Rich Dad – Robert Kiyosaki, My Ultimate Wealth Creation Mentor Part Two of Three
Brian Tracy, one of world's most inspirational speaker and author once said that every one of us should write down a goal to become a millionaire and he claims it has become even easier due to the internet and technology development. He also said that if you want to become a lawyer you study law, if you want to become an accountant you study accounting and if you want to become a millionaire you should study money and rich people. So why not study rich and successful people, who have already been there?
Personally, I believe Robert Kiyosaki is the best financial educator in the world, Robert and his books have inspired and influenced millions of people around the globe and helped them become rich. I decided to make him my mentor, despite the fact I have never met or spoke to him in my life. They say if you want to be rich, just copy the formula used by rich people, so I decided to copy his formula for my journey. All his books are written based on his own experience of building his multimillion fortune, he went broke several times, once even ending up homeless, but he never gave up and went on to build his own businesses, invested in real estate and other businesses.
So what else have I learned from him? Well, just read what he said,
“Your house is a liability to you not an asset”,
“Investing is not risky, being uneducated (referring to financial education) is risky”,
Poor Dad said: “Go to school, get a degree, find a good job and save for retirement” Rich Dad said: “Build your assets and invest wisely, the most important words in business are cash flow and leverage; your brain is your most important asset”,
“It does not take money to make money”,
“People who want to become millionaires go to seminars and people who want to become good employees go to universities”,
“JOB stands for Just Over Broke”,
“Mind your own business, people stay poor or in the middle class because they mind other people's business rather than minding their own”,
The importance of cash flow quadrants and which quadrants you want to generate your cash from and a lot more...
I know it takes time to build wealth, as Robert and his wife took almost 9 years to retire financially free, but I believe this can be a lot shorter due to advances in internet, technology and because you can learn and leverage other people's success, experience and knowledge to your advantage. I knew just reading his books would not be enough and I needed to take action as this is the dividing line between winners and losers. I have taken my important first step by reading his books and I have also attended paid seminars to educate myself. I decided to invest in property and purchased my first investment property in late 2007; I am buying more properties this year. I love the Chinese saying “A journey of a thousand miles starts with the first step.”
For some people it sounds crazy, my God! The average property price has dropped more than 20% since the peak price in 2007! For some people this is a great opportunity, for other people this is a disaster. Remember the Chinese word crisis is comprised of danger (危) and opportunity( 机), winners see the opportunities while losers see disaster. Rich dad said recession is a window of opportunity to increase your property portfolio and his fortunes were made because of this. We may all have the experience where something happened to you that you at first thought was a disaster but as time went by actually later turned out be one of the luckiest thing ever happened to you in your life.
The truth is that the professional property investors never purchase properties at market value, but below market value of between 10%- 40% or even more. In property you make money when you buy, not when you sell. Rich dad taught me that we should purchase an investment property for monthly positive cash flow, but not rely on capital growth. Any capital growth should be treated as a bonus. This will help you to do well regardless of up and down markets. I listened to his advice and it has paid off, one of my buy to let properties has a monthly rental income that covers 675% of my mortgage, the lender only requires 125%, the current recession has helped me to generate bigger cash flow as the Bank of England base rate has decreased to a record low of 0.5%
While amateurs and financially uneducated property investors go bust or get into deep trouble in the current down-turn, the true property investors thrive and are quietly increasing their property portfolio. Most of these amateurs either bought properties at market or over-market values or with negative cash flow each month as they expected the market to continue to go up for capital growth. Warren Buffet, the most successful billionaire investor once said, “when the tide goes out, you will find out who has been swimming naked.”
Everything has a cycle, a boom won't last forever and neither does a bust, the key is to understand the cycle and use this to your advantage. When the vast majority of the public wake up and are trying to jump in to buy properties, the professionals are already way ahead of the game. So how do we spot opportunities and see the future? History repeats itself and we all can learn from history, others and our own previous experience by financially educating ourselves.
To be continued...
I'm interested in sharing your stories of Rich Dad and perhaps any of your life stories... Shannon