K per month) took 9 yrs / $1M took 5yrs
Plan = Build business and invest in Real Estate
Product = Biz/RE
Skills = Team (Nobody can do everything)
RK Started in 1985 took 9 years to get to $100K and took 5 years to get to $1M.
Low income housing costs $385K, minimum wage is $5, so differential is huge.
In high priced areas start a part time biz and build it up then buy RE.
Takes 5 yrs be a business person
Get rich during spare time
===================
Get rich by being greedy.
Get rich by giving.
Give and you shall receive.
===================
Debt Vs Equity
What happens to ROI?
Problem with 401K you use your own Equity so ROI is low
Equity = Lower Return
Debt = Higher Return
Thats why RK / professional investors can make a 50%+ ROI
If you don't understand that you are in serious trouble, because you are probably trying to save yourself out of the poor house
401K takes your own equity, RE takes bankers debt
Lower skills = More Equity
Higher skills = More Debt (massively increase your returns)
Debt = 22%
RE also gets depreciation = 17%
Total = 39% ROI
===================
Product:
Intellectual property / Real Estate / Business
RK is a products guy
RK products is biz, RE, ideas, trademarks, patents
---
Legal Entities
RD Company --Royalties--> Magic Corp
(Royalties taxed less than 'Wages')
Limited Partnership invests in Real Estate
1 in 3 Americans will be sued
6 Types of legal entities:
The Bad - Sole Proprietorship (assets exposed)
The Ugly - General Partnership (exposed for your mistakes but also your partners)
The Good - C Corps, S Corps, LLCompanys, Limited Partnerships
Large Corp -> Delaware (Good previous case law)
Individual -> Nevada (Privacy & Taxes, does not share shareholder info with the IRS)
===================
Employee = Automatic Payroll Deduction - 1943
Self Employed = 1986
===================
Demography is Destiny
American population will go from 280M (2000 Census) to 380M by 2025.
You cannot rely on a blue chip corporation. Blue Chips are NOT Safe.
The 2nd expenses on the expense column is housing (1st is taxes).
People NEED to have a place to live.
Increase in US Pop +70M-100M - You think RE is expensive today, wait 10yrs.
So when the US RE market busts that's when you want to buy
Greatest need in America today is Low income housing = 120% Financing, tax free credits,
ROBERT KIYOSAKI - LIVE IN NEW YORK CITY
===================
- Rich Dad, Poor Dad Book
About accounting:
Income
Expenses
Assets
Liabilities
Being able to read a accounting statement
Most important word in Biz/Investing - CASHFLOW
Asset put money into income
Liabilities take money into expense
===================
- CF Quadrant Book
E = Employee (B students->Gov)
S = Self Employed / Small Biz (A students->Lawyer/Doctor)
B = Biz Owner (C Students-> A students work for the C students)
I = Investor
Can tell who they are by their words:
E = I want a safe and secure Job (with Benefits)
S = No one can do it better
B = I need a great team (Best CEO, Best CFO, etc)
I = What is my ROI
RK knows he is an Investor because the CF flows from assets into income.
Problem with a 401K is that money flows out but not in, so people are 'investing' but are not Investors.
Values:
E = Value security
S = Value Independence
B = Value Teamwork
I = Value money working for them
Rules / Laws are different for each quadrant
Rich co-operate/"cheat" with advisors
Poor don't "cheat" (or co-operate with advisors).
===================
- Prophecy Book
DB Plan:
> Defined by the benefits you get
> Payed by employer
> Included/s Medical care
> Dependant on Company and/or Government
DC Plan:
> Defined by your (& Employers) contribution
> The money can and will run out
> No Medical benefits
> Dependant on Stock Market
Fin. planners say don't worry because peoples expenses fall when they get older, But their medical costs go up.
IRS wants their tax dollars back so mandated to withdraw when people hit 70.
===================
Fin. intelligence is based on:
How long money works for you
How hard money works for you
& How many generations can it last
But most people don't have fin. intelligence so all they can do is work harder.
A banker doesn't care about grades or degrees but wants to know how smart one is with money
& if you are smart with your money your banker will give you more money.
(Fin. intelligence)
===================
WW2 Generation didn't have credit cards, and that has decimated the savings of the middle class.
Middle class have a huge amount of debt - credit card, mortgages, car loans, school loans, medical loans, etc
Year - Workers - Retires
1965 - 11(+DB+DBMedical):1
2000 - 3:1
2025 - 2:1
To pay for 2:1 they will have to raise (social security and/or other) taxes by 25%.
===================
People turning money over to fund manager creates no learning experience.
To become a good investor you have to start investing and get learnings.
===================
Demography is Destiny
You can predict the future by looking at the demographics.
Baby boomer generation is the pig in the Python.
83M baby boomers which caused the boom in housing prices, consumer goods, credit cards.
1980 stock market started to rise because Baby boomers had to invest in 401K/IRA by law
(based on the 1974 ERISA law).
In 2016 by law they will start to withdraw money from their 401k/IRA and exit the market.
Stock boom will last until 2016, until it will crash.
--
The 3 Directions of the Stock Market
-Bull
-Bear
-Channel (/sideways)
Bull go up the stair
Bear go out the window
It's Part of the economic cycle (just like a weather cycle).
401k does well in a bull market
But it does horrible in a bear market
So when the crash came in 2001 in just two years 35% was wiped off
And it took close to 20 yrs to accumulate
401k handcuffs you & You get penalized if you try and pull your money out
When Enron crashed one employee went from $2.2M in his 401K to $6,500.
Thats how fast & hard the wipe out is.
He wrote into a financial magazine and they recommended he invests for the long term.
He is out of Time.
And they say invest for the long term and don't worry because on Average markets go up.
But a sideways market can last for 10-25 years
In the stock market crash of 1920's it took 25 years for the stock market to return to zero again
(Channel market)
Boom, Crash, Sideways
^
^ /
/ |____________________/
2001 4yrs 2007
Crash Sideways Boom
===================
After the crash people then go and buy bonds that average 2%
It is as crazy as buying high tech stocks at the top
75 yrs = Depression and two recessions.
WW2 generation went through their rescission early, Baby boomers will go through the depression late in life.
Last depression was 72 yrs ago.
'Average' investor / Financial Planner - on Average the stock market goes up
Rich investor - yes but Averages are for Average people/investors
The average investor lost 35% over the last two years.
You do not want to be average!
Be careful who take you financial advice from.
===================
People expect the Government to take care of them or their fund manager or their company.
And their is too much of an entitlement "take care of me" mentality.
===================
Professional Investors Vs Average Investors
--
1. Know that markets go up & down
> Don't take a position (up or down). Pros don't care, Average investors need to be 'right'
> Need 3 strategies for up/down/channel market.
--
2. Banker
> Banker won't lend at all on 401K - too risky but people are betting their financial future on them!
> Bank won't lend on Mutual Fund
> Middle class believe in saving and paying off debt
> Rich believe in borrowing.
> Borrowing $8M it takes 2 weeks, how long to save $8M?
> Because it's good debt because it puts $50K cashflow into pocket
> Plus tax break
--
3. Insurance
> 401K has no insurance
> RE Insurance
> When stock is @ $50 they will put a trailing stop or a put (or call) option
> Hedge
> Driving a car requires insurance
> 401K protection strategy is to diversify. RK/Professional investors calls deworseify, spread your risk so thin you make no money.
Professional Investors take insurance, Average investors deworseify.
> Warren Buffet says "Diversification is protection against ignorance"
> Buy, Hold & Pray
> Non Recourse Loan/Note (so if property fail bank can't come after Pro investor)
--
4. Money back Guarantee
> "Will the market go up?" Yes! "Will you guarantee it?"
> Asians/Mexicans will save the US stock market because they will invest in it! "Will you guarantee it?"
> If you need to detect B.S. simply ask them if they will give a money backed guarantee.
> Consumer goods come with a guarantee; Department stores give money back guarantees.
> Bank manager gets a money back guarantee, using a LTV ratio and then can sell the property via foreclosure.
> 401K has no money back guarantee.
===================
Investing takes no physical time but mental time.
Made wealth on not what I buy but who I have become.
To be a good investor you have to start being a bad investor.
Our God made us learn by making mistakes, our school system teaches us not to make mistakes.
And if you don't make mistakes you don't be come good.
===================
Get rich in your spare time
Dorm Rooms (Dell/Google) / Garage (Ford/HP)
What they did after work, not while in work
===================
Financial Education is what can save us.
If school made you rich, teachers would be millionaires.
School can barley teach students to read & write, much less give financial education.
Gov/School/Edu. didn't pick up on credit cards, much less on 401Ks.
1. Academic Edu
2. Professional Edu (jobs)
3. Financial Edu
4 Steps of Fin. Education of CF Game: Rate Race - Small->Big Deals - Fast Track - CF202(options)
1. Rat Race - Stock pickers & Mutual Fund buyers
2. Small/Big Deals - Houses/Multifamily, Small biz/Big biz
3. Fast Track - SEC "Accredited investor" (1933 law)
4. Cashflow202 - Options, Day Trading
===================
50% of women over 50 years of age are single.
50% of Marriages end in Divorce.
Women usually take the Kids.
Women's standard of living drop by 74% the year they divorce.
Of the Elderly who live in poverty 75% are women.
===================
Goal = $100K passive income (total expenses $3K per month) took 9 yrs / $1M took 5yrs
Plan = Build business and invest in Real Estate
Product = Biz/RE
Skills = Team (Nobody can do everything)
RK Started in 1985 took 9 years to get to $100K and took 5 years to get to $1M.
Low income housing costs $385K, minimum wage is $5, so differential is huge.
In high priced areas start a part time biz and build it up then buy RE.
Takes 5 yrs be a business person
Get rich during spare time
===================
Get rich by being greedy.
Get rich by giving.
Give and you shall receive.
===================
Debt Vs Equity
What happens to ROI?
Problem with 401K you use your own Equity so ROI is low
Equity = Lower Return
Debt = Higher Return
Thats why RK / professional investors can make a 50%+ ROI
If you don't understand that you are in serious trouble, because you are probably trying to save yourself out of the poor house
401K takes your own equity, RE takes bankers debt
Lower skills = More Equity
Higher skills = More Debt (massively increase your returns)
Debt = 22%
RE also gets depreciation = 17%
Total = 39% ROI
===================
Product:
Intellectual property / Real Estate / Business
RK is a products guy
RK products is biz, RE, ideas, trademarks, patents
---
Legal Entities
RD Company --Royalties--> Magic Corp
(Royalties taxed less than 'Wages')
Limited Partnership invests in Real Estate
1 in 3 Americans will be sued
6 Types of legal entities:
The Bad - Sole Proprietorship (assets exposed)
The Ugly - General Partnership (exposed for your mistakes but also your partners)
The Good - C Corps, S Corps, LLCompanys, Limited Partnerships
Large Corp -> Delaware (Good previous case law)
Individual -> Nevada (Privacy & Taxes, does not share shareholder info with the IRS)
===================
Employee = Automatic Payroll Deduction - 1943
Self Employed = 1986
===================
Demography is Destiny
American population will go from 280M (2000 Census) to 380M by 2025.
You cannot rely on a blue chip corporation. Blue Chips are NOT Safe.
The 2nd expenses on the expense column is housing (1st is taxes).
People NEED to have a place to live.
Increase in US Pop +70M-100M - You think RE is expensive today, wait 10yrs.
So when the US RE market busts that's when you want to buy
Greatest need in America today is Low income housing = 120% Financing, tax free credits,
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