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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.
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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
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4 . author. Ken McElroy Ken is a founding partner of MC Companies.000 apartment units valued in the hundreds of millions of dollars. Kim Kiyosaki As an internationally renowned speaker.WomenEntrepreneur. Rich Woman. He offers financial advice that exposes the absurdity of conventional attitudes about money and debunks the so-called financial experts. was a Business Week bestseller and is one of the top 50 best-selling personal-finance books of all time. and construction with a portfolio across the southwestern United States of over 10. A true advocate of effective financial education. She’s a sought-after speaker. 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. investment. and a columnist for www. Kim knows what it takes to succeed and be a financially independent woman. television and radio talk-show guest.His latest release. Robert isn’t afraid to challenge the status quo. and real estate investor. entrepreneur. Rich Woman. Kim is a happily married (but fiercely independent) woman and often travels and speaks with her husband. Unfair Advantage. Her first book.com. Kim draws on a lifetime of experience in business and investing to be an advocate for women in the marketplace. the host of a PBS Rich Woman show. Through her international brand. development. A self-made millionaire. Robert Kiyosaki.

5 . www. she was a high school administrator for Douglas County in Colorado.mccompanies. He is currently authoring an upcoming Rich Dad Advisor book on paper-asset investing. school system. Find out more at www. She brings her vast experience to Rich Dad to help develop world-class financial-education curriculums that change lives. Ken brings 20 years of real estate experience to the team and speaks to thousands of people across the globe each year. she joined The Rich Dad Company in 2006 as an Education Advisor. 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.com. 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.com. In 2008.thesleepinggiant. He is the author of the Rich Dad Advisor books The ABCs of Real Estate Investing. and The ABCs of Property Management. He serves as a coach to Rich Dad’s Stock Success System trainers and as the Rich Dad Advisor for paper assets. The Advanced Guide to Real Estate Investing. and www.com.As a Rich Dad Advisor. 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.S.KenMcElroy. Later. 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.

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

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

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

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

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

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

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

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

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

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

(1969) The Cone of Learning was created by an educational researcher named Edgar Dale in 1969. And the best way to learn is at the top of the cone. four green houses. and then doing the real thing. My rich dad taught me to be a rich man by using methods at the top of the cone. So. playing games. if you want to learn without much risk.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. one red hotel. is by simulations. four green houses. The interesting thing is that my poor dad who was good at school thought that reading and lecture were the best way to learn. 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. which is simulations through games. How many people in this room have made financial mistakes? 16 . He taught me using the game of Monopoly™—you know. one red hotel—and then we went out and did the real thing. one of the ways.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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