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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

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

Find out more at www. The Advanced Guide to Real Estate Investing. He serves as a coach to Rich Dad’s Stock Success System trainers and as the Rich Dad Advisor for paper assets. 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. 5 . Anita Rodriguez Anita homeschooled her four children before becoming a teacher and counselor in the poorest high schools of Denver’s inner city. one of the wealthiest counties in the nation. He is the author of the Rich Dad Advisor books The ABCs of Real Estate Investing. 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.KenMcElroy.com.com. Having spent most of her life in education and seen first-hand the lack of sound financial education in the U. www. Ken brings 20 years of real estate experience to the team and speaks to thousands of people across the globe each year. she was a high school administrator for Douglas County in Colorado.thesleepinggiant. school system.S. she joined The Rich Dad Company in 2006 as an Education Advisor.com.As a Rich Dad Advisor. and www. She brings her vast experience to Rich Dad to help develop world-class financial-education curriculums that change lives. 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. In 2008. Later.mccompanies. and The ABCs of Property Management. He is currently authoring an upcoming Rich Dad Advisor book on paper-asset investing.

Tom has devised innovative tax. and is the author of the Rich Dad Advisor books Sales Dogs and The ABCs of Building a Business Team that Wins. Find out more at www. 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 cash flow. and wealth strategies for sophisticated investors and business owners. Find out more at www. Blair has presented in over 20 countries across 5 continents on life-changing sales success. For more than 25 years. productivity. business.com and www.blairsinger.com.salesdogs. 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 is an international speaker and an adjunct professor in the Masters of Tax program at Arizona State University. As a speaker and Rich Dad Advisor.com.provisionwealth. Tom Wheelwright Tom is the founder and principal for ProVision Wealth Strategies.Blair Singer Blair is a top-rated and internationally known speaker and sales communications trainer. 6 . performance.

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

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

Pepsi.RodneyAnderson. Marco Antonio Regil Marco is a successful entertainment entrepreneur and investor.Rodney Anderson Rodney is the Executive Director and Senior Managing Partner for Rodney Anderson with Supreme Lending. 9 . Rodney brings his 25 years of experience to the table as the Rich Dad Advisor on lending. and has arranged financing for over 20. 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. He’s Mexico’s number-one TV host and has devoted 25 years of his life to radio and television.000 families over the last 18 years.com for more information. 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. Visit www. He is the leading home-loan specialist in Texas. He’s helped raise more than $40 million every year for these charities.

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

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

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

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

did you? Mike No. And. It’s not about the law. but he’s got all this real estate. Maloney. not about history. the only financial education I got was specific to my profession. I have not a clue about my money.” 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. Economics is financial education. And people say to me. you never finished school. 14 . she finally looked at me and said. It’s not about investing. We rob ourselves of the independence to think freely as entrepreneurs or investors. Robert: We’ll forgive you. Some are highly educated. they’re street smart. right?” Not really. but when we were talking.Robert And you’re an “A” student. Many times you think that. “Well. I failed school. I learned economics in school. “Wow! He’s doing pretty well. We depend on government to take care of us. school failed me. the people who run our 401(k)s— to take care of us.” She’s 45 years old. Kim I was talking to a woman the other day. but more than that. I thought. Garrett Robert. 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. We depend on three things. I was dyslexic. and she has not a clue. I see all sorts of people walk through the door. no. But when I went to school. She’s a highly successful medical doctor. We depend on a corporation to take care of us. we depend on institutions—you know. Robert Mr. He didn’t go to college. the scary one I think is. And the first time I saw this type of client. but like you said. But they really don’t because they never had the education. right? Tom Yes. Tom Thank you. Robert Right. and some have no education at all. I’m an “A” student. “Oh my gosh. She’s very smart in many ways. as a lawyer. It’s brutal. and we become dependent on those three entities. There was no general financial education. because people are successful. they know something about money. Andy School creates a culture of dependence. It’s not about taxes.

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

one red hotel—and then we went out and did the real thing. What he found is that the worst way to learn is by reading or listening to a lecture. and then doing the real thing.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. The interesting thing is that my poor dad who was good at school thought that reading and lecture were the best way to learn. is by simulations. 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. And the best way to learn is at the top of the cone. four green houses. How many people in this room have made financial mistakes? 16 . 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. So. playing games. which is simulations through games. one of the ways. one red hotel. (1969) The Cone of Learning was created by an educational researcher named Edgar Dale in 1969. four green houses. He taught me using the game of Monopoly™—you know.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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