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1 Go to school 2 Get a job 3 Work hard 4 Save Money below your means 6 Your home is an asset 7 Get out of debt 8 Invest for the long term in a retirement plan filled with stocks, bonds and mutual funds 5 Live

knowledge: the new money ™



Shooting the Sacred Cows of Money Putting a bullet in the head of bad financial advice
A Quick Note from Robert
Throughout history, cultures have tightly grasped their “sacred cows” (dearly held beliefs so commonly accepted, so religiously observed, that to question them is sacrilege). Our culture is no different. Our beliefs are no less sacred. Especially when it comes to money. A year or so ago, Kim and I did something we’d never done before. We assembled all the Rich Dad advisors in one room to talk about the common myths our culture holds about money. These myths include: • Go to school • Get a job • Work hard • Save money • Your house is an asset • Get out of debt • Live below your means • Invest for the long term in a well-diversified portfolio

The conversations were candid, funny, and dead-on. We filmed these conversations and placed them on a website, www.shootingthesacredcows.com. The goal was to create short, free, easy-to-watch, and easy-to-share videos to introduce those new to the Rich Dad message and to help the Rich Dad community educate their family, friends, and co-workers about Rich Dad principles. Rich Dad’s vision has always been to provide comprehensive financial education with quality, free resources when possible to as many people as we can. The mission of Sacred Cows is to take you from the established mindset about money to the enlightened mindset, to put a bullet to the head of bad financial advice, and to help you take charge of your financial future. The videos are available for free online at www.shootingthesacredcows.com. But we thought it would be a great idea to take the content from the videos and condense it all into a free eBook that is easy to share. So, that’s what we’ve done.

The following eBook is an edited version of the video transcript. I hope you enjoy it. Please share it with your friends, family, and co-workers—anyone you know who could benefit from the collective knowledge of the Rich Dad team. Comprehensive financial education is still the surest way to financial freedom, both personally and as a society. Together we can make a difference.

Rich Dad Team

Robert T. Kiyosaki Robert is the founder of The Rich Dad Company, a recognized brand worldwide and a global leader in financial education, empowering people to escape the Rat Race and find financial freedom. A successful entrepreneur and investor, Robert is the author of 19 books, including Rich Dad Poor Dad—the #1 personal finance book of all time. He’s regularly featured on shows such as Larry King Live, Oprah, and Your World with Neil Cavuto. Robert’s bestseller, Conspiracy of the Rich: The 8 New Rules of Money, pioneered online book publishing as a free online interactive book with contributions from over a million readers in over 167 countries. Frequent updates appear on www.conspiracyoftherich.com

entrepreneur. Unfair Advantage. Robert isn’t afraid to challenge the status quo. Kim Kiyosaki As an internationally renowned speaker. A self-made millionaire. A true advocate of effective financial education. Her first book. Robert Kiyosaki. She’s a sought-after speaker. a real estate investment company that specializes in management. Kim draws on a lifetime of experience in business and investing to be an advocate for women in the marketplace. addresses what schools will never teach you about money and incorporates both audio and video into Rich Dad’s first enhanced eBook. development. Ken McElroy Ken is a founding partner of MC Companies. author. and a columnist for www.WomenEntrepreneur. He offers financial advice that exposes the absurdity of conventional attitudes about money and debunks the so-called financial experts. Kim knows what it takes to succeed and be a financially independent woman. Rich Woman. 4 . investment.000 apartment units valued in the hundreds of millions of dollars. was a Business Week bestseller and is one of the top 50 best-selling personal-finance books of all time. television and radio talk-show guest. Through her international brand. the host of a PBS Rich Woman show. and real estate investor. Kim is a happily married (but fiercely independent) woman and often travels and speaks with her husband. Rich Woman.His latest release. and construction with a portfolio across the southwestern United States of over 10.com.

He is currently authoring an upcoming Rich Dad Advisor book on paper-asset investing. school system.S. He serves as a coach to Rich Dad’s Stock Success System trainers and as the Rich Dad Advisor for paper assets.com. and The ABCs of Property Management.thesleepinggiant. one of the wealthiest counties in the nation.com. In 2008. she joined The Rich Dad Company in 2006 as an Education Advisor. and www. Andy was key in helping develop and launch Rich Dad’s Stock Success System which teaches investors advanced technical trading techniques to profit from bull and bear markets.As a Rich Dad Advisor. Ken brings 20 years of real estate experience to the team and speaks to thousands of people across the globe each year.mccompanies. www. 5 .com. Later. Find out more at www. Anita Rodriguez Anita homeschooled her four children before becoming a teacher and counselor in the poorest high schools of Denver’s inner city. she was a high school administrator for Douglas County in Colorado.KenMcElroy. He is also a contributing author to Robert’s The Real Book of Real Estate and the author of The Sleeping Giant: The Awakening of the Self-Employed Entrepreneur. Having spent most of her life in education and seen first-hand the lack of sound financial education in the U. Andy Tanner Andy is a renowned paper-assets expert and successful business owner and investor known for his ability to teach key techniques for stock-options investing. She brings her vast experience to Rich Dad to help develop world-class financial-education curriculums that change lives. He is the author of the Rich Dad Advisor books The ABCs of Real Estate Investing. The Advanced Guide to Real Estate Investing.

He serves as the Rich Dad Advisor for Tax and Wealth Strategy and is the author of an upcoming Rich Dad Advisor book on building wealth through tax strategies. Tom Wheelwright Tom is the founder and principal for ProVision Wealth Strategies. and is the author of the Rich Dad Advisor books Sales Dogs and The ABCs of Building a Business Team that Wins. As a speaker and Rich Dad Advisor. and cash flow.Blair Singer Blair is a top-rated and internationally known speaker and sales communications trainer.provisionwealth. Since 1987 he’s worked with tens of thousands of individuals and organizations such as IBM and JPMorgan to help them achieve extraordinary levels of sales. and wealth strategies for sophisticated investors and business owners. Find out more at www.com and www. For more than 25 years.salesdogs. productivity.blairsinger.com. Find out more at www. performance. business.com. Blair has presented in over 20 countries across 5 continents on life-changing sales success. Tom has devised innovative tax. Tom is an international speaker and an adjunct professor in the Masters of Tax program at Arizona State University. 6 .

Find out more at www. Wyoming. The ABCs of Getting Out of Debt. families. and advance their personal financial goals. Mike is regarded as an expert on economic cycles and capitalizing on the opportunities they afford. He is the author of the Rich Dad Advisor books The ABCs of Writing Winning Business Plans. and How to Buy and Sell a Business. a law firm with offices in Nevada. He has over 20 years experience assisting and advising entrepreneurs.sutlaw.com. Guide to Investing in Gold and Silver. protect their assets.com. Garrett speaks frequently at Rich Dad events on the topic of corporate formation and asset protection.goldsilver.garrettsutton. and businesses in selecting the appropriate corporate structures to limit their liability. Find out more at www.com provides research and commentary for its clients.. Own Your Own Corporation. A student of economics.Garrett Sutton Garret is a founder and partner with Sutton Law Center. 7 . assisting them in their wealth-building endeavors. As a Rich Dad Advisor.goldsilver.C. He is the author of the Rich Dad Advisor book. Mike has spoken to audiences throughout the world on the benefits of precious-metals investing. and California. P.goldsilver. www. Additionally. an online precious-metals dealership that specializes in the delivery of gold and silver and secured storage. Mike Maloney Mike is the owner and founder of www.com and www.com.

com. drugs. and public speaker. Trina excelled in sports and initially viewed professional basketball as her destiny and vehicle to success. 8 .heasleyandpartners. entrepreneur. she is a social entrepreneur who understands how to use money to create opportunities and better the lives of herself and those she serves. business coach. A successful author. Kathy serves as the Rich Dad Advisor for marketing and branding. and communications. Today. and social entrepreneur. She later chose to pursue a career in social work and ministry through non-profit organizations and churches.. a branding and marketing firm. which she’s done for the last 21 years.Kathy Heasley Kathy is the founder and principal of Heasley & Partners. She grew up in the midst of violence. which pioneered and champions Heart & Mind™ Branding. Trina White Maduro Trina is a businesswoman. Inc. marketing. and gangs on the south side of Chicago and was raised in a single-parent home with 14 other siblings and family members. investor. She has over 20 years of experience helping to shape brands like Cold Stone Creamery and Massage Envy and is an international speaker on branding. Find out more at www.

He’s Mexico’s number-one TV host and has devoted 25 years of his life to radio and television. He is the #1 producer of mortgage origination in the state of Texas and was named the #1 FHA/VA lender by Mortgage Originator magazine. Marco Antonio Regil Marco is a successful entertainment entrepreneur and investor. He is the leading home-loan specialist in Texas. and has arranged financing for over 20.000 families over the last 18 years.RodneyAnderson.Rodney Anderson Rodney is the Executive Director and Senior Managing Partner for Rodney Anderson with Supreme Lending. Pepsi.com for more information. He’s a spokesperson for such companies as McDonald’s. and Nestle and for non-profit organizations like the American Red Cross and the Mexican Telethon. 9 . He’s helped raise more than $40 million every year for these charities. Visit www. Rodney brings his 25 years of experience to the table as the Rich Dad Advisor on lending.

and built our wealth together as a team. We were broke and building a business. up until that point. Kim I should say something. I asked her dad and his first question was. were dirt-poor. “Does he have a job?” Robert The answer was. and I think one of the most beautiful things about being financially free was that it was the first time we were able to ask. Kim And I’m Kim Kiyosaki. and we did it without a job. of course.. no! But anyway. We met in 1984 and fell in love. 10 . “What do we want to do with the rest of our lives?” Because. and without government support. and I’m probably best-known for my book Rich Dad Poor Dad.Introduction: Robert and Kim’s Story In Shooting the Sacred Cows. and 1985 was probably the worst year of our lives. but we were homeless for a period of time. Robert Hello I’m Robert Kiyosaki. Robert Kim and I met in Hawaii in 1984 when I was kind of between businesses. and it was a really tough time to go through.. Kim and I share our story about how we met. she’d put up with me any time. by 1994 Kim and I were financially free. And that’s when we started The Rich Dad Company. Kim My dad’s first question was. We also share why we felt compelled to start The Rich Dad Company and why we feel financial education is so important. Robert And in 1996. we struggled financially. we created the CASHFLOW board game to give people the same financial education my rich dad gave me. in 1986 I asked Kim to marry me because I figured if she had put up with me with no money. Robert So. we were so busy working day to day and paying the bills that we never had that luxury. Kim Yes. without a retirement plan.

the more poor people you create. There is no fairness when it comes to money. Kim Like Robert said. We say hard things because they are the truth. “That’s not fair!” Well. We found that lots of people were asking us how we achieved financial freedom. Money does not start in your hands. and that was the reason back in 1996 that we created The Rich Dad Company—to provide financial education so people can learn to take care of themselves. age-old Industrial-Age beliefs. The Rich Dad Company was formed to teach people what my rich dad taught me. there’s a huge financial crisis going on right now. You might even say.Kim Prior to meeting Robert. Either you’re a winner. Money actually starts in your head. and not depending on the government or other financial experts. They are serious. I had very-little-to-no financial education. which was quite the opposite of what many people are taught. but also because we care about your financial future. what our governments do today is give people fish rather than teach them to fish. but more importantly. 11 . you don’t learn anything about money in school. then maybe you need to look for new answers. financial education begins by shooting the sacred cows of money. Instead of starting out with learning how to fish. Robert Today we’re in a financial crisis. People hold to sacred cows. A sacred cow is something that everyone accepts as truth—and it’s taboo to say anything bad about it or to the contrary. I was always taught the importance of teaching people to fish instead of giving people fish. “Go to school. it was almost the opposite.” Unfortunately. If something isn’t working for you financially today. taking charge of your life. Unfortunately. And we’re always looking for new answers. There are many sacred cows regarding money. or you’re a loser. such as. In fact. and they hurt people. to teach them how to fish. And what Robert’s rich dad taught him and what we learned on our journey to becoming financially free was not what we heard from financial advisers and planners. That’s what Shooting the Sacred Cows is about—getting financially educated. so we created the CASHFLOW game to teach people just what we did.” Everybody says. you have to go to school. And the more you give people fish. In Shooting the Sacred Cows of Money. “Well. we’re not trying to be fair. The lies of the sacred cows of money actually hurt people. we’re going to say some things that will challenge you. Robert Our answer to the financial crisis is to get financially educated. Kim and I saw this crisis coming.

but how much money you keep. the Federal Reserve Bank could print as much money as it wanted. capital gains versus cash flow. As you know. They knew that it was only a matter of when. They had to tax us if they were going to print money. lock and load. There are many interesting dates. It became a currency backed by debt. what’s the difference between an asset and a liability. So. but one important one is 1913 when the Federal Reserve Bank was created. Element number one is history. Also of importance. A good analogy is the people who lived in New Orleans prior to Hurricane Katrina. which paved the way for the 401(k). In other words. Number four is wealth protection. There are many reasons why the rich pay much less in taxes than people who work for the rich. Time Out: The 5 Elements of Financial Education You need to know the five elements of financial education.Today’s world is different than it used to be. after 1971. One of the reasons we’re in this massive financial crisis today is because. President Richard Nixon took the U. Yet. The way things always have been done financially isn’t working. 12 . They knew they lived below sea level. We have a solution—a very strong solution. the bank gives it to somebody else. and it’s time that somebody stands up and shoots a few sacred cows so that people stop suffering. the bank gives it to somebody else. we hope to wake you up to start thinking differently. Today. When you put your money in the bank. not if. in 1913 the Internal Revenue Service (IRS) was created so that they could tax us. financial education is not only how much money you make. After 1971. or fundamentals versus technicals? That’s all part of a financial vocabulary. And element number five is that there are two sides to every coin. the rules of retirement changed with the Employee Retirement Income Security Act (ERISA). In 1974. And they paid the price. When you put your money in your retirement plan. Element number two is taxes. For example.S. taxes are not fair. By shooting the sacred cows of money. they chose to ignore the potential consequences. You need to be prepared. Element number three is financial vocabulary. a disaster like Katrina hit. we’ve got a lot of financial storms. understanding the language of money. Because of this. In 1971. But there are also people whom you trust who are taking your money. people out there are trying to steal your money. off the gold standard. As we all know. money stopped being money. And that’s why today so many people of my generation are afraid of running out of money during retirement.

writing. The second type of education they give is the professional kind of education. Many people think I’m anti-school. The second thing I don’t like about school is how they label a kid as smart or stupid at an early age. I’m antiignorance. Tom Well. that’s basic. The reason I’m sensitive about that is because I was labeled stupid right from the start! And it wasn’t that I was stupid. That’s really what you’re talking about. which is really important…Reading. and we studied subjects I wasn’t interested in. Your financial statement will tell you whether or not you’re smart with money. If you want to be a lawyer or an accountant or a teacher. Were they training me to be an employee or street smart? My poor dad was school smart. there’s a total lack of practical education. Anita Education is more important now than it’s ever been. There’s the academic. But the one kind of education that’s lacking severely in the school system is financial education. I was bored and not interested. arithmetic. You need to have it. to work for the rich.Sacred Cow #1: Go to School An important part of financial education is having a financial statement. My rich dad was street smart. So. I’d rather be street smart today. and I received a comment back from a teacher that said. “Who’s going to pay for it?” We’re all going to pay for it if we don’t start educating our children about finances in school. and I found that to be true. I’m very pro-education. 13 . then you need to go to school and get those certifications. I have a master’s degree. not your report card. Anita So the problem is that the schools focus just on two kinds of education. Rodney I put on my Facebook one day that we need to teach our children financial education. your banker always asks for your financial statement. When you go to your banker. which includes an income statement and a balance sheet. I’m just not pro of being stupid about money. That is not true. The financial statement is the report card of your financial intelligence. Robert That’s right. because your financial statement is your report card once you leave school. Nobody could tell me how I was going use calculus. Our schools are training people to be employees. I’m an accountant. One of the biggest sacred cows of all is go to school. Robert This is a very hot subject.

I have not a clue about my money. We depend on government to take care of us. He didn’t go to college. Some are highly educated. they know something about money. Andy School creates a culture of dependence.” And then there’s a pattern that develops where you see a lot of people who never went to college but are street smart and have done very well. right? Tom Yes. We depend on three things. she finally looked at me and said. but when we were talking. She’s very smart in many ways. right?” Not really. I learned economics in school. but he’s got all this real estate. But when I went to school. It’s not about the law. not about history. “Well. but more than that. I was dyslexic. I see all sorts of people walk through the door. “Wow! He’s doing pretty well. 14 . but like you said.” She’s 45 years old. Kim I was talking to a woman the other day. “Oh my gosh. Robert: We’ll forgive you. It’s brutal. Economics is financial education. But they really don’t because they never had the education. I failed school. I could have gotten a master’s degree and a PhD in my field without any specific financial education at all about how to handle myself once I got out of school. I thought. It’s not about investing. the people who run our 401(k)s— to take care of us. school failed me. Tom Thank you. And the first time I saw this type of client. and some have no education at all. It’s not about taxes. I’m an “A” student. did you? Mike No. no. Robert Mr. the scary one I think is. because people are successful. We rob ourselves of the independence to think freely as entrepreneurs or investors. you never finished school. And. Many times you think that. we depend on institutions—you know.Robert And you’re an “A” student. We depend on a corporation to take care of us. they’re street smart. Robert Right. and we become dependent on those three entities. Garrett Robert. She’s a highly successful medical doctor. There was no general financial education. Maloney. and she has not a clue. And people say to me. the only financial education I got was specific to my profession. as a lawyer.

I was bored stiff. Robert And the reason I’m bringing up Michael is that most people will agree he’s probably the smartest guy on this team. Most people don’t know it’s built into the operating system. you get less money. I got put in all the remedial classes. in my case. You learn to deal with pressure. If you’re poor. Robert Now we can’t shut him up. So. and in sports you learn to compete. and you can just select text. I didn’t do well in school. but basically I was just like you.They didn’t know what dyslexia was back then. a pilot. In other words. you’re getting the worst possible education. And passion drives you. when I look at the number side of it. And there’s financial. it isn’t. There’s academic: reading. schools are based on real estate tax. Basically. I was in with the dumb kids. if you come from a rich neighborhood. writing and arithmetic. Robert. I developed a passion for global finance and economics and monetary history especially. Robert: And I’ll just say the last thing about school that really upsets me. There’s professional: become a doctor or a lawyer or. 15 . because you can’t read. So how does a person learn about money? How does a person increase their financial intelligence? A diagram called the Cone of Learning provides some interesting clues. They weren’t teaching me anything I wanted to learn or anything that I would ever use in my lifetime. that is cruelty. hit a button. the real estate tax pays for better schools. I did very well in sports. how did you learn to read? Mike Apple came out with OSX at the beginning of the last decade. To me. And the problem for Michael was that there are three kinds of education. right? Mike Right. any time somebody tells me schooling is about being fair. Some of us cheated better than others. If you are from a poor neighborhood. and the computer reads to you. But Michael was put back because of academics. Robert So. and teamwork is called cheating in school. Goals in school are individually focused. and I’m going to blame Apple for that one! Andy School is so low gain. In America. You’re competing against everybody.

The interesting thing is that my poor dad who was good at school thought that reading and lecture were the best way to learn. which is simulations through games. And the best way to learn is at the top of the cone. So. What he found is that the worst way to learn is by reading or listening to a lecture. The reason my wife and I created the CASHFLOW game was so that you could play and make a lot of mistakes with play money. How many people in this room have made financial mistakes? 16 .Cone of Learning After 2 weeks we tend to remember Doing the Real Thing 90% of what we say and do Simulating the Real Experience Doing a Dramatic Presentation Giving a Talk 70% of what we say Participating in a Discussion Seeing it Done on Location Watching a Demonstration 50% of what we hear and see Looking at an Exhibit Watching a Demonstration Watching a Movie 30% of what we see 20% of what we hear 10% of what we read Looking at Pictures Hearing Words Reading Nature of Involvement Active Passive Source: Cone of Learning adapted from Dale. He taught me using the game of Monopoly™—you know. one red hotel—and then we went out and did the real thing. four green houses. four green houses. one red hotel. one of the ways. playing games. is by simulations. (1969) The Cone of Learning was created by an educational researcher named Edgar Dale in 1969. My rich dad taught me to be a rich man by using methods at the top of the cone. if you want to learn without much risk. and then doing the real thing.

that I started paying less in taxes. We teach people the language of becoming a doctor. Even though my job is to reduce taxes. It’s because the business owners. how to have a savings account. Time Out: The CASHFLOW Quadrant In this eBook. 500 employees or more. S. right? 17 .” And that’s the difference between my rich dad and my poor dad. you have the E. also known as the CASHFLOW Quadrant. Robert When you learn to speak the language of money. My rich dad said. Robert Financial education is like learning another language. and investors have their money work for them. And unfortunately in our school systems. “If you want to be rich. B & I. or an employee. The people who go to school are on the E and S side. lawyer. and these people have other people working for them. I started as an employee right out of school.Kathy Yes. it’s clearly the employee who’s paying the most taxes. those basics. I was paying high taxes. “Go to school and get a job. I started my own business—my own CPA firm—and I was now self-employed and paying more taxes. you can do business with the whole world. & I quadrants. the only thing we were ever taught in school was maybe how to balance a checkbook. and I was paying high taxes. and was really a significant-sized business. Marco I say this all the time in Mexico. And then about 15 years ago. The S stands for specialist like a doctor or a lawyer. S. Tom Well. E stands for employee. and the E’s are employees. S stands for self-employed. So. or specialist like a doctor or a lawyer. If you learn English. it wasn’t until I started acting like a bigger business. it opens up a whole new world.” He wanted me to become an employee or a specialist like a doctor or a lawyer. and the investors—the active investors—really pay the least amount of taxes. But doctors and lawyers pay the highest taxes. we don’t teach the language of money. I’ll turn to my accountant here. you have to be a business owner on the B-I side. Sacred Cow #2: Get a Job The next sacred cow is get a job. small business. you’ll hear a lot about E. the entrepreneurs. Now the problem with getting a job is: Who do you think pays the most taxes—the owner of the business or the worker? For that. B stands for big business. And I stands for investor. Robert If you look at the CASHFLOW Quadrant. Tom. These people own a job. Now my poor dad always said to me. employees have a job. B.

If I had followed that advice. you know. I was around employees. So. “Yeah. It’s the self-employed people because. I went back to my class reunion. It’s probably the most insecure thing you could be doing right now. get a safe. My mother wanted me to be a doctor.” 18 . There are no safe. Robert The idea of a secure job is an Industrial-Age idea. secure jobs. Blair The other part of it is this whole idea of getting a job. which is always an interesting thing to do. the entrepreneurs—those who are creating housing. So. And they actually have the fewest options to reduce their taxes. All you have to do is pick up any paper to see how many tens of thousands of people are losing their jobs. Kim The only option put into your head is to go get a job.Tom Oh.” And so that by getting a job somehow you’re going to be taken care of for the rest of your life. “You’re so brave. and I wasn’t around… Robert That’s brainwashing. but they pay the highest percentage in taxes. They make a lot of money. It’s a system of rewards for people doing what the government wants you to do. That’s the longest I have ever worked anywhere. secure job. not only are they paying the highest income taxes.” They looked at me like. They want the private sector to do that. I didn’t grow up around entrepreneurs. Robert Right. and so they reward them for doing so. I started a company about five years ago.” And I’m thinking. And that’s really all the tax law is. So that’s why this relates back to “go to school. Kathy When I first started my company 15 years ago. real estate investors—because the government understands that’s what we need. I’d be paying the highest tax possible.” Tom That’s right. they’re paying extra taxes just to be in that S quadrant. Kim Yes. But the tax laws are really geared towards those people who are creating jobs. “I’ve had this company for five years now. and now we’re competing with India and Asia for jobs that were sacred to America at one point in time. I wasn’t around business owners. they also get the privilege of paying Social Security taxes and Medicare taxes on everything they earn. Blair Exactly. by far. and I remember saying to them. this whole idea of having a job and being secure is just not true. There’s some kind of a myth out there that goes with “get the job.

I mean you’ll never hear that in the school system. you can go out and do something. Robert You’re an entrepreneur because nobody would hire you! (Group laughter. I thought all you could do was get a job. E’s and S’s get punished for making mistakes. Now my risk has gone down considerably. the other thing is. Ken Well. The government doesn’t really create jobs. it’s not right or wrong to be an employee. Get a job is the only option that you’ll hear in school as a rule. whereas now I have thousands of clients. and fill that gap. and higher pay. “Go to school. did they say. my employer. it’s not the end of the world. What’s tragic today with so many people losing their jobs is that they’re going back to school to get another job. If you’re going to lose some business. get your diploma. B’s and I’s get richer from their mistakes because they learn from their mistakes. So again. That’s the piece that I like. it’s just a high-risk play. get the bigger paycheck. but I’d like to know what my options are. almost to nothing. you’re in complete control. Anita When you were in school. get a better job. we’re not saying jobs are bad. Now. They need more entrepreneurs. That’s insanity. and become an entrepreneur?” No.Robert See. When I started my business 15 years ago. So. without financial education you have to get a job. Kim No. generate business. Robert And job stands for Just Over Broke. you know. “Work your way up the ladder. We’re just saying as entrepreneurs that our job is to create jobs. they said. or you do lose some business. 19 .” Anita But you’re right. Tom To me. When you have a job. Robert Financial security is more important than job security. Kim I didn’t even know there was another option growing up. but they’re now competing with their kids. or they lose their job. if one client fires me. You can go out. the real issue with a job is that it’s the highest-risk profession you can have because you only have one client.) Ken But it’s nice. it was after being fired from a job. What I recognized was that I had no control over my life because I had one client.

“I need to get more hours. Tom As we build assets. and B’s and I’s. the more you will pay in taxes. Robert Can we bring in the bags of coins right now? Thank you. but we don’t work hard in the normal sense of working hard. Robert A lot of people can’t wait until Friday because they hate their work so much. I love my work. My rich dad said. You want other people to work hard for you. It was a story of how Tom Sawyer got the other kids to paint the fence for him. hardworking man. The harder you work for money. people are working so hard because the Feds are also working hard printing money. a great guy with his PhD. the banking system.” or “I need to get a second job. the less they’re making because the government and the Federal Reserve. and B’s and I’s focus on the asset column. My poor dad. So the harder people work. but they don’t realize that over this entire past decade. “That’s working hard. They’re working harder to make a few more dollars. the economy grows. is that you pay more in what. with problems and all that stuff. right? Mike I’ve got friends who just say. always said. we work hard. but we’re working differently. when we build assets. So. Employees benefit also because now we have more jobs for more employees.” That was his lesson. but I love it. 20 . Instead of working hard for money. “I’m a good.” or something like that. they’re basically stealing it from them. we build the economy. and you want your money to work hard for you. He had me read this book by Mark Twain. the average income after inflation has fallen. right? Tom Right. Robert Taxes. And they dread Sunday because they have to go back to work the next day. The problem with working hard for money. is that E’s and S’s focus on the income statement. Robert But on Michael’s side.Sacred Cow #3: Work Hard The next sacred cow is work hard. The tax law is geared towards building assets because. Robert The big difference between E’s and S’s. It’s challenging. I would say most of us are working 24/7. With us. because the rich don’t work for money. a schoolteacher.” My rich dad had a different point of view. the rich work for assets and pay a lot less in taxes. Tom? Tom Taxes.

that’s why people are working harder. not the can of soup.” and “live below your means. It’s the currency that’s changing. It all takes place in your head.” “work hard. E’s and S’s have a different context than B’s and I’s. Take this glass here. dollar stopped being money and it. What’s changed is the dollar’s value. one gold coin cost $300. Mike And it isn’t the coin that changed. It became debt. paying more taxes. Robert It became an IOU from the federal government.. we can print our own money. How many dollars did the Fed print in 2009? Mike From August of 2008 through 2009. Having a different context. Robert So.S..” in this case. It’s the value of the dollar falling.5 times more paper dollars than they printed in the previous 200 years. quarters. In this case. having a different context entirely. It’s because. People don’t understand that it isn’t the price going up. you’re not concerned. because their money is worth less. Today. the glass here is “context. 21 . and working harder when. The more they print. they created about 1. a different type of information. This huge bag I’m holding is $300 in U. The insanity of getting another job. and a different type of education.S. the harder you have to work.” It holds the “content. E’s and S’s attract the sacred cows like “go to school.” B’s and I’s. in 2010. Money is created out of your head.. And the thing is. Today it’s $1. attract a different type of content. So the reason people have to work so hard to keep up is because the value of our dollars is going down. that same gold coin costs thousands of dollars to buy. In 1971 the U.. In the year 2000. Robert So that’s why the rules have changed. If you’re a true B and I. just like the Fed. they can print as much as they like. the water.95 or whatever it is.Kim I’m not going to hold that! Robert I’ll give you an example. The can of Campbell’s soup in the grocery store is the same can with the same contents from back in 1950 when it cost 15 cents. Mike It became a currency.

Sacred Cow #4: Live Below Your Means Our next sacred cow is one of our favorite ones—live below your means. Kim So why is it that whenever some adviser looks at your finances that the first thing he looks at is how you can cut expenses? Tom Well. Instead. what does a financial planner tell you? The first thing that they ask you is. So it’s never living below your means. It kills people’s spirits. if you’re on a paycheck. Tom The key here is to raise your means. you have that one income coming in. Do you like living below your means? It’s no fun. we first acquire an asset. Anita Well. 22 . Robert When we met in 1984. but every year we would get together at New Year’s and we would set our goals for health and assets. unfortunately. Why would you want to live below your means? But many people have to live below their means. which means people are forced to live below their means. It’s expanding your means through acquiring assets that give you cash flow that gives us all those good things in life. because we kept adding assets every year. So. that’s why it took us only about 10 years from 1984 to 1994 to become financially free. If Robert and I want to buy a luxury like a new car. we had nothing. It’s not that we want to have terrible credit-card debt or something like that. “What do you want?” Kim Robert and I definitely do not believe in living below our means. That’s the idea here. So we acquire the asset and the cash flow from the asset pays for the car payment. you’ve only got 24 hours in a day to work. there is a limit to how much you can work to get those paychecks coming in. That’s one of the best-kept secrets—getting rich is fun! Kim It is fun! It’s a lot of fun. let’s raise our means so that we can live the way we want to live instead of living at this poverty level. “What do you need to live on when you retire?” They never ask. This forces many to live below their means. So. Let’s talk about what keeps people living below their means and how you can rise above yours. and if you’re just one person. because the Fed is printing so much money that taxes and inflation go up. And we continue to do the same thing today because it’s fun and exciting.

I definitely do not like living below my means. Three is inflation. and in order to be able to grow in business. I’m not making it right or wrong. The reason so many people struggle financially is that they have no financial education. and I think people are being taught to contract and be less than they are instead of being inspired to expand and be more than they are. Andy I think a lot of people accept mediocrity. You know. Instead. Kathy A lot of it comes from fear. 23 . then inflation goes up. that small luxury. and taxes are going to go up because the Fed is printing so much money all over the world. if you’re an E and an S. and it creates guilt. Ask “What can I do?” as opposed to “What can’t I do?” That’s the big distinction. Two is debt. not less than I am. It’s all about slicing. Kim No. and that was exciting times and all. your income is limited. I did it when I was in college. you have to step out of that comfort zone and stop being mediocre. and then they feel bad about it. use credit-card debt to make ends meet. They’re not sure where the future is going to lead them. and then use debt to buy their house because they think it’s an asset. but if they don’t know the difference between assets and liabilities and they keep buying liabilities instead of assets. I think people are afraid of their futures. There’s a lot of people who like being poor. And fourth is retirement. The way you increase your means is to acquire more assets—not houses or cars—but assets. Number one is tax. as taxes go up and prices go up. right? A budget is all about cutting. you can increase your means by increasing cash-flowing assets. but that’s definitely not what I like to do. You must put something away for the day when you stop working. too. if you’re on a fixed income.” They of course fall off the wagon. They may be a good doctor or lawyer or accountant or rock star. People leave college with tons of debt.Robert The point here is this: There are assets and liabilities. you should make a strategy and look at projections into the future. Inflation goes up because. Kim and I definitely don’t live below our means. I think living below your means is one of the greatest spirit-killers there is. but I get inspired when I get put in a position where I need to create something new. have to live below their means. Robert Or hoping the government is going to save you. Tom That’s the issue with the idea of a budget. “I’ll live below my means. I want to be bigger than I am. There are four major expenses that keep E’s and S’s poor. and they think. But if you have financial education and live on the B-I side. Those are the four main reasons E’s and S’s. they have to keep living below their means. It’s all about being less than you are. as a general rule. I’ll save. in order to make more money. I won’t allow myself to have this small luxury. If you’re single or not.

and that was the way we got by. in my community where I grew up. And what they do teach us is to put your money in the bank which means you lose more money. Robert And that’s a problem. of course by legal definition. I’m just being honest. Anita It all goes back to the questions you ask. Become a doctor or a lawyer.Robert The worst thing is that they cut back on their expenses and they save money. 24 . When you say. “How could I afford that? How can I get the money for that?” That type of question expands your mind. A better question would be. you’re going to pay more and more in taxes because you get no tax benefit for living below your means. That’s what they’re training you to do. You cannot be who you’re supposed to be. That is not financial education. That is educating people to give more money to the rich. abundant living. Robert That’s why I think it’s absolutely criminal that our school system does not teach us much about money. which is what I believe in my faith. You say to a child. and we didn’t live and didn’t know how to live. Kim I say it’s time to get financially educated and take care of yourself. is not the way that God intended for us to live. They’re saving depreciating money. And some of the ways we created those means were. Create a budget. and you never manifest. I don’t have the money for that. Kim That will also cause you to have to live below your means. Mike And while you’re at it. “I can’t afford it. and then talk to a financial planner who’ll put you into mutual funds. Trina You know. you’re just hiding and trying to play it safe. We didn’t have any means. Mike? That’s the worst thing they could do. Marco If you’re playing defense instead of offense. to me. It was basically survival.” you put yourself in a box. The opposite of that. saving money. Mike Right.” That child will pay more than his or her fair share of taxes and then will have to live below his or her means. illegal. living below your means was pretty much a step up. Right. Living below your means is completely opposite to abundant living. “Go to school and get a job. That was the way we survived.

and by the time they got into their 60s. and each unit had the same buying power as the next one. Mike Worldwide. When they start creating a whole lot of currency. Before then. they rush back toward gold and silver. Robert Let me ask you this. This printing of money out of just paper. they could retire on their savings account and expect to live off that interest. Money has to maintain its value over long periods of time. the big reason that savers are losers is very simply because in 1971 the dollar stopped being money and became debt. And that is what causes inflation and the loss of purchasing power. many times. the baby-boom generation. 25 . and there’s always one result. and money was no longer money. hasn’t it? Mike Many. the World-War-II generation. They’re saving debt. It became money when somebody minted it into coins in Lydia in about 680 BC. you could retire on that. the industrialized generation. Robert As I’ve said in my books for years. when someone became working age. They became interchangeable. they could expect to put away 10 percent a year.000 years. Right. When the public senses the inflation of retail prices that is caused by the inflation of the amount of currency in circulation. For 5. which isn’t really money anymore.000 in the bank. In 1971 President Nixon took the dollar off the gold standard. Eventually gold and silver lie in wait. essentially taking the world off the gold standard. saving money could be the stupidest thing you can do because the system is stealing your wealth through the very thing you work for—money itself. everything changed and they started creating currency on a massive scale. Robert So for folks like my mom and dad.000 years. if you had $100. Real money is actually gold and silver. Robert Name some governments that have attempted to print money. but especially real money. Currency doesn’t have to. Robert Worldwide. you get far higher prices for everything. the rules all changed in 1971. They have for 5. it was very smart to save money. For our generation. gold has been the predominant currency. Mike? Mike Yes. Mike Right. Back in the 1950s.Sacred Cow #5: Save Money The fifth sacred cow is save money. So people are no longer saving money. In 1971. many. this has been tried before.

S. That’s the problem with saving money.S. the Zimbabwean dollar was on parity with the U. It’s now debt. is trying it.Mike The Weimar Republic. dollar was the same as the Zimbabwe dollar. It doesn’t buy a cup of coffee. the Germans tried it. One U. Mike I’m preparing by getting fully diversified. yes. Robert And so that’s why saving money is probably the biggest mistake you could make right now because today money is no longer money. I buy both gold and silver! 26 . when it went from Rhodesia to Zimbabwe. the Greeks did the same thing when they started clipping coins.S. The Romans tried it. But when Zimbabwe was created as a country. Mike Yep. the English tried it. the world goes with it.S. the same way the Zimbabwe dollar is in trouble. This is the largest note ever printed. All currencies throughout the world are in trouble. But it doesn’t buy anything today. After 1971. Robert And this was printed in 2000? Mike Yes. dollars. the Chinese tried it. dollar. They are the most recent. See.S. it was no longer money. Robert Right. Robert If the U. Mike And more than 70 percent of all the currency on the planet is U. Kim What about Zimbabwe? Mike Zimbabwe. and now the U. having printed a $100 trillion note. dollar goes.

A house just drains money from your pocket. Robert A lot of people are in trouble today with their house. Your home is not your asset. as an accountant. It’s not difficult math. Ken Yes. The bank will say it’s an asset. though. Robert Everybody used to tell me my house had appreciated in value. is a house an asset? Tom Well. “Well. At that point. I wrote in Rich Dad Poor Dad that your house is not an asset. It’s actually your bank’s asset if you read a financial statement. you get a deduction for the interest. Robert Is your home an asset? Ken No. no. and they’re finding out it’s a liability because they still have to pay the bank on that mortgage. if you own a house.” Yes. but it’s money out of your pocket and the best you can get is 40 cents on the dollar. Rodney And I’ll tell you. You’re still out 60 cents. One of my little pet peeves is that people say. In 1997. because it doesn’t produce any revenue. Ken Yes. and the financial planners will say it’s an asset. I rent.Sacred Cow #6: Your Home Is an Asset The next big sacred cow is your home is an asset. okay? So you’re giving a dollar and you get 40 cents back. every realtor stopped sending me Christmas cards. What does that tell you? Robert Well. but the reality is that it’s not an asset for you unless it’s putting money in your pocket. I pay the bank every month. It’s the bank’s asset. that’s capital gains versus cash flow. you own lots of real estate. Again. And what people are finding out now that the real estate market has crashed and the value of homes has been sucked out… now people are upside down on their home. I’m the largest originator of FHA and VA loans in the entire country. 27 . Robert Kenny. not my personal residence.

this is okay because I get a deduction. and this is one of the biggest financial lessons that our country has had to learn in a very hard way. And the reality is that the reason they were doing that is because they got to deduct the interest off their taxes and so they thought. but today the market’s trending down. prices will come up again. and it brings them $20. Kim and I own two houses. Your home is not an asset. as in anything. boats. this is your best time. you might make money in an up-trending market. and so this has affected entire communities. So. cars.000 swimming pool. We’ve heard people say that your home is an asset. Otherwise.” I’m not saying don’t buy a house. The way I look at it is that you just bought a $30. people were borrowing against their house and putting it into the stock market or wherever they were putting it. Even if they had their mortgage paid off. new credit will be loosened again years from now. I should’ve listened to him. The neighbors aren’t going to sell their houses because values are so far down.000 worth of value. but it’s not an asset that you’re going to make money on. Garrett Fifty percent of the mortgages in Reno are under water. meaning that the mortgage is greater than the value of the property. and they’re our biggest liabilities. and people will do it again. Kim People did think. one in Arizona and one beautiful beach house in Hawaii. Ken This has happened before and what will happen is new laws will come in. But if you’re going to use debt. Well. just keep calling your house an asset. This is the best time to get back in the market. we’re talking here about financial education. Now people are saying. And this affects the whole community because people aren’t able to sell their homes and move to a place where they can get a better job. They put in a $50. Robert Now. you’ve got to be highly financially intelligent. Just don’t call it an asset. that your house is not an asset. if you’re not intelligent. That’s why in 1997. It’s not a financial asset. was heresy because the market was up-trending. It’s a place to raise a family. but they were also taking money out against their house in second and third mortgages. Robert It’s about a 20-year cycle. Tom And they were doing it for things like vacations.000 babysitter. The reason I’m in real estate is for one reason—debt—because one of the easiest assets to get debt on is real estate. not only were they getting crazy mortgages.Rodney Your home is shelter. what I said in Rich Dad Poor Dad. especially in the high times when the markets were high. that their house was an asset. and that’s why it takes financial education. I’m saying just don’t be financially ignorant and call your house an asset if it’s taking money out of your pocket. 28 . The point here is that this is the best time to buy real estate. Rodney One of the big mistakes people make is over-improving their house. “Oh my God. “Well.” Just because you get a deduction doesn’t make it a good thing to do. and other things. If you are a first-time home-buyer.

And a credit card is a fast way of creating money because there’s really no money in the card. and we have commodities. That’s why debt is good. requires debt. and we love rental properties that cash flow. In fact. Sacred Cow #7: Get Out of Debt Time to shoot one of the more evil of all the sacred cows. And number four is commodities: gold. A lot of people are saying to cut up your credit cards. don’t you? Rodney Yes. we’re in real estate. you try to pay off the bad debt so that you can invest in good debt. we live in a credit society. I think that’s really ridiculous because a credit card is not the problem. $100 is created and it flows into the economy. and I charge $100. silver. you see the horror stories of bad debt. and gas. Mike The entire currency supply. A dollar is just an IOU. Robert Right. As an entrepreneur you own a business. which would be real estate.000 in credit-card debt. “What do we do with it?” Well. real estate that puts money in our pocket every single month. and savings. Most E’s and S’s are in paper assets today. and they have this bad debt. Number three is paper assets: stocks. but they have $250. I don’t know how anybody could get along today without a credit card. We have paper assets. number one. evil for most people—get out of debt. bonds. Like magic.Time Out: The Four Asset Classes We’re talking a lot about assets. mutual funds. But when you abuse this. They’re asking. Rodney. So for us. I love my credit cards. Every month there’s a payment due on those dollars that you created. We’re in business. Currency is also created by people taking out a loan at the bank through fractional-reserve lending. and there are four primary asset classes. that’s when we get in trouble. So let’s say I go to the store. Let’s face it. all of the dollars in existence. when we talk about diversification. It’s borrowed into existence either by the government creating a bond that promises to pay interest or by future taxes. You can’t have a dollar without debt. The problem is a lack of financial education. don’t we? 29 . But people are walking into my office. other precious metals. we’re in all four asset classes. oil.000 a year. One is business. and you do have to have credit. I see people walk into my office who make $150. and we own hundreds of properties in real estate. Number two is real estate. We have to learn how to survive and thrive in this credit economy. Robert And we love debt.

Tom And the tax benefits that you get on the real estate isn’t on the $1 million either. and we even have good debt in business as well. so that’s what I consider to be good debt.Ken Yes. That’s the point. But I don’t really like real estate. and the debt creates more cash flow. and the tenants are paying them off. Ken They’re moving into our places. A smart investor doesn’t really care. And by using the bank’s leverage. You say that if you put $1 million of cash into a mutual fund. paying rent. Ken Here’s what we’re doing. That’s how we grow. versus $1 million of mutual funds with $1 million. But if you put $1 million as a down payment on real estate. People say that I like real estate. Tom And it’s not just real estate. Robert And they’re paying it off with after-tax dollars. And it’s the cash flow from the business that’s able to pay the debt. and we’re taking that rent and paying our mortgages down to zero. Robert Many people are worried today or think investing is risky because they invest for capital gains. we have a lot of debt. right? Ken I like the analogy that you use sometimes. A smart investor wants both capital gains and cash flow. I just love debt because it’s so easy to get a loan on real estate. but you also increase leverage on your taxes. Robert Our real estate that we own is all basically financed with our tenants. They’re hoping their home value goes back up. Ken So you’re actually getting a $5 million asset with $1 million. We get these loans. we get proper leverage. So you not only increase leverage on your cash flow and on growth in your asset. Robert Right. and it’s paid by all the residents who live in all of our projects. So when we get real estate. It’s on the $5 million. not the $1 million. the value you’re creating on that real estate is on the $5 million. They’re hoping the stock price goes back up. 30 . you get whatever you get paid. you actually buy a $5 million project. Business is the same way.

000. But ask them if they will loan you money to buy those mutual funds. or no tax? Tom It’s no tax. and from there I learned. That’s why. But if we go in and say we want to buy real estate. Robert Because they’re not educated. And people are raised. Kim No. That should tell you something. I had to put down $5. The reason it was good debt is because every month I would collect the rent and pay the expenses. they’ll ask us how much we want. and I had a mortgage—or good debt—of $40. it’ll probably take them $2 million to save the million because taxes will take 50 percent of it. pre-tax. So it was good debt because that debt put money in my pocket every single month. and the answer is no. 31 .000. Tom Right. one-bath house. and I was raised. If only people understood that there is such a thing as good debt. Anytime you’re borrowing money. there’s no tax on that money. You can use that cash tax-free. I’m somebody that knew absolutely nothing about money or financing or investing. but it was a start. Now it wasn’t a lot. including my mortgage payment. but they won’t lend you money on mutual funds. And the other part about it is. I did my next investment and my next investment. Robert So if somebody wants to save a million dollars versus borrow a million dollars. I don’t know how many people I talk to who think “debt” is the dirtiest word in the world. Ken That’s because there’s collateral. Robert Yes! Ken They actually have something physical. to get out of debt. At the end of the month I had a positive cash flow of $25. Robert They’ll sell you mutual funds. and this was back in 1989. that borrowed money for real estate—is that after-tax.Kim Wait a minute! Ken is talking about these million-dollar deals. Robert Go to a bank and the banker will sell you mutual funds.000. That’s it. which I didn’t have. and I began investing with a little two-bedroom. The house cost me $45. Let me tell you how I started. That’s the four-letter word.

“No. no. and amortization. I still remember when I did a real estate course. Kim And help you create and develop very good financial habits. I might have been wiped out in this crisis. and I said. greed sets in. And I didn’t always listen to my rich dad. Some of my best mentors. I think some of the greatest mentors are tough because a really great mentor will push you to go beyond where you think you can go. They’re fabulous because they give us the money.” So I let that condo go. 32 . We keep all of it. I love my banker. “If you start investing for capital gains.” in other words.000 that didn’t cash flow. I went to see my rich dad. no. We keep all the appreciation. “But it’s going to go up in value. Robert Yes. you’re going to take those into your investment life.” And we argued and argued and argued. But you know. “Never buy anything that goes up. I’m anti-lack of financial education because there’s good debt. but I learned a lesson from my coach. Robert Because when markets go up. someday you will lose big time. that’s what they’ve done for me. and I didn’t pay $64. and I can borrow a million dollars tax-free.000. Kim Because if you have poor financial habits in your personal life. capital gains. and I’m not anti-debt. It must cash flow.” And I said. my rich dad. Robert Right.Robert But I just go straight into a bank. He finally said to me. depreciation. One of the most important things a coach will do is help you develop great financial habits. So that’s why a coach and a mentor keep you onto your plan. and I went running out and found this condo for $64. Today it’s probably worth $300. and there’s bad debt. He said.000. Kim Your rich dad was a tough mentor. And greed makes people stupid. I’m not saying bankers are bad. If I had gotten into the habit of buying for capital gains due to the price of stocks going up or real estate going up. They’re the best partners of all. It’s great money. So I’m not anti-bank. It’s going to go up. All they want is their interest.

Andy In real estate. Well. as entrepreneurs and real estate people. Liquidity is what paper assets are about—your ability to sell and buy without negotiation problems. Stocks are good for people who are not business people. 33 . who say that stocks are the best way to go and not to get into real estate. if you sell them to other people. we’re personally responsible for income.. And you talk about the law of compound interest. A whole new industry was born called financial planners.. what control do you have? Robert None. You can’t do that with paper assets. what do you think of mutual funds? Andy I think they’re a great way to make money. what do you think about that and paper assets? Andy You’ve lost control that quick. assets.” Robert Right. even in Microsoft. Robert Okay. United Airlines. so let me ask you this: If I say to invest for the long term. Today it takes 30 days to become a financial planner. you can just go on and on. you can force the appreciation—paint it. Robert Andy. you’re rolling the dice and saying. After 1974. expenses. General Motors... They make other people rich with hidden fees and expense ratios. like financial advisers. like 30 or 40 years. etc. and liabilities. I think they’re one of the worst places a person can put money. the rules of retirement changed and suddenly forced E’s and S’s into the I quadrant with no financial education as they had to put their money into these retirement plans. and mutual funds. and liabilities. bonds. If you hold it forever. Think of all the companies people have held for the long term: Enron. It still takes a year and a half to become a massage therapist. Your only control is to sell. Andy All you can do is sell or hedge. But as a stock investor. Worldcom. carpet. I have no control over income. Honestly. expense. That’s all you can do. But the moment you decide to hold stocks. “I hope it works out. assets.Sacred Cow #8: Invest for the Long Term in a Well-Diversified Portfolio Our last sacred cow is invest for the long term in a well-diversified portfolio of stock. There are a lot of people. You see. there’s the law of compound expenses too.

once they’re in that 401(k). Tom You’re penalized for pulling them out. “I’m well diversified. and capital gains or passive income. they’re all taxed at the highest ordinary earned income rate. When you sit down and they say. you’re diversified across asset classes. Andy Right. Robert You’re penalized for early withdrawal.” they’re not well diversified. when you pull them out. when it’s coming through savings or a 401(k). And savings and mutual funds. By putting them into a 401(k). Robert. if one company goes down. but not a system-wide problem. what are they taxed at? Tom When you pull out earnings. I’ll tell you where I think the risk is. there are three types of taxes: ordinary earned income. Andy Right. Robert So the problem with diversification in just one asset class like paper assets is that it doesn’t protect you from a crash. And what makes it worse is that you take those paper assets that you don’t have control over because you invest long-term and then put them into a 401(k). And I think it’s… Robert That’s not diversification. Andy Robert.Tom That’s right. you can’t take them out. It’s more fragile now than I think it ever has been before. “We’re going to diversify you so that. not just bunches of stocks. you’ve got all these other companies to buoy you up. And then on top of that. Robert Warren Buffet. Then you have even less control because. Robert On top of that. But if you plan to be poor. And these people saying. 34 . it’s a pretty good plan.” That’s fine for non-systemic-type things. I’ve seen you take heat in the press when you say they’re risky. Robert It’s the worst thing you could possibly do if you plan on being rich. you don’t even get the one tax benefit you get with paper assets—capital gains. you’ve lost that benefit. the world’s greatest investor. reportedly says that diversification is protection from ignorance. It does not protect us if the system breaks down. portfolio income.

Our companies have insurance. all these retirement plans. Andy And that’s a hard level of education because most people don’t know how to hedge that. you lose everything and the mutual fund companies walk away with the money. I mean it’s possible. your home or your 401(k)? Robert And I’ll say it again. Robert That’s what we teach in our advanced courses. you don’t know. But here is the biggest thing that really bugs me. 35 . right? Ken Right. Robert Is there insurance for mutual funds? Andy Well. But the 401(k). we always buy insurance. not for the average person. Robert Nope. hopefully. Robert But it’s ignorance from both the person selling you the plan as well as you who invest in the plan. When Kenny and I buy real estate. We all drive cars with insurance. We all have houses with insurance.Andy Right. So if it crashes. don’t we? Ken Yes. When we buy real estate. Andy They don’t know how. Robert Is there insurance on your 401(k) that what you put in will be there when you retire? Andy And which is more likely to burn down in the next five years. there’s no insurance on them. we have insurance. but if you’re the average person. Robert And then when we drive a car. we have insurance.

Ken That’s the truth. Ken The cool part about this whole discussion is that those people putting their money in the plans and mutual funds. In 1974. So keep putting that money in that 401(k). and it flows from the E’s and S’s to the B’s and I’s. that’s the money I get to buy my real estate. with a definedcontribution plan. Cash always flows. That is not a minor thing. Defined-Contribution Plans This is a very important point. most people do not know that difference. What that meant was that they received a paycheck for life from their company after they retired. or the return of your money. five golf courses and a major resort. you’re gambling. because it has to go somewhere. Time Out: Defined-Benefit Plans vs. Robert Kim and I just bought this huge property. and most of the money came from retirement plans. Robert So the money flows from the E’s and S’s… Ken And then I make money on their money. That is a major deal. And that’s why financial education is so crucial. Any time you have no control over your money. What you put in is all you get back. most people like my parents had a defined-benefit pension plan.Andy If you poll the average person and ask the difference—this is a very basic question—between a defined-benefit pension plan and a defined-contribution plan. the rules of retirement changed. the entire world started shifting onto defined-contribution pension plans. After 1974. you can lose everything in a market crash or you can run out of money before you die. Many people are terrified of running out of money in retirement simply because. 36 . Prior to 1974. you guys. Robert That’s right.

Kim To further your financial education. I’d like to thank you for reading and paying attention to this. We’ve all been in the dumps. to where you want to be. and that’s where the change starts. It takes more than watching one video. to turn your mind into an asset instead of a liability. Take the leap. Be strong. We’ve all made this change. now’s a better time than ever to make a change. but there are experts out there. Ken And the objective is. there’s no athlete. if you’re in a difficult situation. Every one of us has been there. this is your time. Kim It’s not until you hit a point where things become so uncomfortable or so painful that you are willing to accept that things aren’t working right.Final Thoughts Robert In closing. I just want to thank you guys for being givers. And so for many people. It takes more than one book. Robert Help your children today. the way that you think they’re supposed to work. It’s not too late. like Robert says. So take control. no expert in any area that has become a professional at something in one week or with one book or with one DVD or one workshop. knowledge is the new money. and we know that you can do it. Kim And I want to say specifically to the women. And you can make that change. real estate. We know that we can do it. Take that next step. I mean there’s no professional. It’s a whole process. Take control of their financial education because they may not receive it in school. one of your greatest assets—or liabilities—is the people you hang around with. These programs are developed to get you from where you are today. As we said. that’s their wake-up call. and we’ve all hit at the top. But there’s one more thing about friends. when they get into a financial crisis. and paper. And in fact. I’d also like to thank my friends who helped impart their wisdom because. We also have Rich Dad coaching programs **LINK** in business. and for women I think this is really an opportunity for you to grow and get stronger. 37 . Get that financial education. Kathy You can’t wait until you have 100 percent confidence because you’ll never have 100 percent confidence. The Rich Dad Company has advanced educational and mentorship programs **LINK** These programs are in the business entrepreneurial sector of real estate and paper assets. as you’ve heard so many times. Tom What I would leave you with is to take control of your life.

Two years later. You’ve got to go through a minefield of failures to get over onto the side of success where you want to be. one of the greatest leaders of all—Winston Churchill. I kept flying and flying and got better and better. one of the ways we learn best is by repetition. Finally. Wait a week. and that’s why friends are so important. I entered Navy Flight School in Pensacola. I’ll end with some great words about quitting from a great man. I popped out as a Marine helicopter-gunship pilot on my way to Vietnam. The same thing happens with education. Robert Education’s a process. It’s from multiple sources. That educational process transitioned me from a guy who couldn’t fly. financial intelligence isn’t from one source. and more and more will make sense. read it again. you need financial education because financial education is also a process. In the darkest hour of England. read it again. For example. he said.It is imperative that you get role models in the form of coaches and trainers every step of the way. never. and you’ll absorb more and see new things. the question is. Wait another week. That’s a great way to use this eBook. To come out as a B and I. do you come out an employee? Do you come out as a person who needs a paycheck? Do you come out as a person always looking for a job? A person working hard and paying excessive taxes? Most people go to school and they pop out as E’s and S’s. and that’s why I’m glad and I thank all of my friends for coming together to share their knowledge. As you can see. “What do you come out as?” When you go through the process of education. I didn’t learn to fly by flying once. For example. When you go to school. never. “Never.” 38 . They will keep you on track. One of the reasons we created this eBook is so you can read it again and again. to somebody who became one of the best pilots in the world. never give up. Florida.

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