Speaker 1: This is the rich dad radio show, the good news and bad news about money.

Here's Robert Kiyosaki.

Robert Kiyosaki: Hello, hello, Hello. It's Robert Kiyosaki, the Rich Dad Radio Show, the good news
and bad news about money today. Today, we have a very, very important show
and is on a very important subject, and it's a subject that's near and dear to my
heart. It's about brothels. No, I mean risk. That word is a four letter word, yet I
know the word risk holds so many people back in their lives. As a person who
spends most of my time talking to people about money and things like this, I
notice that most people are so terrified of losing money or making a mistake or
what if my business fails?

Robert Kiyosaki: It goes to this subject called risk. It is not just a superficial surface four letter
word, it goes deep down into the core of the individual. So, risk means different
things to different people. Today our guest is Allison Schrager, and she is the
author of a book that is sounds interesting. I haven't read it, but I'd like to read
it. It's called "An Economist Walks Into a Brothel," which came out 2019, this
year. And I really liked the title already and she's going to be talking about
people who walk into brothels and also surfers. So, as some of you may know, I
grew up in Hawaii as a surfer, and I must admit I have walked into a number of
brothels in my lifetime and just to take some risk. My wife is here, Kim, so she
can tell you that I actually called her from a brothel once. Any comments, Kim?

Kim: Well, you did actually call me from a brothel. Yeah, I think you were in Costa
Rica and it's like, "Kim, I'm in a brothel." And I'm like, "Well, tell me what it's
like. I've never been in one." But ...

Robert Kiyosaki: Yeah, it was really a nice ... interesting people.

Kim: Interesting. But I'm very excited to talk to Allison because she's all about risk
management. It's something we haven't really talked a lot about here, but if you
think about it, in your business there's risk management, in finance and money
there's risk management.

Robert Kiyosaki: Your life.

Kim: In every day of your life there's risk management.

Robert Kiyosaki: Crossing the street looking the wrong way is risky.

Kim: Yeah, health, sports, everything is risk management. Allison is the expert and
she's studied it, as Robert says, she's studied it from brothels to surfers and all
starts throughout the globe. So, I'm anxious to hear her take on risk

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Robert & Kim Kiyosaki featuring Allison Schrager 1
 management and how to manage it, but more importantly, how to use it to your
advantage.

Robert Kiyosaki: One more thing I'd like to say about Allison, she's fantastic marketer because I
looked at her video and she has these good looking young guys riding these
giant waves. So, it's an interesting podcast ... I don't know what you call those
things anymore.

Kim: Video. Those are video.

Robert Kiyosaki: But you can go to her website, allisonschrager.com. Not just in risk, her video is
at minimum entertaining. Anyway ...

Kim: Allison, welcome to the show.

Allison: Thanks so much for having me.

Robert Kiyosaki: You're a very good marketer, I must admit. Very good, very good.

Allison: I take no credit for that. I think that was the recent video and they had all the
great footage.

Kim: It worked.

Robert Kiyosaki: Your title is a great title because economists and brothels don't necessarily go
hand in hand. So anyway ...

Allison: Yeah, that's why we went with it because I'm actually ... I studied economics of
retirement. I don't exactly do these sexy things in my work and so it just kept
putting me in these sort of places you would never expect, which is how we
chose that title.

Kim: Yeah, so what is An Economist Walks Into a Brothel. What's it about?

Allison: It's about risk taking. My background's in retirement finance and the central
question, this is that when there's a pure risk problem, the over fine, how do
you move money into the future. The more risk you take, the more money you
can move into the future although you risk loss. So, it's all one big risk problem
and I spent my career as an economist very focused on risk and how to measure
it and how to manage it. It seems to me, I noticed that people could be so great
about managing risk in one aspect of their lives, but not the other. I just reject
the idea that people can't understand risk. It's really popular to say that. I was
thinking, especially with the retirement issue, we put the huge risk problem on
everyone that they have to invest themselves to their retirement.

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Robert & Kim Kiyosaki featuring Allison Schrager 2
Allison: It seemed important people understand all these things I've been studying for
so many years and I fully am committed to this idea that people can understand
it. They're not something you have to get a PhD and to understand. These are
basic concepts that people need to know. They're fundamental financial
literacy, yet we don't really do anything to teach them formally. So, people use
them in one area, but not the other. I've also had a background as a journalist,
and I figured a good way to communicate these ideas was to do storytelling, was
to find interesting examples of people using these concepts in unusual ways
that were memorable and engaging and interesting. It would also be a fun
experience for me to meet them.

Robert Kiyosaki: Well, that's great because today, Kim and I are hosting a luncheon for a US
congressman and he's going to be talking about the retirement risk. There's a
new video out by PBS called the Retirement Gamble. One of the reasons that we
started the Rich Dad Company was because, I'm sure you know 1974 was ERISA,
the Employee Retirement Income Security Act, which led to the 401(k), and all
of these criminal activities called stocks, bonds, mutual funds and ETFs. And it's
just ripping people off.

Robert Kiyosaki: I sit there and go, "Oh my God." And now it's coming home to roost because the
World War II generation, our parent's generation, they had was called defined
benefit pension plans. And today baby boomers have these things called no
pension plans or defined contribution, IRA's, 401(k)s and things like this. An
average person has no idea what the difference in a mutual fund, an ETF, stock
or a bond is. That's why 22 years ago we kind of coined these, put two words
together called financial literacy. Now I'm glad to hear that people are actually
using the word because it was made up. It didn't exist, because our academic
system is made up by people who are not risk takers, I call school teachers.

Robert Kiyosaki: Anyway, I want to hear what you have to say about this because I'm very
concerned about the growing gap between the rich and everybody else, but also
for my fellow baby boomers right now, a lot of them are going to go, as you say
and surfers, surf or talk over the falls. They're just going to get hammered when
the next crash comes on them. So, what did you find out about surfers for
Russia's hookers? That's very important to just start.

Allison: Well, I went searching for wisdom.

Robert Kiyosaki: I did too.

Allison: Most of the stories I read about are people who take risks and really smart,
interesting ways and both surfers and sex workers are very smart. They can be
very smart risk takers.

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Robert & Kim Kiyosaki featuring Allison Schrager 3
Robert Kiyosaki: Well, you have to be able to survive in both industries.

Allison: Totally. I mean we had this image of both of them being fairly reckless, but
when you get to know them and talk to them, it's [inaudible] the people who
are successful in their field, anyone who's successful in anything, no matter
what it is, no matter how exotic it is, is a really good risk taker.

Robert Kiyosaki: You also said something that's interesting is that people take risks in certain
areas, but don't take risk and others. Right?

Allison: Totally. As I said, we have this perception that people are risk averse or risk
loving and some people are more tolerant of risk than others, but I've never met
someone who never takes risks, especially people like to say women never take
risks, which I just find offensive. Women are great risk takers.

Kim: Yeah, that's a great point. I was talking to Sally Krakow, she was on Wall Street
and she says that women are not risk averse. She likes to use the word risk
aware. They're more aware of what the risks are. And so, when they make
decisions, they're more practical decisions and they understand the risks and
the nonrisks.

Robert Kiyosaki: Especially when a guy comes up and says, "Hi, can I buy you a drink?" The risk is
on risk at that moment. Risk on, risk off. It's a risk on at that time.

Kim: How does a surfer manage risk? What did you find out there?

Allison: I went to the north shore of Oahu because they have an annual risk conference.
These are the big wave surfers as opposed to regular wave surfers because big
wave surfing is exceptionally dangerous. The waves are like 80 feet wide.

Robert Kiyosaki: Yeah, my best friend died outside at sunset.

Allison: Oh, I'm sorry.

Robert Kiyosaki: It kind of ended my big wave surfing career. He was gone.

Allison: Isn't very dangerous. You're in an incredibly dangerous condition and because
people were dying more, they really decided ... there was this guy, I don't know
if you've ever ran across him named Brian Keaulana, and he decided that he ...

Robert Kiyosaki: Buffalo.

Allison: Yes, his son.

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Robert & Kim Kiyosaki featuring Allison Schrager 4
Robert Kiyosaki: Yeah. Right.

Allison: He comes from this long, big wave surfing dynasty and he was telling me how
one day he was ... I think he was participating in the Eddie, which was a big
wave surfing a contest. He's a lifeguard and so is Buffalo. It's a long history of ...

Robert Kiyosaki: That was Eddie Aikau. He died also.

Allison: Yeah. Exactly. So, he was in the water having been wiped out and here's
reflecting. I think it was a couple of days before, there was a surfer who he
couldn't rescue and who died. And this is haunting him. He was now in similar
water. He's a very good swimmer, so he was raised in the water. So, he's
worried about himself, but he was in the water sort of bubbling along waiting
for a chance to swim to shore, when a friend of his came by on a standup jet ski,
they are fairly new, and he said a light went on there.

Allison: Wow, we could use this tool to reduce risk. Once he got home, he bought a
Yamaha wave runner and he brought jet skis to big wave surfing. Now, but the
thing is the surfing world is haunted by this issue, which is you bring a
technology to make surfing safer. So, with jet skis is that you can get rescued
when you're wiped out [crosstalk 00:10:37].

Robert Kiyosaki: What happened is they went after bigger waves.

Allison: Exactly. It's like a stock option. It's like they could be used as insurance or it can
be used as leverage. Brian's concerned about this. He's like I'm empowering
people to take bigger risks. Not only do they feel safer because they have
something that can rescue them, but they also something that can fold them to
take bigger risks and it can push them on bigger ways. They have an annual
conference to discuss risk management, in the same way we would in a pension
conference talk about techniques of how to reduce risk and how to take more
risks while at the same time insuring against your downside.

Robert Kiyosaki: Well, glad you hear that. What do you find out about retirement risk? In my
opinion is nobody's really talking about it right now, but it's going to be one of
the biggest disasters and that disaster went back to '74 when congress passed
ERISA, which led to the 401(k), and now you have a whole generation of
Americans, about 60%. My generation will not ever be able to retire. What is
your system say about that? Because that's more than the rich dad's trikes on.
It's why Rich Dad was formed, really.

Allison: Yeah. A defined contribution pension isn't in of itself a bad thing. There's
problems to benefit plans too. The problem with defined contribution plans is
we sort of duck everyone with this tool without any training, without good

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Robert & Kim Kiyosaki featuring Allison Schrager 5
 investment options, without any financial education, like saving for retirement.
I've spent my whole career on it. I did a PhD in it, [inaudible] laureate on it. It's a
really hard problem. I find it very difficult.

Robert Kiyosaki: Yeah, Allison, but the biggest problem was they stuck people who are risk
averse with it.

Kim: And ignorant. And financially ignorant.

Allison: Exactly. If such people with an incredibly hard problems that I even struggle
with and they have no tools or education and how to manage it.

Robert Kiyosaki: That's right. I love you, Allison. I'm glad you're saying that because that's the
reason the Rich Dad company was formed. We have a disaster coming in ... I'm
of the generation that 401(k) and these IRAs and Roth IRAs and mutual funds
and ETFs, I look at them and going, "Holy macro, they're going into the riskiest
of all waters today."

Kim: How do you manage that risk? How do you manage the retirement risk? How do
you manage the financial risk?

Allison: Well, we have to reframe the problem. There's so many levels of where things
have gone wrong. To start with is we pushed everyone into a 401(k) without
really ... like defined benefit plans had a very clear objective. Right? You work
for someone and they gave you a security.

Robert Kiyosaki: The difference is Allison, for those who don't not know, defined benefit plan
was technically, which it wasn't always true, was professionally managed,
Whereas you had somebody who knew ...

Allison: They often didn't do a very good job.

Robert Kiyosaki: Yeah. I know most of them were horrible. But anyway, there was some degree
in the corporation and if you worked for Ford Motor Company, you had a
defined benefit, you going to pay a check for the rest of your life. So, it was Ford
who was managing that fund manager. But now, they ...

Allison: Yeah, they took on all the risks for you.

Robert Kiyosaki: That's why '74 was such a big year for me. I went, "Holy macro. We've screwed a
whole generation." The bill is coming due today.

Allison: Yeah. Although a lot of people didn't have defined benefit plans, so a lot more
people can ... I mean, defined contribution plans are a lot cheaper for

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Robert & Kim Kiyosaki featuring Allison Schrager 6
 companies to offer because they also take on all these risks because they're
cheaper.

Robert Kiyosaki: That's why they did it. Because they don't have to pay for the employee for the
rest of their lives.

Allison: Well, what ERISA did is, not only did it create the 401k, it made companies
properly account for how expensive defined benefit plans were because they
were being managed a lot more recklessly before. ERISA forced companies to
realize how expensive these promises were once they saw that, they're like,
"We want out of this."

Robert Kiyosaki: Not only that, when the corporate raiders found the defined benefit plan that
was full of money, they went in and raided the company just for that pension
plan. The same thing was going on in Wall Street today. That's why the Rich Dad
Company was formed. We have bunch of very ignorant people leading ignorant
people. That's why I'm glad to hear what you have to say about this whole thing
on risk because it is to people who are risk averse and they don't know what risk
is. They may take risks in other parts of their lives, but they don't know anything
about money or investing or a risk. When we come back, we'll be talking more
to Allison Schrager. She is the author of the book An Economists Walks Into a
Brothel, that's about risk and risk management and two Very dangerous
professions surfing and hookers. But when we come back we'll talk about the
next subject called hookers. We'll be right back.

Kim: Can I add something to that. So, when we come back, I want to talk to Allison
about how you take risk and manage risk in business, how you manage risk in
money and what are some of the key points that Allison has discovered in her
research.

Speaker 1: You're listening to the Rich Dad Radio Show with Robert Kiyosaki.

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Robert & Kim Kiyosaki featuring Allison Schrager 7
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Robert Kiyosaki: What is your number one expense in life? Your number one expense. It's taxes.
And I'll ask the question is how come there's no financial education in school,
but why isn't there education on taxes either. They tell you to save money,
which is stupid. They tell you invest in the stock market, which is stupid. I want
the to teach you about taxes. So, here at rich dad advisor, Tom Wheelwright,
we're talking about is revision for his book Tax Free Wealth. Welcome Tom.

Tom: Thanks Robert.

Robert Kiyosaki: What's the Tax Free Wealth about? What's different this time? So, we've got
revised edition.

Tom: Well, so what we did was, is ...this is the first major tax reform we've had in 30
years, 2017.

Robert Kiyosaki: Right. Because '86 was the last one.

Tom: 86 was the last one back when I was in Washington DC.

Robert Kiyosaki: So many guys got wiped out because of that tax change.

Tom: They did. It wiped out an entire industry. Savings and loans. This new tax law is
just as big but in a very different way. It affects different industries. The tax law
is always a series of incentives, and the question is always, which incentives and
which ones apply to me. And so, the key to revising tax free wealth was what is
that? What changed so much in this new tax law that we can absolutely take
advantage of? Seriously amazing incentives, for example, I mean the bonus
depreciation for example, for real estate is unbelievable. You buy a $1 million
apartment, you get a $300,000 deduction or more the very first year.

Robert Kiyosaki: So, if you want to make more money and pay less taxes like Donald Trump and
myself, get Tom's book Tax Free Wealth.

Speaker 1: financial freedom begins with financial education. Now, back to Robert Kiyosaki
and the Rich Dad Radio Show.

Robert Kiyosaki: Welcome back, Robert Kiyosaki and the Rich Dad Radio Show, the good news
and bad news about money. Today we're talking about a very important
subject, especially when it comes to the subject of money. It has to do with risk.
And most people are so risk averse, they stay poor, absolutely poor because our
school system, as you know, teaches us zero about money. On top of that, we're

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Robert & Kim Kiyosaki featuring Allison Schrager 8
 led by a lot of financial planners, stockbrokers, real estate brokers who are more
broke than you are. once again you can listen to the Rich Dad Radio program
any time anywhere on iTunes or android, and all of our programs are archived
at richdadradio.com. We archive them because one of the essentials of
education is repetition. If you listen to this program one more time or two more
times, you'll get smarter because it's like a golf ... when you play golf, the more
you swing the club, hopefully the smarter you get.

Robert Kiyosaki: The biggest part about listen to this program again is get together with friends,
family, and especially business partners. Listen to this program and discuss it
because our guest today is Allison Schrager. She is an economist and she's a
founder of lifecycle finance partners, LLC, a risk advisory form. The author of
great book, An Economists Walks Into a Brothel. Please get it, if nothing else,
watch the video it's fantastic. It's about surfers and hookers. Her website is
allisonschrager.com, so if you listen to this program one more time, you might
learn something about a very important subject called risk. we all take risks, but
in different ways. One of the things that Allison and I were discussing at the
break is everybody says investing is risky. That's absolutely not true.

Robert Kiyosaki: There are ways you can mitigate risk down to zero, but you have to have the
right advisor and the right professional support.

Allison: Hesitation and the right experience. Yup.

Robert Kiyosaki: Kim, are we hundreds of thousands and millions in debt?

Kim: We are. But that comes from education, that comes from experience, that
comes from knowledge.

Robert Kiyosaki: And Dave Ramsey, who is a good friend, he's got great advice. He says live debt
free. For most people that's ...

Kim: For most people, that's very good advice.

Robert Kiyosaki: Because they really should not be taking a risk with debt. So, Allison, again, as
an economist and her book is An Economist Walks Into a Brothel. She discussed
surfers and hookers and she was talking how they take risk and how they
manage risks.

Kim: So, many of our listeners, they're small business owners, they're small investors.
So, what would you say to them? Some of the keys on how to manage risk as a
small business owner or as an investor?

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Robert & Kim Kiyosaki featuring Allison Schrager 9
Allison: Well, in finance, so the techniques people use is they diversify. That gets rid of
unnecessary risk. The other things you can do is just-

Robert Kiyosaki: That's what financial planners tell you, right? Diversify.

Allison: Yeah. Although, that will help you get rid of the risk that a single stock will rise
or fall, or if you are a business owner and you have a store and you only are
selling one product, you're completely banking on that product [crosstalk
00:21:30].

Robert Kiyosaki: Diversification is one way a person can minimize or mitigate their risk.

Allison: Certain kinds of risks, but there's still these huge risks, like the risk that there's
going to be a recession or that every single stock's going to fall like it did in 2008
or almost every single stock. So, you still have those risks remaining. You also
have to think about managing or as you said, you're a small business owner,
you're very sensitive to what happens in the whole economy. That's where you
get into the more risk management, which could be hedging, which is just
hedging your bet, taking a little less risk.

Robert Kiyosaki: Hedge is another word for insurance for people.

Allison: No. Well, I define it a little differently. Is that where hedging is balancing risk
and reward and insurance is a different concept, which is when you pay
someone to take on downside risk for you or you have a plan to [crosstalk
00:22:18].

Robert Kiyosaki: Allison, I understand the term. I agree 100%. Okay, but this is what I do for a
living.

Kim: Are you saying that a lot of the risk management is that you're looking at all the
what if scenarios and what if the downside scenarios? Like recession, we have
to prepare for if there is a recession, how are we prepared to handle that if
interest rates, inflation ...?

Robert Kiyosaki: If you lose your job.

Kim: If you lose your job as an individual, how do you hedge for that? How do you
mitigate that risk? Is that what you're saying?

Allison: Yeah, and it is a very dangerous risk too because if it's a recession, you're likely
to lose money in the stock market and your job at the same time.

Robert Kiyosaki: And your house and then you're stuck with a debt.

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Robert & Kim Kiyosaki featuring Allison Schrager 10
Allison: Exactly. That's why-

Robert Kiyosaki: How about student loan debt, which is the worst of all type of debt.

Allison: Yeah. Well, this is why systematic risk is so dangerous is because everything
seems to go wrong at once and it's really hard to find a new way to diversify
your way out of that.

Robert Kiyosaki: Yeah. You're speaking my language here, Allison. The big question here is today
there's a rise of socialism, with AOC and, I don't know, the bristles characters.
The presidential campaign is now a Jerry Springer show as far as I'm concerned,
led by my friend Donald Trump. It's the rise of socialism because people are
afraid of risk?

Allison: Well, yeah. I think that's part of it. I think people sense more acute risks
certainly with all the that are happening, that there's this more existential
threat to their livelihood. One thing I think is socialism or populism in general, is
it's saying someone will take care of the risk for you, the government will take
care of risk for you. That's expensive.

Robert Kiyosaki: Right. Allison, the way I always said capitalism as you teach people to make their
money and then in socialism you give people money, and that's why people
want the government to take care of them. That's why they want free
education, free health care free ... all this other, free education because they
really are so risk averse right now.

Allison: Well, there's a lot of risks, especially if say when the economy is going through a
big transition is that you feel that systematic risk so much more and it's
particularly scary.

Robert Kiyosaki: Right. How else does a person mitigate their risk or reduce their risks?

Allison: Well, as I said, it could be, as I said, finding different ways to insure, it could be
finding different ways to hedge. As I said, figuring out how much risk is right for
you. Like I say, you guys feel comfortable taking on debt because you know how
to manage that. That's not right for everyone. For other people, it would be
getting rid of debt because if the economy tanks and you still have to make a
mortgage payment, that's a riskier situation to be in.

Robert Kiyosaki: Right. So, in your book An Economist Walks Into a Brothel, how do brothel sex
workers manage risk?

Allison: Like anything, you pay. There's a cost to reducing risks. I went to the brothels in
Nevada to understand ... sex work is a very risky job traditionally. You're walking

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Robert & Kim Kiyosaki featuring Allison Schrager 11
 the streets, or you're meeting men online, and they can be violent, they could
be police. So, the women in Nevada, what they do is they work out of the
brothels, and they give up 50% of their earnings. They give it to the brothel and
in exchange, the brothel promises then complete safety, and the customers as
well are paying for safety because they don't have to worry about a Robert
Craft, Eliot Spitzer type situation. They know that everything is secure. They
know the women are tested for diseases, and it really won't be any
repercussions, but they also pay a lot more than they would pay an illegal sex
worker for that reassurance.

Robert Kiyosaki: That's good to hear. How does that translate to the average person either a
small business or an old guy preparing for retirement. How does that translate
to them?

Kim: Because it sounds like from the sex workers, these are the things that could go
wrong. I think a lot of business owners, they get very optimistic, and they get
very starry eyed, and they don't look at what are the downside risks that need
to be managed.

Robert Kiyosaki: I met a lot of women in the brothel who had worked in the illegal market and
had a lot of really scary experiences, which is why they ended up there because
they were very aware of all the downside from not being out there. This is a way
of risk reduction is thinking I will pay, and in exchange, I will get less money, but
I will have less risk.

Kim: It's like insurance.

Robert Kiyosaki: The other thing is this, how does a person today, let's say they're an old guy like
me, 65 years old and we're cruising for one of the biggest market crashes in
history because of the quantitative using and they printed so much money, the
stock market is overinflated rates and all the financial experts are saying stay in
the stock market, stay for the longterm. And we all know it's going to crash
because markets crash about every 10 years, so we're overdue right now. How
does a person with a 401(k) or an IRA protect themselves from a catastrophic
market crash?

Allison: Well, it depends on where you are as an investor. Certain assets are less volatile,
so you could invest more in bonds. It's low return, but you do face less risks.
And/or if you are investing more for the long-term, and you've got a stable job
and stable earning, you just have to ride it out and be like, all right, the market's
going to crash, but I know, or I hope it will come back. So you have to balance
those two things, one year investment horizon into how much risk do you feel
comfortable taking and get into lower volatility, other lower earning assets to
compensate.

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Robert & Kim Kiyosaki featuring Allison Schrager 12
Robert Kiyosaki: So, you have the standard financial planner pitch on how to mitigate risk?

Allison: I guess so.

Robert Kiyosaki: Yeah. Let me just say that as a surfer, when you're paddling out, and you say
waves come in sets of five, [inaudible] that three to five. And you see this huge
wave about to crash on you and you're halfway out. Which is where I'd say most
people are today, what would you do today?

Allison: Well, you have to decide what's right for you and your risk tolerance. A lot of
the surfers I met would let that wave go and go for a later wave in the set, even
if it would be smaller. Because if you take that first big wave, and it crashes on
you, you might be dead. You balance, do I want that career defining huge wave
or do I want to take maybe a wave that maybe two thirds of the size, but I know
we'll be safer? A lot of them make that decision. I think we'd like to think these
guys as daredevils. But I found a lot of them made the decision to wait for the
later waves.

Robert Kiyosaki: Now, I like what you said about, in your book, in An Economist Walks Into a
Brothel that these big wave surfers are very smart people. They understand risk.
The reason I'm encouraging people to get your book An economist Walks Into a
Brothel is in today's world of high risk, you have to look in the mirror. Who are
you? And if you're not a big wave surfer, you shouldn't be out there. And if
you're not a hooker, you shouldn't be there either. But most people don't look
in the mirror and then they take advice from people like school teachers or
financial planners who are also a risk averse and they don't get educated. Any
comments on that, Kim?

Kim: Well, it's actually why I love the game of golf. I'm a golfer, and every day, every
round of golf, every shot almost you're managing risk. So, you hit a bad shot and
then you've got to figure out what's the best way to get the best score, the
lowest score possible. Here I am under the trees in the bushes, how am I going
to get out of this? And you've got to manage every shot. I relate that to life. So,
in business, all of a sudden something goes awry and you've got to figure out
how am I going to get back on track? How do I make the most money? How do I
get my most revenues? It's like every single day people are managing risk. I
think really not even realizing they're doing it.

Robert Kiyosaki: Yeah. If you saw the masters where Tiger was on hole 12, Tiger took the less risk
and he won because he took the less risk. His two guys who were tied with them
took the greater risk. But that's kind of human nature isn't Allison? It's up to the
golfer, or the person.

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Robert & Kim Kiyosaki featuring Allison Schrager 13
Allison: Yeah. You have to know when it's the right ... this is the tricky thing about versus
knowing what risks are the right ones to take and when is it better to hedge, or
how much to hedge? This is what makes it hard and it is. We don't really-

Robert Kiyosaki: What happened when my best friend, his name was Karl Rahner, when he died
surfing, a lot of us stopped surfing. It was so tragic. You see your friend got
wiped out and they never found his body. I love your book. I love what you're
talking about here is that the risk is up to you to manage, but I think you have to
look in the mirror personally, don't you? As an individual.

Allison: Totally. I mean, this is one of the big issues at the historic conferences. How
many people are there surfing big waves who don't belong out there? But to be
honest, a lot of the sort of tragic accidents and surfing has been skilled people.
Even if you do know what you're doing, sometimes things happen that you can't
control.

Robert Kiyosaki: Amen.

Kim: Then we often say that investing isn't risky, but it's the investor that's risky and
that's the uneducated, ignorant person that's taking these risks with no
background, no education, and don't really know what they're doing. That's very
risky.

Allison: Totally.

Robert Kiyosaki: And then, what you said about technology is very, very insightful, Allison. When
they came out with those way of runners and all this, they started a new type of
surfing called tow in. What they could go out, they could go further out into the
sea and they could find these ocean waves and then they would hook the surfer
up to it and they would tow him into position so the surfer could pick up enough
speed to catch an ocean wave, not a show wave. And so what happened with
technology on surfing was these kept going for bigger and bigger waves. That's
why I'm concerned about these economy today with technology called
algorithm they have for investing.

Robert Kiyosaki: They've taken technology and taking bigger and bigger risks, which is why I'm
concerned about the future of all these baby boomers paddling around with a
little defined contribution, 401(k)s IRAs. Because these guys who are running
the biggest hedge funds in the world, they're actually tow in surfers. They can
take faster risks and they're trading now. When you say invest for the long-term
...

Kim: Like nanoseconds.

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Robert & Kim Kiyosaki featuring Allison Schrager 14
Robert Kiyosaki: ... these guys are trading within half a second and taking bigger risks with bigger
bets. The average guy is sitting there with a little four 401(k) knowing these guys
with who are tow in servers are about to bring down the world economy. What
do you think about that?

Allison: Yeah. think that's mostly right because that is what most hedge funds are doing
is they make bigger returns than everyone else by taking leverage, which is-

Robert Kiyosaki: Leverage is more money for smaller return.

Allison: Yeah. You borrow against your returns and that is more risky, but also can
amplify your return. That's a lot like a similar function that just play in surfing,
which is a lot of them are ... what they're doing is they're using options which
are technically insurance and flipping them around to take leverage, which is
[crosstalk 00:33:38].

Robert Kiyosaki: I agree with doing that, but you're going to practice doing that. That is really
high risk stuff we're playing with.

Allison: More importantly, like with the surfers are discussing is what about when those
risks pose costs to others. If you want to run a hedge fund and blow up your
hedge fund, good for you. But if you are posing a systemic risk to other people,
then where does the responsibility lie?

Robert Kiyosaki: That's what happened in 2008 was the government bailed out those guys who
brought down the economy.

Allison: Yeah.

Robert Kiyosaki: That's what's happening.

Allison: Yeah, and I mean with the surface as well, they discuss who, when you get
rescued and you're posing a risk to others, where does [inaudible 00:34:15].

Robert Kiyosaki: Who risk their like? Allison, thank you very much. I'm really glad we've
interviewed you.

Allison: Me too.

Robert Kiyosaki: I love the title of your book, an Economist Walks Into a Brothel. I love the two
metaphors. We use surfing, big waves surfing especially.

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Robert & Kim Kiyosaki featuring Allison Schrager 15
Kim: And we didn't even get into all the military examples that you used as well.
There's a lot of different examples you used other than brothels and surfers, but
that was great.

Robert Kiyosaki: Yeah. I flew for the Marine Corps and we practice practice practice before the
went to Vietnam, so we knew there was risk, but we had more skill to handle
risk and that's my concern for the average person right now. We're cruising into
one of the biggest crashes in history and they don't know what's going to hit
them. So anyway, thank you for your work, Allison.

Kim: Thank you Alison. Her website is Allison Schrager, S-C-H-R-A-G-E-R,

allisonschrager.com, go visit her website, and I'm sure there's a lot of great
information on that/

Robert Kiyosaki: Thank you again, Allison.

Kim: Thank you, Allison.

Allison: Thank you.

Robert Kiyosaki: When we come back with one of the most popular part of our program, which is
called Ask Robert.

Speaker 1: You're listening to the Rich Dad Radio Show with Robert Kiyosaki.

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Mention "rich dad" and receive $100 off your formation fee. That's
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Speaker 1: Log on to richdadradio.com while you listen. Now, back to to Robert Kiyosaki.

Robert Kiyosaki: Welcome back. Robert Kiyosaki. The Rich Rad Radio Show, the good news and
bad news about money. You're going want to thank Allison Schrager because
she's talking about her new book An Economist Walks Into a Brothel 2019. She

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Robert & Kim Kiyosaki featuring Allison Schrager 16
 was a co-founder of Life Cycle Finance Partners, LLC, a risk advisory firm. That's
interesting. Any comments Kim on Allison?

Kim: No, ii think it's interesting because there are certainly in the interview in our
discussion with her, there were points that we disagreed on or not necessarily
we're so aligned on, for example, she said you have to take risk to make money.
That's a different ...

Robert Kiyosaki: That's the biggest lie there is.

Kim: We have a different point of view here at Rich Dad about that.

Robert Kiyosaki: Yeah. Anyway, so it's completely opposite, and it's what the reach teach our kids
about money that Wall Street doesn't. Wall Street does the education today.
And be careful. My new book is out. It's called Fake Money, Fake Teachers, Fake
Assets. Wall Street sells fake assets. I call stocks bonds, mutual funds, ETFs and
savings. That's who sells you those assets classes, they're fake assets. Like your
house is not an asset. I said said that in Rich Dad, Poor Dad. So we're a financial
education company. I'm not a stock broker, I'm not a real estate broker. But we
are educators who want to point out the differences.

Kim: Our philosophy at Rich Dad is that you don't necessarily have to take risks to
make money. Where the risk gets reduced is through education, through
experience, through doing the real thing.

Robert Kiyosaki: Amen.

Kim: And you do that, there's less risk.

Robert Kiyosaki: Be careful. And fake money, fake teachers and fake assets, most people
listening to fake teachers, I call financial planners, stockbrokers, real estate
brokers, insurance planners, all these guys, they're just trying to sell you
something. Look that doesn't have half the risk. AI like Allison's book, An
Economist Walks Into a Brothel because I was a big wave surfer until one of my
best friends, Carl Rahner, he was killed out there. They never found his body.
That is a very dangerous business.

Robert Kiyosaki: As far as the whorehouses go, so I did call Kim from one. Everything my mother
said not to do became my to-do list before I got married. Anyway, I've done a lot
of the things there, which is just absolute true, is the higher the risk of the
industry, the smarter you've got to be.

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Robert & Kim Kiyosaki featuring Allison Schrager 17
Kim: Yeah, I mean she made a very good point. You've got to look at what are the
risks. In her example of the sex workers, they mitigated the risk by paying a
higher percentage of what they collected in return for safety.

Robert Kiyosaki: For protection.

Kim: Protection. That makes perfect sense. If you look at her book, there's a lot of
different examples on how to mitigate risk, how to manage risks. For a business
owner and an investor, I think it's a great book.

Robert Kiyosaki: Yeah. It really is because we had general McChrystal on, he was a four star
general, he got fired by Obama, which I think was interesting. But McChrystal
said, because he's west point, I'm a king's point, we're military guys. He says,
"The biggest risk is the person looking at you in the mirror." He says, "When you
look at what is risks, you got to look at yourself."

Robert Kiyosaki: I think that's what people don't tell people is that who is risky? The stock, the
bond, the real estate, the asset, the gold, the silver? Or are you the risky
person? It's not the asset, it's you, it's the guy looking, or the woman I'm looking
in the mirror or did you marry some idiot who you think is going to protect you?
Or do you have a job you think it's going to protect you? You're the person's at
risk because you're the risky person. That's the Rich Dad philosophy. So, our
philosophy is get financially educated. My new book is Fake. We have Cashflow
game, we had Rich Dad, Poor Dad, Cashflow Quadrant. It's all about who do you
have to be when you look in that mirror. And most people are idiots. They have
no financial education and they take advice from people who have no financial
education either.

Robert Kiyosaki: They take from fake teachers. Like I talk about in Fake. I went to Vietnam, my
teachers were real pilots. When I was in school, most teachers were fake
teachers. They had no idea what they were talking about. There was a guy
teaching me calculus, third year of calculus, he never used this stuff. The guy
who taught me accounting wasn't an accountant. That's what's happening
today. So sports fans, the reason we have the Rich Dad company here is so you
can listen to real people or we'll debate with them, but be careful who gives you
financial advice. If you want to take financial advice from a financial planner,
just know most of them are not rich people. Most of them are risk averse. So,
you can submit your questions to ask robert@richdadradio.com. So, Tony,
what's the first question for ask Robert?

Tony: First question comes from Chelsea in Tempe, Arizona. Robert, and Kim, How has
your tolerance for risk taking changed as you've become more successful?

Robert Kiyosaki: That's a great question.

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Robert & Kim Kiyosaki featuring Allison Schrager 18
Kim: That's a great question.

Robert Kiyosaki: Look, what every financial planner will tell you is that you have to take risk to
make money. That is an out and out lie. See, the more financial education you
have, the less risk you take and the more money you make. Let's take a crash.
Kim, when the markets crashed 2005/6 and '07, did we make money or did we
lose money?

Kim: We made a lot of money.

Robert Kiyosaki: We made fortunes. Most people make fortunes when markets crash. The
metaphor of the big wave surfer, that's God to us. I'm waiting for this. Next
crash is coming. It's pretty close. And unfortunately, the reason we started this
Rich Dad company is millions, probably billions of my generation, baby boomers
and millennials we get wiped out because they have no financial education in
school. The risk is listening to idiots who have no financial education while they
sell you something, it's called Wall Street. Think about it this way. When Wall
Street crashed, they brought the crash, the government bailed them out. Did
they bail you out? No. That's the game plan sports fans. That's my new book,
Fake. Fake Money, Fake Teachers, Fake Assets. Be careful who you take financial
advice from. Any comments, Kim?

Kim: Yeah. Well, when you hear about risk, so most people think borrowing money is
risky or investing your money is risky. To Chelsea's point, we do bigger and
bigger deals. We borrow more and more money because we have our
experience, we've made a lot of mistakes, we've had successes, we're out there.
We increase our knowledge with every single investment we do so we can do
the bigger deals and borrow more money and invest more money because of
our education.

Robert Kiyosaki: Yeah. I'll give you one more piece of information, diversification. Every financial
plan will give you that same rot, diversify, reduced risk. That has a bunch of BS,
blue sky. It's not diversify, it's deworsify. You're not reducing your risk at all. Let
me give you an example, from Rich Dad, Poor Dad and all the other books,
there's four basic asset classes. There's business, the highest risk of all things.
You hear people say, "I'm going to start my business." And they have no
experience. They can't sell, they don't know taxes, they don't have a team. The
second highest risk is real estate, and most go, "Ah." We had a friend who said,
"Yeah, I'm a real estate investor. I bought six houses." That they lived in, that's
not investing, that's consumption. But they think they're real estate investors.

Robert Kiyosaki: They think they're Donald Trump. The third asset class is paper assets, stocks,
bonds, mutual funds, ETFs and savings. That's what Wall Street's and the bank
pump out. The fourth asset class are commodities, gold, silver, real estate, food,

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Robert & Kim Kiyosaki featuring Allison Schrager 19
 real, commodities. Now, when Wall Street says to you or people like Allison say
to your diversify, they're talking to you about deworsify, which means you go
into the third category called paper assets, stocks, bonds, mutual funds, ETFs. Or
they say, put 60% of your money in equities when you're young and 40% in
bonds and when you get older, put 60% in bonds and 40% in equities, stocks.
You haven't diversified. You're still in paper assets. The riskiest of all assets and
the only people that make money on it is Wall Street. Smell the roses, man.
These guys are the ones selling this garbage to you.

Robert Kiyosaki: Now, to do what Kim and I do, you have to have financial education, right?

Kim: That's correct.

Robert Kiyosaki: That's the way of the cashflow game. That's why we have advisors. We have Ken
McElroy on real estate, not these phony flippers.

Kim: On paper assets, we've got Andy Tanner, but he's teaching you how to trade
with options, which reduces and mitigates your risk, make paper assets.

Robert Kiyosaki: Yeah. And you make more when market crashes. When these financial planners
tell you diversify, it's deworsify, but you're playing straight into the hands of
Wall Street. That's Goldman Sachs, Lehman Brothers, all this, Wells Fargo, you
guys are ripping us off, that's why I wrote the book Fake. They hire these
financial planners that go out there and tell you, "Oh, just diversify." You're not
diversified. You're still in one asset class called paper. When this market crashes
down, which it will soon, because after 2008 they pumped trillions of dollars to
blow up the stock market and real estate market into a bubble.

Robert Kiyosaki: When that baby comes crashing down, my generation, the baby boomers, I'm
going to be toast. Most of the millennials they're leaving school with student
loan debt, and they don't even know. They think the banks provide student loan
debt. The banks don't provides student loan debt. In 2009, a guy named
President Obama canceled the student loan program and then the banks got
out of the student loan business, and the US Treasury got into it, but they don't
tell you that. It was president Obama has set up the current student loan
program, and today it is the biggest asset class of the US Treasury.

Robert Kiyosaki: Today, $1.6 trillion, but they don't tell you that on television. These are reason
we have the Rich Dad Company, and look ladies and gentlemen, you've got to
be a little bit smarter than that today. Be careful who you take a financial advice
from. With that said, you can submit your questions to Ask Robert at
richdadradio.com. I think Allison, again. Her advice is good for the average
person. Dave Ramsey's advice is good, live debt free if you don't have any
financial education. Living debt free won't help you if you lose your job, or the

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Robert & Kim Kiyosaki featuring Allison Schrager 20
 market crashes. With that, that's why we believe in real financial education.
Thank you for listening to Rich Dad Radio Show show.

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Robert & Kim Kiyosaki featuring Allison Schrager 21