Real Estate Investor Magazine recently interviewed and spent quality time with financial guru Robert Kiyosaki to get the inside track on the investment world. Kiyosaki is best known as author of international best seller and #1 personal finance book of all time ‘Rich Dad Poor Dad’ which has sold over 27 million copies worldwide, been translated into 51 languages and is available in 109 countries. He has also written and co-authored over 20 financial education books, which have changed the way millions of people, think and act about money. He is also an investor, entrepreneur and leading educator in real estate, business and a financial forecaster.
Kiyosaki predicts a global currency crash in 2016, which will wipe out the poor and the middle class – while the rich will get richer. His latest book is called ‘Second Chance‘ which focuses on our lessons from the past are a brutal lesson for us on how to seize the future.
Kiyosaki’s perspectives of the world of money, investing and real estate fly in the face of conventional wisdom. On his recent trip to South Africa Kiyosaki says that the old advice of “get a good job, save money, get out of debt, invest for the long term and diversify” is obsolete and flawed advice. His straight talking approach, investment strategies and own business experience has unsettled the most experienced and learned in the traditional financial world of finance and investing. His methods of investing like the wealthy in both times of booms and bust can guarantee that you never will lose in any market.
Learn how to get ahead in the current crisis
The bad news
Kiyosaki says that we are currently in a very serious world crisis and that there are two sides to every crisis – danger and opportunity. It could be an economic or leadership crisis or education or moral crisis. He says the global problems we face today just cannot be solved by the same minds that created them. The Industrial Age is over and the Information Age continues to accelerate into the future. Those that can train their minds to see the future, prepare for the opportunities and the challenges what lies ahead and take the steps to act upon the positive change they want to see in their own lives.
Now for the really bad news
The world economy is in a volatile place and is facing a global crisis and Kiyosaki forecasts a global currency crash in 2016. Kiyosaki is critical of governments; banks and public institutions as most of them are creating massive debt and stealing money out of the economy for little value return. The financial world changed in 1971 when President Richard Nixon took money off the gold exchange and as a result started the trend of printing money to pay off government debts.
This trend increased at a more rapid rate since the 2008 global financial crisis with major governments of the world resorting to printing huge sums of money to pay national debts and also bail out banks. Today this on-going crisis we are now seeing in Greece, China, Japan and the United States is proof of governments using the printing presses to solve debt problems that they have created. Results of that in the US is the city of Detroit that is bankrupt, California is bankrupt, predicts that Chicago is on the verge of bankruptcy who are seeing the signs of high unemployment, massive debt and increased violence as a result of statesman awarding themselves huge financial benefits. Phoenix cannot pay pensions to the retired and there are more casualties to follow. When America panics then most people pack a gun
“The single most powerful asset we all have is our mind. If it is trained well, it can create enormous wealth in what seems to be an instant.”
South Africa’s economic prognosis
Kiyosaki who has visited South Africa multiple times and who recently just spent more than 6 weeks in South Africa says that South Africa it is no different from the US or elsewhere in the world. He says that Jacob Zuma is failing South Africa and is falling into the same trap as the US politicians by stealing, mismanaging state money and creating massive amounts of debt. He says that Zuma is making his government anti-business and this can be disastrous to the future of the country. His close alliance with Robert Mugabe who single-handedly destroyed and bankrupted Zimbabwe puts us in a bad light.
RW Johnson is a South African author, journalist and academic whose latest best selling book ‘How long will South Africa survive? The looming crisis’ says SA’s economy is in dire straits. Johnson says that after 20 years of ANC rule that they have shown conclusively that they are hopelessly ill equipped to cope with the challenges of running a modern industrial economy. Everything suggests that SA is fast slipping backwards and survival as a unitary state is not granted. The Eskom electricity crisis, SAA, SABC, E-tolls, PRASA is all examples of failed public enterprises
Johnson says in his book that the country is heading towards a likely International Monetary Fund (IMF) bail out which in turn will lead to regime change.
The view from the IMF in Chapter eight of his book: “The IMF conducts annual country consultations under its Article IV. In 2012 the visiting IMF delegation expressed considerable shock at Pretoria’s priorities. Instead of spending on infrastructure to mop up some of the mountainous unemployment and to make the country more competitive ready for the upturn. Instead the government had borrowed massively abroad merely in order to give the money away to already overpaid public sector workers. The IMF warned, public spending needs to be completely rebalanced. The IMF could hardly contain its horror at the governments complete disregard for the unemployed.” Kiyosaki says if the IMF knocks on SA’s door, then SA could be in serious trouble.
Learn how to get ahead in the current crisis
The pending currency crisis
Kiyosaki says the US dollar is biggest culprit of inflating world currency today. Cash is trash as a result of the US Federal Reserve policy of printing massive amounts of dollars. The US national debt stands between $100 – $260 trillion and is very disturbing.
Kiyosaki says normal cash money is actually debt as are credit cards. Why save when the governments spending. For each $1 saved banks create $10 to spend. In 1970 when money was linked to gold $1 million saved gave you $100 000 interest where today for $1 million saved you will get $10 000 interest
Zimbabwe is a frightening example of a perfect currency crash when Zimbabwe went into hyperinflation and the Zim dollar collapsed in 2009 after years of rampant money printing. This is a warning for nations that choose that route to get out of debt says Philip Haslam a Johannesburg based chartered accountant and economic advisor. He says at university he was taught that it was good for governments to go into debt and that this is accepted as the norm.
In his new book ‘When money destroys nations’ Haslam interviewed ordinary Zimbabwean citizens to find out how these people survived these turbulent circumstances. On Black Friday in Zimbabwe caused pension schemes to shut down and a major collapse to the Zim dollar. He draws parallels to what is happening to the world’s developed economies such as the US, Japan, China and the UK and says this holds lessons that we cannot ignore.
Here is the good news
You really understand the bad news. All markets have a period of both boom and busts. You can make money both ways but Kiyosaki says that there are bigger opportunities to make money both when the market crashes. Kiyosaki predicts market crashes in 2016, 2017 and 2018. He says that people must prepare themselves to seize the opportunities.
South Africa’s offshore talent pool.
Elon Musk technology billionaire and entrepreneur is one of South Africa’s most prized entrepreneurs who have been lost to South Africa. He has built himself a multi-billion dollar fortune running companies that make electric cars, sells solar panels and that launches rockets into space. What many people don’t know is that he has achieved that success with almost $5 billion in government subsidies. Clearly he goes where there is government money and the US unlike SA’s put their entrepreneurs on a pedestal.
“I’d rather welcome change than cling to the past.”
Why don’t they teach us about money at school?
Kiyoskai emphasizes the importance of having the right financial education to help you succeed in any economy which is critical to thrive and survive. He says if applied properly it can be life changing and liberating for your investments, business and personal life. Kiyosaki shares some of his inside secrets for his investment success and why he still believes in real estate as a prime investment category.
Kiyosaki says that capitalist education systems are commandeered to educate people in the old way so that they can be reliant on the government to continually pay taxes to them for the rest of their lives.
The first lesson of money is ‘The rich don’t work for money,’ the rich have money work for them.
The second lesson is ‘Become financially literate’ focus on assets. Assets include owning a business, real estate, paper assets and commodities such as gold, silver, food, water.
“Intelligence solves problems & produces money.Money without financial intelligence is money soon gone.”
Your house you live in is not an asset
Kiyosaki says that your house that you live in is not an asset even if the mortgage bond is paid off on the house. You are still liable for rates, taxes, and utilities such as electricity, sewerage, insurance and maintenance. Each person needs to determine whether buying or renting is best for him or her at any age is the best choice for him or her.
It could become an asset if you sell it for more than what you owe on it then it that becomes capital gains play and falls into speculation and not investing. Renting or buying is neither right nor wrong but is rather what is best for you.
Why real estate is the cornerstone of Kiyosaki’s investment strategy and why he continues to invest in real estate
Kiyosaki learnt the real estate game playing Monopoly and the acquiring of 4 green houses to purchase one red hotel is something he has applied in his personal real estate investment strategy.
By Neale Petersen