Robert Kiyosaki (10 Strategies for Investing and Boosting Your Income)
In this article, I’ll go over the top 10 money strategies that I learned from Robert Kiyosaki. I’ve attended his workshops and have also read many of his popular financial books.
Robert Kiyosaki is an American businessman and author. He is known as the author of the best-selling “Rich Dad Poor Dad” book series.
The “Rich Dad” is a character in the book that was the father of Mike, the author’s best friend. The “Rich Dad” dropped out of school at the age of 13. He owned businesses and made investments that made him one of the richest men in Hawaii. The “Poor Dad” in the story was the author’s biological father. The “Poor Dad” was highly educated and worked for the government in the field of education. Both made different decisions in life that results in one becoming rich and the other not amassing any wealth.
Robert Kiyosaki has a net worth of over $80 million. He has been in the real estate, oil, and mining business. He is also the founder of Rich Dad Company, a company that offers training and workshops to help educate you about personal finance, investing, and business.
Quick financial disclaimer: If you’re looking for tax or investment advice, please seek a professional. The information provided in this article is for educational purposes only.
Table of Contents
- 1 Understand the 3 Types of Income
- 2 Educate Yourself
- 3 Buy Assets, not Liabilities
- 4 Turn Your Regular Income to a Passive Income
- 5 It’s on You Whether Your Investment Would Fail or Succeed
- 6 Mistakes Make You Wiser
- 7 Preparation is Important
- 8 Good Deals Find Money
- 9 Calculate the Risk and Reward for Every Investment
- 10 Buy When the Market is in Turmoil
- 11 Conclusion
Understand the 3 Types of Income
Most people fail to identify what and how their income came about. They don’t care how the process works as long as they’re receiving money. This is bad in the long run as you won’t know the factors that keep the money flowing. There might be events or problems in the future that will affect your income and you won’t know what to do.
According to “Rich Dad”, there are three types of classifying income. These are:
- Earned income – This is income earned from doing a job. You’re exchanging your time and energy for dollars. Also, this type of income is the highest-taxed among the three.
- Portfolio income – This is income generated by paper assets or capital gains. These include stocks, bonds, and mutual funds. It’s second to earned income as the highest-taxed.
- Passive income – This is income generated by real estate, royalties, and distributions. It’s the lowest taxed among the three. Kiyosaki’s “Rich Dad” recommended this type of income because of its low taxes and potential for greater returns over his lifetime.
This is not the education that you are thinking of. You don’t have to go to expensive business schools or workshops. You can start by looking at the internet. There are lots of materials on the internet that can help you learn more about investing. The reason why people stay poor is that they are not knowledgeable in the investment field.
Educating yourself is cheap but it can be costly too. If you really have the time and funds to be educated, you can look for famous people in the investing world that are offering seminars, workshops, and lessons. Investing in yourself is the best way to start off.
Buy Assets, not Liabilities
Would you list your car as an asset? If you believe you should, then you’re in the same boat as I was when I read Robert’s 1st book. In his eyes, a car isn’t considered an asset because it depreciates in value. This was a huge eye-opener for me.
To increase your wealth, think about how you could invest more into appreciating assets instead of throwing your money out the window on things that depreciate. Many materialist and status-focused products don’t appreciate. These include cars, designer bags, expensive smartphones, and brand name clothing. All of these things won’t generate income for you and in many cases, their values will decrease greatly over time.
One of the core assets he focuses on is real estate. If you don’t have enough money for real estate, how can you turn a depreciating asset into wealth generator? An example of this is using a rental car to generate income.
So instead of thinking about your dream vacation, a luxury car, or another way to “Keep up with the Joneses” to impress your friends, think about your financial priorities. If you start shifting your focus into investing in income-producing assets, you’ll have a greater potential to go on a dream vacation instead of breaking the bank.
Turn Your Regular Income to a Passive Income
People at the start of their careers make money through earned income by doing jobs. Most people just keep their income in savings. But other people also use their earned income to invest in instruments to produce portfolio income or passive income.
When you amass wealth by doing jobs you should know that you can only do it for a limited amount of time. You get older and your work efficiency tends to become slow. You would then have to stop working and your income stops.
“Rich Dad” recommends as early as you can to turn your earned income into passive income. It’s taxed low and the income you earned has the potential to earn for a lifetime.
It’s on You Whether Your Investment Would Fail or Succeed
Investing isn’t a very hard field to explore. You might think it’s only for the smart and cunning people but it’s not. It’s all about being ready. You don’t just dive headfirst and start investing. You’ll fail that way. That’s why investing has a reputation of being hard and risky. People tend to become impulsive and start investing without making preparations. They end up losing their money and telling other people that it’s a hard thing to do. When all they needed was to take their time and learn the field before investing.
Investing isn’t a way to get instant money. It’s about patience and waiting for the right opportunity to score a return on your investment. It’s slow and boring but these types of investment tend to yield successful results.
Mistakes Make You Wiser
If you want to make your investments succeed then you have to make mistakes. You start off first with small investments. That way you won’t incur huge losses. Learn how it went and what mistakes you made from it. Then work your way up to bigger investments. As you work your way up, you gain knowledge from experiences gain at the start of your small investment. This will give you confidence and a higher success rate in investing.
Preparation is Important
Preparation is everything. If you are prepared, you won’t make hasty or stupid investment decisions. Don’t try to be the one who predicts when the next financial crisis happens. Instead, be the one who is prepared for anything that can happen.
According to “Rich Dad”, you should focus on what you want, be alert on what’s happening right now, and grab to any opportunity that arises. There are plenty of resources available around you. You just need to put in the effort to find them and gain knowledge from it.
Good Deals Find Money
When you have made your preparations through education and experience, you will find some good deals that are way out of your financial capacity. The problem then would be how to raise the money to grab that good deal. “Rich Dad” advised us to grab any opportunity and focus on what we want.
So how do we raise the money?
You just have to find the people who will give you the money.
Why would they give you the money?
This is where your preparation comes in handy. You invested in yourself, which means you have the knowledge, education, and experience. People will trust you. People look for competent and confident people to entrust their investments on.
Calculate the Risk and Reward for Every Investment
Every investment comes with its risks. You should learn how to choose the ones that are a good deal for you. How do you identify the risks? By collecting information about the investment. You should look into every aspect related to the investment you’re making. Examples would be company performance, management, assets, location, customer feedback, and many more.
Identifying the risks means you are well prepared in the event that these risks come. It also helps you choose the optimal investment and decision making.
Buy When the Market is in Turmoil
The basic concept in investing is to buy low and sell high. But when a financial crisis strikes, investors let their emotions get the better of them. They sell everything they have and move away from the market.
For Kiyosaki, this is the best time to invest cause you to make more cash. Some companies out there have stood countless crisis and still continue to grow. As long as you make the preparations and research then your investment should pay off when the market recovers.
Robert Kiyosaki’s book “Rich Dad Poor Dad” taught us that even if you don’t have a degree in college, you can succeed in investing. “Rich Dad” was a dropout from high school who started his own business and gradually succeeded. “Poor Dad” had a degree in college and a job at the government but failed to amass wealth. We can learn from all of these strategies and take action. Understand that you’ll encounter many mistakes along the way, but use them as learning lessons to help catapult your wealth.
If you’re curious about who the “Rich Dad” was, he’s based off a real person named Richard Kimi. Richard Kimi owned a hotel chain in Hawaii. His hotels were catered to locals and travelers who were looking for cheap accommodations. After his death his son, Alan took over the business.
I hope these tips will help you increase your wealth!
Further Reading :
- Robert Kiyosaki’s Real Life Rich Dad
- Robert Kiyosaki’s Investing Strategy
- 10 Best Money Tips from Robert Kiyosaki
- Rich Dad’s Six Basic Rules of Investing