The Investing Mystery Solved

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For many new investors, the numbers of investing are a mystery.

They may even appear intimidating and mind numbing. The reality, however, is that they are just the opposite! Numbers are the clues for solving the mystery.

Every investment has a story. Every time someone approaches you to invest money in his or her particular investment, whatever it may be, they will tell you that story.

  • “This company has just discovered the cure for cancer and will be coming out with its new wonder product in five months. The stock will explode!”
  • “This 24-unit apartment building is where the growth in Texas is moving. Boeing is opening a new plant there next year, so the demand for rentals will be extremely high.”
  • “My partner and I have created a new clothing line geared for women at colleges and universities. We’ve been in the fashion world for 25 years. So far, 30 of the major universities have picked up our line. We have verbal agreements that that number will double in the next six months.”

Where people get into trouble with investments is when they act upon the story without getting into the facts that the numbers tell. The numbers may tell the same story or a very different one. It’s up to you to uncover the true story and to solve the mystery.

Rich dad often said, “It is through the expense column that the rich person sees the other side of the coin. Most people only see expenses as bad, events that make you poor. When you can see that expenses can make you richer, the other side of the coin begins to appear to you.”

He said, “One of the reasons so few people become rich is that they become set in one way of thinking. They think there is only one way to think or do something.

“While the average investor thinks, ‘Play it safe and don’t take risks,’ the rich investor must also think about how to improve skills so he or she can take more risks.” Rich dad called this kind of thinking, “Thinking on both sides of the coin” by standing on the edge.

Numbers as Clues

Consider every investment you pursue as a mystery to be solved. The numbers that make up that investment’s story by themselves means nothing. I never see numbers from an investment analysis as just numbers. Instead, I look at the numbers as clues to guide me to discovering the truth about the investment. What is the investment? How is it really performing? How can we expect it to perform in the future?

Many investment pitches show you pretty brochures. They give you lots of facts about the industry and not the specific company, city, or property.

Here’s a general rule: The bigger the brochure, the worse the deal.

If the offering is not clear and concise, then chances are, the investment is anything but great. Don’t baffle me with your BS (blue sky).

Finding a Good Deal in the Numbers

Imagine you are told a story like this: “For the past two years, my business sold $5,000 worth of product. My projection for this next year, with your investment money, is that we will sell $100,000 worth of product!”

At that point, you have only one question to ask, “How?” Everyone knows you do not go from $5,000 to $100,000 without a strong plan in place. If she can’t show you how she will get there, then the $100,000 prediction is meaningless.

If an investment opportunity is a good deal, then:

  • Show me the numbers—past operating numbers, as well as the worst-and best-case scenario of future numbers.
  • Explain why and how this investment will increase in value in the future.
  • Give me the expected rate of return on the money I invest in this investment.

Use the three bullets above to obtain information and start your research. Even if you trust someone, check to see if their numbers are correct. It’s a good learning experience. Plus, people trying to sell something tend to expand the truth… even if they are powerful and respected.

For example, according to an article in Harvard Business Review, a study done by Dana Carney from Columbia University Graduate School of Business found that, “a sense of power buffers individuals from the stress of lying and increases their ability to deceive others.”

The purpose of the numbers is for you to identify the red flags, the possible inconsistencies, of what you are being told. The numbers help you discover what the facts really are and raise the right questions.

Untangling the Numbers

Let’s say you are considering the purchase of a rental duplex. The seller tells you that the property has very low operating expenses. That sounds like a good thing, right?

You review last year’s numbers and see that the owner has indeed spent very little on maintenance and repairs for this duplex. It raises a question (could be a clue) in your mind, so you dig a little deeper. The owner is telling you part of the truth.

Yes, it’s true his expenses to maintain the property were very low. Upon further inspection, however, what he did not tell you is that, because he has spent so little to maintain the property, there are many repairs that need to be done to the building to keep it operating.

His maintenance-and-repair expenses are low, but yours, especially when you first buy it, will be very high.

The numbers are just as important if you are purchasing shares of stock in a publicly traded company. Most people buy and sell stocks based upon rumors, tips, and current news. When you buy shares of stock in a company, you own a piece of that company.

If you are going to invest in a company, wouldn’t you want to review its past performance numbers and future projections, just as you would a privately-held company?

The numbers don’t lie. Keep this in mind as you move forward on your journey to independence, financially. Learn to overcome your fear of numbers and use them to uncover the mysteries of a good investment versus a bad investment.

The more comfortable you become through practice and experience at understanding the numbers of any investment, the greater success you will have as an investor.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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The 6 Real Estate Trends to Watch in 2019

This post The 6 Real Estate Trends to Watch in 2019 appeared first on Daily Reckoning.

In case you weren’t paying attention, 2018 was an exciting year in real estate—full of twists and turns. Obviously, I don’t have a crystal ball—but after spending decades as a successful real estate investor, I am pretty well versed in reading the tea leaves. So, what does 2019 have in store for real estate investors?

According to Zillow, “rising mortgage rates will set the scene for the housing market in 2019. They will affect everyone, driving up costs for home buyers and creating more demand for rentals. Even current homeowners could start to feel locked into their mortgage rates.”

Here are some interesting trends that will affect the real estate market in 2019:

1. Technology Advancements

Technology in the real estate industry has been changing rapidly. Companies like Redfin, Zillow, Trulia and Homesnap have been changing the way sellers and buyers perceive the market and it is crucial for investors looking to buy properties to understand the difference between price and value.

2. New Buying Patterns

The baby boomers who once purchased all the traditional two-story homes are now ready to downsize. But they don’t just want less space, they are also looking for ranch-style homes, so they don’t have to navigate stairs as they age. What does that mean? Single-story homes will increase in value as demand rises.

Millennials are finally ready to purchase their first homes despite headlines saying they “can’t afford them.” But because they are largely seeking affordability and quality of life, they are having to trade in the urban life they crave and head out to the suburbs. In 2017, the undeniable shortage of affordable entry-level properties created a real barrier for this group, the nation’s largest buyer segment.

During the Great Recession, more than 10 million Americans were forced into foreclosure—and their ten years of waiting to purchase another property (due to foreclosure law) is over. According to the National Center for Policy Analysis, approximately 1.5 million Americans will become eligible to re-enter the housing market this year. While some might still be licking their wounds, many are sick of renting and itching to own again.

3. Continued Dive in Retail Assets

We all know online sales are killing some malls, but we’ve seen few attempts at repurposing these empty properties. Many of these struggling retail locations have excellent economics for multifamily redevelopment. I’m shocked we haven’t seen more mall-to-multifamily conversions.

4. Steady Stream of New Construction

The top trend I’ve seen so far has been a steady stream of new construction, which is kept rent prices mostly in check for 2018. Where I live in Arizona, you can’t drive down any street without seeing some sort of new construction happening. A stable pipeline of new buildings means we’ll see the impact of lower rent growth but still above long-term averages when it comes to rent across the U.S.

5. Low Available Inventory

After the real estate bubble burst in 2008, and foreclosure properties were abundant, inventory wasn’t a concern. Fast forward 10 years, and the economy back to a comfortable level, inventory levels are back to pre-2008 numbers.

6. Rise of The Single-Family Rental Asset Class

A total of 3.6 million single-family rental homes (SFR) have been added from 2006-2016. The SFR industry has risen to the challenge to escape a “mom-and-pop” dominated market. As the demand from more sophisticated renters who choose not to rent increases, so does the demand from the sophisticated investor requiring a higher level of service.

Investing Is A Lifestyle

Many people want to be successful real estate investors. The problem is that the average person starts at the last step of the investment cycle rather than at the beginning. Because of this, they often fail.

What is the last step? The property.

It seems counterintuitive, but the property is actually the least important part of becoming a successful real estate investor. In fact, you could have one of the best properties in the world, but if you don’t complete three crucial steps prior to buying that property, chances are that, for you, the property will be a huge disappointment.

Many people think they need to invest in their own backyards. While that may be a good idea, it’s not a necessary one. Rather, you should find a market that meets the needs of your personal investment philosophy.

For instance, if your personal investment philosophy were to invest for monthly cash flow, it would make no sense invest in a number of properties with an aggressive, highly leveraged debt ratio that allowed for no cash flow. Nor would it make sense to invest in a high appreciation market where prices didn’t pencil out for positive cash flow.

Rather, you would need to find the right market that provided affordability and cash flow, even if it didn’t appreciate much. For cash flow investors, that’s a great market. For flippers or appreciation investors, it’s a nightmare market. But you only know that if you understand what kind of investor you want to be.

As rich dad said, “Business and investing are team sports.” In order to be successful in any market, especially ones that you don’t live in, you need to have the right team.

This team should include an attorney, a CPA, a bookkeeper, and a real estate agent and/or broker, and you should rely on them heavily to give you expert advice about your market and the properties you’ll be looking at.

Without a team in place to give you expert advice, the chances of you making a huge mistake are high.

So, if you’re looking into becoming a real estate investor, 2019 could be a great time to do so. Investing in single-family rental properties may deliver strong returns. How do you begin? Do your research and read everything you can—this will automatically increase your financial literacy. Learn how to invest using other people’s money in order to minimize your risk. Then, take action, so that you can lead the rich life you absolutely deserve.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

The post The 6 Real Estate Trends to Watch in 2019 appeared first on Daily Reckoning.

Your New Year’s Plan: Top 3 Lessons from 2018

This post Your New Year’s Plan: Top 3 Lessons from 2018 appeared first on Daily Reckoning.

Around this time of year, it’s a good idea to stop and look back, taking stock of all the incredible and difficult things that happened over the last 365 days.

The Internet is full of “Top 2018” lists that span the best books, movies, music, celebrity moments etc. to allow you to reflect on the past year.

This week, I’m looking forward to the top trends and predictions for 2019, and how you can position yourself to make it your best year yet.

There’s no way to know for certain what will happen in the new year. As we know from previous experience, things can drastically change overnight. But there are a few trends we will probably see carrying over from 2018.

1) Embrace The Tech

I for one am very excited to see what technology advancements 2019 brings. For some, technology spells doom as robots threaten to replace workers and cut jobs. But for entrepreneurs, technology promises to address problems and make running a business easier than ever.

As an entrepreneur, using the wide array of tools out there to help you improve or create your business is one of the best ways to excel in 2019. Make it a part of your New Year’s resolutions to incorporate further learning and tech adoption into your financial plan.

2) President Trump’s Economic Outlook

2018 was a year for some major economic growth in the U.S., largely due to Trump’s tax cuts, consumer confidence, and companies re-investing in their business.

According to many economists, the economy is expected to slow down, and as financial conditions tighten, the impact of the tax cuts passed will fade.

Some economists are expecting more than a slowdown and are saying there’s a 50% chance of a recession by 2020.

Again, we can’t know for sure what will happen, and things are always liable to drastic change. That’s why maintaining a strong financial knowledge base will be the best way to navigate the coming year. Don’t wait around until the government implements new financial policies. Take charge of your financial plan now and position yourself for a great year.

3) Debt Will Increase To An All-time High

Debt has been on the rise for years. 2018 was a record high for consumer credit card debt, and I have a feeling the problem is only going to get worse.

According to nerdwallet.com, “Credit card balances carried from month to month continue to inch up, reaching $420.22 billion in late 2018, according to NerdWallet’s annual analysis of U.S. household debt. That’s an increase of about 5% over last year. And for Americans carrying that debt, the impact is significant.”

Today, it’s easier than ever to make money running your own business or investing in assets, but it’s also easier to get into debt. Still, bad debt is not inevitable. There’s no reason you shouldn’t be able to get out and stay out of debt. Remember the two rules of staying out of bad debt: Don’t swipe the small stuff and credit keeps charging.

Go into 2019 with open eyes regarding your spending habits and debt. Are you carrying over debt from last year? What’s your plan to pay it off? Do you have a clean slate? What steps will you take to avoid bad debt? Ask yourself these questions and get your plan together early.

What does this mean for you?

Instead of wringing your hands in fear or sitting back comfortably because you think everything will go your way, take 2019 into your own hands. Start crafting a strong financial plan that can sustain you no matter what happens.

Start by identifying what you hope to achieve. I find the act of physically writing down my goals is the best way to make my dreams a reality. Putting my vision on paper gets it out in the open. Once it’s written down, I’m committed to it.

As we all know, it’s all too easy to fall off the wagon with our New Year’s resolutions. That’s why you have to set up goals that in turn set you up for success. Setting SMART goals with the new year approaching is more important than ever. Remember, SMART goals are: Specific, Measurable, Attainable, Realistic, and Timely.

When your goal meets these five characteristics, it becomes much easier for you to stick to them. And remember, every goal should be working you towards a greater vision of where you want to be.

Another way to make sticking to your goals easier is by getting others involved. Whether it’s your spouse, your kids, your friends, or a mentor, you can find a partner to help keep you dedicated to your goals. We all know it’s easier to go to the gym when we have a friend going with us. The same holds true for true freedom in your finances.

With your goals in mind, you can start making a list of what you’ll need to attain them. Maybe you need increased understanding of real estate. Maybe you need to understand how to invest for cash flow. By knowing where you are, and where you want to go, it should quickly become apparent the things you must learn to get there. Increasing your financial education is the first step.

Why I’m optimistic for 2019…

This year for many people was full of ups and downs. The presence of disruptive technology led to extensive job cuts, not to mention a still recovering economy, political turmoil, higher interest rates, and more.

But despite a less-than-ideal landscape, the people coming out of 2018 on top are the ones who have a strong base of financial education.

It was confirmed this year that financial education is more important than ever. With every twist and turn, every “impossible” act, every astounding technology that revolutionized the market, only those with a deeper financial understanding, and the right mindset, came out ahead.

While the masses were panicking over every setback, those on the path to freedom kept their eyes on the long journey ahead, never wavering or allowing the day-to-day challenges to deter them.

Education breeds confidence. And in these ever-changing times, confidence is more important than ever.

Anything can happen in 2019. To the glass-half-empty folks out there, that might be a little scary. But to the rest of us, that’s great news. Anything can happen, like getting out of debt, starting your business, quitting your job as an employee and making the shift to business owner and investor, purchasing your first asset, and so much more. If you haven’t started the journey to complete independence, 2019 is your time. You just have to take it.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

The post Your New Year’s Plan: Top 3 Lessons from 2018 appeared first on Daily Reckoning.

Brace Yourselves: A Crash Is Coming

This post Brace Yourselves: A Crash Is Coming appeared first on Daily Reckoning.

I know we are in the midst of a joyous time of year, but that doesn’t mean the world has stopped turning. And the start of 2019 brings us to a critical moment. We’re on the brink of the third wave crash.

Let’s take a gander at recent history: First, there was the 1980’s savings and loan crisis. Then, in 1987, the stock market crashed, and the Dow Jones index lost 23% of its value. The next major event was the dotcom bubble and subsequent crash from 1999 to 2000. And the most recent event was the global financial crisis in 2007-08, which was triggered by the subprime mortgage crisis and collapse of the U.S. housing bubble. I’m leaving out a few smaller ones in between, but those are the true highlights (or lowlights, really) of the crash cycle in the past forty years.

Essentially, the economic cycle is longest period of tranquility took place during the 1990s when the economy went an entire decade without a down cycle. That was a rare—and glorious—decade.

As you can see, it’s been 10 years since the last major event—if history repeats itself, we’re due for a crash. And soon. That is if we’re not already seeing the needle headed toward the bubble.

Let’s examine the evidence: Both the Dow Jones Industrial Average and the S&P 500 are up for their worst December performance since 1931, when stocks were battered during the Great Depression.

December is typically a very positive month for markets. The Dow has only fallen during 25 Decembers going back to 1931.

The S&P 500 averages a 1.6 percent gain for December, making it typically the best month for the market, according to the Stock Trader’s Almanac.

Bitcoin, the highly volatile cryptocurrency, has created a complete frenzy in recent weeks. Last year at this time, Bitcoin saw a 1600% increase in value. That being said, Bitcoin’s bubble literally popped and millennials, like generations before them, just got a painful lesson about speculation. Also, in the news there’s talk of housing bubbles and auto loan bubbles forming left and right.

Do you know what bubbles always do? Pop!

Preparing for The Pop

I’m not trying to end the year on a note of doom and gloom. We don’t know when this bubble will burst, but we can certainly start preparing for it. How? It all comes down to financial education.

You see, it all begins with understanding that money doesn’t make you rich. Your financial IQ is what makes you rich. I guarantee that if you give the same $100,000 to a person with a low financial IQ and a person with a high financial IQ, you’ll see an immense difference in how they spend and grow that same money.

Central to the difference between those with low and high financial IQs is a simple but profound literacy: the ability to understand a financial statement—an income statement and balance sheet.

balance sheet

Strangely, accounting classes teach how to read an income statement and balance sheet separately. But, it’s actually the understanding of the relationship between them that’s crucial. After all, how can you tell what an asset or liability really is without the income column or the expense column? Understanding the relationship between the two allows you to easily see the direction of your cash flow so you can effortlessly determine if something is making you money or not.

Bottom line: If something is making money, it’s an asset. If not, it’s a liability. The reason most people with low financial IQs suffer money-wise is that they purchase liabilities and mistakenly list them under the asset column.

Cash Flow is the Only Way to Go

It’s this simple insight that explains why those with a low financial IQ are still poor even when they make a six-figure income. They have no clue how to move their money into assets that make them more money. And cash flow is king.

Because financial subjects have a way of turning unnecessarily complicated, let’s keep the concepts simple and use diagrams for added clarity. If you can understand the following diagrams, you have a better chance of acquiring great wealth.

Cash flow patterns

cash flow pattern

An asset is something that puts money in your pocket. This is the cash-flow pattern of an asset:

A liability is something that takes money out of your pocket. This is the cash-flow pattern of a liability:

cash flow pattern

The Confusing Part

Now, confusion can happen because accepted methods of accounting allow for the listing of both assets and liabilities under the asset column.

To explain this, look at this diagram:

cash flow pattern

In this diagram, we have a $100,000 house where someone has put $20,000 cash down and now has an $80,000 mortgage. Confusing indeed! How do you know if this house is an asset or a liability? Is the house an asset just because it is listed under the asset column?

The answer is, of course, no. In order to know for sure, you would need to refer to the income statement to see if it was an asset or a liability.

To illustrate this, let’s look at a diagram that depicts the house as a liability:

cash flow pattern

You can tell it is a liability because it’s only line items are under the expense column. Nothing is in the income column.

Next, let’s look at a diagram with the addition of a line that reads “rental income” and “net rental income”—the key word being “net.” Do you see how that addition to the financial statement changes that house from a liability to an asset?

cash flow pattern

Put simply, if the rental income of the house, minus the expenses of the house, equal positive net rental income, then the house is an asset. If not, it’s a liability.

Did you find this lesson profound? It’s essentially the basis for building all great wealth. Going back to my earlier comment, a person with a high financial IQ and $100,000 would be able to know how to invest it in assets that are true assets—ones that put more money back in the pocket each month. The person with the low financial IQ would spend that same money on liabilities but wouldn’t be able to diagnose what was wrong. Instead, they would try and work harder to make more money—a vicious cycle we call the Rat Race.

Back to The Bubble

Understanding the relationship between the income statement and the balance sheet allows you to quickly understand if an investment is an asset or a liability—and this understanding will allow you to make the right investment every time. While you can’t control how the economy behaves or when this unavoidable bubble will occur, you can absolutely control your ongoing education and financial prowess to minimize its impact.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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The #1 Secret to Being a Winner

This post The #1 Secret to Being a Winner appeared first on Daily Reckoning.

I have never met anyone who likes losing money. And in all my years, I have never met a rich person who has never lost money.

But I have met a lot of poor people who have never lost a dime—investing, that is.

The fear of losing money is real.

Everyone has it. Even the rich.

But it’s not the fear that is the problem. It’s how you handle fear. It’s how you handle losing. The primary difference between a rich person and a poor person is how they manage that fear.

It’s okay to be fearful. It’s okay to be a coward when it comes to money. You can still be rich. We’re all heroes at something and cowards at something else.

My rich dad understood phobias about money.

“Some people are terrified of snakes. Some people are terrified about losing money. Both are phobias,” he would say.

So, his solution to the phobia of losing money was this: “If you hate risk and worry, start early.”

If you start young, it’s easier to be rich.

But what if you don’t have much time left or would like to retire early? How do you handle the fear of losing money?

My poor dad did nothing. He simply avoided the issue, refusing to discuss the subject.

My rich dad, on the other hand, recommended that I think like a Texan. “I like Texas and Texans,” he used to say. “In Texas, everything is bigger. When Texans win, they win big. And when they lose, it’s spectacular.”

“They like losing?” I asked.

“That’s not what I’m saying. Nobody likes losing. Show me a happy loser, and I’ll show you a loser,” said rich dad. “It’s a Texan’s attitude toward risk, reward, and failure I’m talking about. It’s how they handle life. They live it big.”

Rich dad went on, “What I like best is the Texas attitude. They’re proud when they win, and they brag when they lose. Texans have a saying, ‘If you’re going to go broke, go big.’ You don’t want to admit you went broke over a duplex.”

He constantly told Mike and me that the greatest reason for lack of financial success was because most people played it too safe.

“People are so afraid of losing that they lose.”

Fran Tarkenton, a once-great NFL quarterback, says it still another way: “Winning means being unafraid to lose.”

In my own life, I’ve noticed that winning usually follows losing.

I’ve never met a golfer who has never lost a golf ball. I’ve never met people who have fallen in love who have never had their heart broken.

For most people, the reason they don’t win financially is because the pain of losing money is far greater than the joy of being rich.

Rich dad used to tell Mike and me stories about his trips to Texas. “If you really want to learn the attitude of how to handle risk, losing, and failure, go to San Antonio and visit the Alamo.

“The Alamo is a great story of brave people who chose to fight, knowing there was no hope of success. They chose to die instead of surrendering. They got their butts kicked. So how do Texans handle failure? They still shout, ‘Remember the Alamo!’”

Mike and I heard this story a lot.

He always told us this story when he was about to go into a big deal, and he was nervous.

It gave him strength; it reminded him that he could always turn a financial loss into a financial win.

Rich dad knew that failure would only make him stronger and smarter.

It gave him the courage to cross the line when others backed out. “That’s why I like Texans so much,” he would say. “They took a great failure and turned it into inspiration….”

But probably his words that mean the most to me today are these:

“Texans don’t bury their failures. They get inspired by them. They take their failures and turn them into rallying cries. Failure inspires Texans to become winners. But that formula is not just the formula for Texans. It is the formula for all winners.”

Failure inspires winners. And failure defeats losers.

It is the biggest secret of winners. It’s the secret that losers do not know.

There is a big difference between hating losing and being afraid to lose.

Most people are so afraid of losing money that they cannot help but lose. They go broke over a duplex.

Financially, they play life too safe and too small.

The main reason that over 90% of the American public struggles financially is because they play not to lose. They don’t play to win.

They go to their financial planners or accountants or stockbrokers and buy a balanced portfolio.

Most have lots of cash in CDs, low-yield bonds, mutual funds that can be traded within a mutual-fund family, and a few individual stocks. It is a safe and sensible portfolio.

But it is not a winning portfolio. It is a portfolio of someone playing not to lose.

Don’t get me wrong. It’s probably a better portfolio than more than 70 percent of the population has, and that’s frightening.

It’s a great portfolio for someone who loves safety.

But playing it safe and balanced on your investment portfolio is not the way successful investors play the game.

The concept of winning and our desire to win in all areas of our lives were themes of the 2016 U.S. Presidential election.

It’s a mindset, a goal to which we can all aspire, and that motivates us to embrace our mistakes, learn from them, and keep our sights focused on winning.

It’s something President Trump understands, something rich investors understand…

And now it needs to be something you not only understand, but act on.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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There Are 5 Levels of Investing… Here’s How You Reach the Top One

This post There Are 5 Levels of Investing… Here’s How You Reach the Top One appeared first on Daily Reckoning.

I recently read an article on “Retirement Success: focus on the paycheck, not the savings number.” I was intrigued. I didn’t know exactly what it meant, so I read it.

The article features an actuary named Vernon who is an expert in numbers, and also a retirement educator. I always like to hear what those guys have to say.

Vernon’s strategy is to not to focus so much on the retirement number, but instead setting up “retirement paychecks that are guaranteed to last the rest of your life.” I thought “Oh, maybe he’s talking about cash flowing assets.”

I read on.

I didn’t have to get much farther down the page before I realized this “retirement educator” was teaching what most finance-gurus teach: a retirement filled with basics and necessities.

“The big picture is to get a feel for what your basic necessities are each month, and your discretionary expenses,” Vernon said. “Then, you want to insure an income that exceeds your basic expenses.”

What he called “retirement success” was simply living to pay for your necessities. By his logic, a retiree who probably worked a majority of their adult life was to live the rest of their life only with the basics. That’s not the way I’d want to live. That’s not the way anyone should live.

Social Security, Pensions, Annuities and Reverse Mortgages were his strategy for success.

This is no way to live.

5 Levels of Investors

Below is my Cashflow Quadrant…

 

cash quadrant

The image informs every different kind of person out there when it comes to their understanding of money.

The E and S side are where 90% of the population live. Uneducated financially. It’s not where you want to be.

Level 1: The Zero-Financial-Intelligence Level

Over 50% of the population in America is the Level 1 investor. The results of a lack of financial education in the school system can be found in this level. Simply put, they have nothing to invest.

Zero financial intelligence = Zero money to invest

There are many people who make a lot of money who fall into this category. They earn a lot—and spend more than they earn.

Level 2: The Savers-Are-Losers Level

As the Federal Reserve and central banks throughout the world print trillions of dollars at high speed, every printed dollar means higher taxes and more inflation. In spite of this fact, millions of people continue to believe saving money is smart. It used to be smart when money was money. Now savers who park their money are the biggest losers.

Level 3: The I’m-Too-Busy Level

This is the investor who is too busy to learn about investing. Most likely a highly educated person who is too busy with a career, family, and vacations. They rely on the expertise of an “expert” to manage it for them. They hope and pray their expert is really an expert.

Level 4: The I’m-a-Professional Level

This is the do-it-yourselfer (they’re from the S quadrant investing in the I quadrant). This investor may do their own research and make their own decisions before they buy and sell a few stocks, often from a discount broker. If they invest in real estate, the do-it-yourselfer will find, fix, and manage their own properties. And if the person is into commodities, they will buy and store their own gold and silver. In most cases, the do-it-yourselfer has very little, if any, financial education.

Level 5: The Capitalist Level

This is the richest people in the world level. The Level-5 investor, a capitalist, is a business owner from the B quadrant investing in the I quadrant.

The capitalist uses other people’s money (OPM) to invest. Once a person knows how to build a business in the B quadrant, success attracts money and it becomes easy to raise money in the I quadrant.

They get their money from Level 2 and Level 3 investors who save their money in banks and pension plans.

5 Types of Investors

Investors, like investing plans, are not created equal. There are different investor types.

  1. Accredited Investors: As defined by the Securities and Exchange Commission (SEC), this investor earns at least $200,000 in annual income ($300,000 for a couple) and/or has a net worth of $1 million. An accredited investor has access to many lucrative investments that, because of their risk, may be legally off-limits to people of lesser income. Although usually financially educated, accredited investors are not necessarily fully literate. They may be content with security and comfort rather than wealth, and may rely on advisors to develop and implement their financial plans.
  2. Qualified Investors:  This investor is well versed in either fundamental or technical investing. Fundamental investing requires the ability to assess a company’s potential by reviewing financial statements, tracking the company’s industry, and calculating how changes in interest rates and the economy could affect profitability. Fundamental investors use financial ratios (which you’ll learn about later) to assess the strength of a company being considered as  an investment.
  3. Sophisticated Investors: Sophisticated investors build wealth by developing a foundation of assets that generate high cash returns with minimum payment of taxes. Sophisticated investors exercise control over the timing of taxes and the character of their income. They know, for example, to defer paying taxes on capital gains from real estate by rolling over profits to more expensive property. They look at economic downturns as opportunities to pay bargain-basement prices for quality paper assets, and they create deals instead of simply waiting for the right one to come along.
  4. Inside Investors: Building or owning a profitable business is the primary goal of this investor. Whether as an officer of a corporation or owner of a majority of its shares of stock, the inside investor exercises some degree of management control. By running business systems from the inside, he or she learns how to analyze them from the outside and thereby becomes a sophisticated investor as well.
  5. Ultimate Investors: The goal of the ultimate investor is to own a business that is so successful that shares are sold to the public. Making an initial public offering (IPO) is expensive and full of risks, yet it allows business owners to cash in on the equity they have built up in the company, while also raising money to pay down debt and fund expansions. The ultimate investor is one who has mastered every rule and enjoys playing the game for its own sake.

Average investors buy packaged paper assets such as mutual funds, treasury bills, or real estate investment trusts (REITs). Professional investors are more aggressive. They create investment opportunities or get in on the ground floor of new offerings, build businesses and marketing networks, assemble groups of financiers to fund deals too large for them to undertake alone, and pick the companies with the most promise for initial public offerings (IPOs) of stock.

Each level of investor and type of investor that you are will determine if your retirement is secure, comfortable, or rich. Which do you choose?

Regards,

Robert Kiyosaki

The post There Are 5 Levels of Investing… Here’s How You Reach the Top One appeared first on Daily Reckoning.

There Are 5 Levels of Investing… Here’s How You Reach the Top One

This post There Are 5 Levels of Investing… Here’s How You Reach the Top One appeared first on Daily Reckoning.

I recently read an article on “Retirement Success: focus on the paycheck, not the savings number.” I was intrigued. I didn’t know exactly what it meant, so I read it.

The article features an actuary named Vernon who is an expert in numbers, and also a retirement educator. I always like to hear what those guys have to say.

Vernon’s strategy is to not to focus so much on the retirement number, but instead setting up “retirement paychecks that are guaranteed to last the rest of your life.” I thought “Oh, maybe he’s talking about cash flowing assets.”

I read on.

I didn’t have to get much farther down the page before I realized this “retirement educator” was teaching what most finance-gurus teach: a retirement filled with basics and necessities.

“The big picture is to get a feel for what your basic necessities are each month, and your discretionary expenses,” Vernon said. “Then, you want to insure an income that exceeds your basic expenses.”

What he called “retirement success” was simply living to pay for your necessities. By his logic, a retiree who probably worked a majority of their adult life was to live the rest of their life only with the basics. That’s not the way I’d want to live. That’s not the way anyone should live.

Social Security, Pensions, Annuities and Reverse Mortgages were his strategy for success.

This is no way to live.

5 Levels of Investors

Below is my Cashflow Quadrant…

 

cash quadrant

The image informs every different kind of person out there when it comes to their understanding of money.

The E and S side are where 90% of the population live. Uneducated financially. It’s not where you want to be.

Level 1: The Zero-Financial-Intelligence Level

Over 50% of the population in America is the Level 1 investor. The results of a lack of financial education in the school system can be found in this level. Simply put, they have nothing to invest.

Zero financial intelligence = Zero money to invest

There are many people who make a lot of money who fall into this category. They earn a lot—and spend more than they earn.

Level 2: The Savers-Are-Losers Level

As the Federal Reserve and central banks throughout the world print trillions of dollars at high speed, every printed dollar means higher taxes and more inflation. In spite of this fact, millions of people continue to believe saving money is smart. It used to be smart when money was money. Now savers who park their money are the biggest losers.

Level 3: The I’m-Too-Busy Level

This is the investor who is too busy to learn about investing. Most likely a highly educated person who is too busy with a career, family, and vacations. They rely on the expertise of an “expert” to manage it for them. They hope and pray their expert is really an expert.

Level 4: The I’m-a-Professional Level

This is the do-it-yourselfer (they’re from the S quadrant investing in the I quadrant). This investor may do their own research and make their own decisions before they buy and sell a few stocks, often from a discount broker. If they invest in real estate, the do-it-yourselfer will find, fix, and manage their own properties. And if the person is into commodities, they will buy and store their own gold and silver. In most cases, the do-it-yourselfer has very little, if any, financial education.

Level 5: The Capitalist Level

This is the richest people in the world level. The Level-5 investor, a capitalist, is a business owner from the B quadrant investing in the I quadrant.

The capitalist uses other people’s money (OPM) to invest. Once a person knows how to build a business in the B quadrant, success attracts money and it becomes easy to raise money in the I quadrant.

They get their money from Level 2 and Level 3 investors who save their money in banks and pension plans.

5 Types of Investors

Investors, like investing plans, are not created equal. There are different investor types.

  1. Accredited Investors: As defined by the Securities and Exchange Commission (SEC), this investor earns at least $200,000 in annual income ($300,000 for a couple) and/or has a net worth of $1 million. An accredited investor has access to many lucrative investments that, because of their risk, may be legally off-limits to people of lesser income. Although usually financially educated, accredited investors are not necessarily fully literate. They may be content with security and comfort rather than wealth, and may rely on advisors to develop and implement their financial plans.
  2. Qualified Investors:  This investor is well versed in either fundamental or technical investing. Fundamental investing requires the ability to assess a company’s potential by reviewing financial statements, tracking the company’s industry, and calculating how changes in interest rates and the economy could affect profitability. Fundamental investors use financial ratios (which you’ll learn about later) to assess the strength of a company being considered as  an investment.
  3. Sophisticated Investors: Sophisticated investors build wealth by developing a foundation of assets that generate high cash returns with minimum payment of taxes. Sophisticated investors exercise control over the timing of taxes and the character of their income. They know, for example, to defer paying taxes on capital gains from real estate by rolling over profits to more expensive property. They look at economic downturns as opportunities to pay bargain-basement prices for quality paper assets, and they create deals instead of simply waiting for the right one to come along.
  4. Inside Investors: Building or owning a profitable business is the primary goal of this investor. Whether as an officer of a corporation or owner of a majority of its shares of stock, the inside investor exercises some degree of management control. By running business systems from the inside, he or she learns how to analyze them from the outside and thereby becomes a sophisticated investor as well.
  5. Ultimate Investors: The goal of the ultimate investor is to own a business that is so successful that shares are sold to the public. Making an initial public offering (IPO) is expensive and full of risks, yet it allows business owners to cash in on the equity they have built up in the company, while also raising money to pay down debt and fund expansions. The ultimate investor is one who has mastered every rule and enjoys playing the game for its own sake.

Average investors buy packaged paper assets such as mutual funds, treasury bills, or real estate investment trusts (REITs). Professional investors are more aggressive. They create investment opportunities or get in on the ground floor of new offerings, build businesses and marketing networks, assemble groups of financiers to fund deals too large for them to undertake alone, and pick the companies with the most promise for initial public offerings (IPOs) of stock.

Each level of investor and type of investor that you are will determine if your retirement is secure, comfortable, or rich. Which do you choose?

Regards,

Robert Kiyosaki

The post There Are 5 Levels of Investing… Here’s How You Reach the Top One appeared first on Daily Reckoning.

And the Winner Is… Real Estate

This post And the Winner Is… Real Estate appeared first on Daily Reckoning.

We are a little over one year since President Donald Trump signed the Tax Cuts and Jobs Act (TCJA), and since then, real estate investors have been rushing to make sense of it all. In what represents the most sweeping U.S. tax reform since the Tax Reform Act of 1986, many of the changes are set to have a significant impact on businesses and individuals alike.

The new 20% deduction that’s available on pass-through income for sole proprietors and LLCs, or the higher 100% bonus depreciation allowance on the purchase of business assets are both new for the 2018 tax year. Despite the fact that this act contains some complicated areas, the good news is that generally speaking, business will most likely benefit from it—and that includes many real estate investors.

Keep in mind that currently, many of these changes are temporary, but this past September, as part of a three-pronged legislative package dubbed “Tax Reform 2.0,” Republicans approved two other bills. One would make tax rules governing retirement and education savings more flexible, while the other would provide bigger tax breaks to start-up companies.

While it may not be wise to restructure all of your investments solely for the purpose of tax breaks, it’s certainly a good idea to pay attention to the changes and consult with a CPA to find out how you can benefit most.

Income Tax Rate Reductions

Most taxpayers will be celebrating this year when they file their tax returns this year.

While the income brackets themselves remain the same, most of the tax rates are slightly lower. Prior to the changes, the tax brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. The new tax rate breakdown is as follows:

Income Tax Rate table

Pass-Through Deduction

Real estate investors will see a new 20% deduction on pass-through income form business other than C-corporations. This will have a significant impact on investors. This includes sole proprietors, LLCs and S-corporations. With these entities, the company itself doesn’t pay taxes. Instead, it’s passed through to the owner. For landlords and property investors, who often structure their investments as LLCs, this provision could represent significant savings.

If you’re married, filing jointly with over $315,000 in AGI, or filing single with over $157,500 make sure you consult a tax professional as there may be limitations to claiming the full 20% deduction.

Another change is the lower limits to mortgage interest deductions. Under the new law, mortgage interest is now only deductible on the first $750,000 on primary and secondary residences, although there is a grandfather clause that allows interest on previously purchased residences to be deducted up to $1 million. Also, interest on home equity loans is now only able to be deducted if the money was used for home improvements.

Additionally, state and local tax deductions, while unlimited before, are now capped at $10,000. Of course, investors and residents in states with high income taxes will feel this change the most.

Finally, for businesses with gross receipts of over $25 million, the net interest expense deduction will also now be limited to 30% of earnings before interest, taxes, depreciation and amortization.

100% Bonus Depreciation

Business owners have been able to deduct the cost of assets that they purchased for the business—up to 20%—with the TJCA, the amount has been increased to 100% in one year.

For example, let’s say this year, you buy a new $60,000 heavy SUV and use it 100% in your business. You can deduct the entire $60,000 in 2018 thanks to the new 100% first-year bonus depreciation break. If you only use the vehicle 60% for business, your first-year bonus depreciation deduction is $36,000 (60% x $60,000)

If you instead buy a used $45,000 heavy SUV, pickup, or van, you can still deduct the entire cost in 2018 thanks to the 100% first-year bonus depreciation break — which is allowed for both new and used vehicles. If you only use the vehicle 60% for business, your first-year bonus depreciation deduction is $27,000 (60% x $45,000).

REITS

Real Estate Investment Trusts (REITs) are treated quite favorably under the TCJA. Important changes that affect REITs specifically are:

    • Ordinary REIT dividends (i.e., dividends that are not declared as capital gain dividends or qualified dividend income) are entitled to the 20% pass-through deduction discussed above. However, these REIT dividends are not subject to the wage/capital limitation.
    • REITs, as corporate taxpayers, are subject to tax at corporate rates on any income they do not distribute in a tax year to their shareholders. Accordingly, REITs that do not distribute 100% of their taxable income in any year will be taxed as the new lower corporate tax rate of 21% on any undistributed income.

Real Estate as a Tax Shelter

A serious real estate investor should never have to pay tax on their cash flow or on the gain from the sale of their real estate. Plus, understand that rental real estate investments not only shelter cash flow from the real estate but can also shelter other income from taxes. With proper planning, rental real estate can create huge tax deductions for your business and salary income.

The key to building tax-free wealth in real estate is to continue buying more and more real estate and rolling your gains into like-kind properties through tax-free exchanges.

There’s a whole strategy around using exchanges and depreciation to pay no taxes, but I’ll leave that to the tax professionals like my Rich Dad Advisor, Tom Wheelwright, to explain.

While the long-term implications of this bill are yet to be seen, for now, many of the changes seem poised to directly benefit professional real estate investors — especially those who buy property under LLCs.

If you don’t yet have a business or aren’t investing, then it’s high time to start. Work with a knowledgeable tax advisor to build a strategy around deductions and tax law, to ensure you have getting every benefit you are entitled to.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

The post And the Winner Is… Real Estate appeared first on Daily Reckoning.

Are You a Team Player?

This post Are You a Team Player? appeared first on Daily Reckoning.

I hope you had a wonderful Christmas. And I hope you got the chance to look at that potentially life-changing video… though if you didn’t don’t worry. I made sure to get you some extra time, just click here to take a look before it comes down tonight!

After that, let’s back to the story.

What’s Your Game?

If you didn’t already know, rugby is one of the most physically demanding sports there is, far more challenging than American football. Unlike American football, players never stop. Most American football players play less than 10% of the entire game. Rugby players are playing 90% of the game, because a rugby player plays both offense and defense, simultaneously.

American football is like corporate America. Football players are told what to do before every play.

Rugby is a sport for entrepreneurs. Rugby is freestyle, free-flowing, always changing, always dynamic. The rules are clear. Yet there are no set plays. Rugby is fluid and instinctive—no one is ever told what to do.

Single-Phase and Multi-Phase Games

American football is single phase. One play and the play are over. The teams, both offense and defense, huddle, a new play is called and executed and again, once that play is over, the game stops. Players take a break.

Rugby is multi-phase. If a play breaks down, both teams converge on the ball, a “ruck” forms, the ball comes out, and the play continues, and continues, and continues. The team that controls the ball through the most phases, wins the game. Players do not take breaks.

Advancing the Ball

American football is a game of advancing the ball by running forward, by forward passes, or by kicking the ball forward when the team is out of downs for failing to advance the ball 10 yards.

In rugby, a rugby player advances the ball by passing the ball backwards. This means the ball is often passed “in the blind.” This means all rugby players must be running in support and close by, following the player with the ball—just in case the player with the ball needs help. I’ll repeat: Rugby players do not take breaks.

American football players do not cheat. They do only as they are told to do.

In American football, only a few players handle the ball. If the play is on the other side of the field, American football players stop and wait for the play to end. They are not helping the player with the ball, especially if that player is on the other side of the field.

Rugby players are always cheating. They are always ready to help a player in need, the player with the ball. That is because all rugby players run, pass, and kick the ball. If a fellow player is on the other side of the field, all players are running in support ready to help a fellow player in need.

American football players are specialists. Most players do not handle the ball. They all have specific jobs and assignments. That is why most American football players are playing less than 10% of the time they are in the game.

Rugby players are generalists. They have to do everything. Rugby players are playing 90% of the game.

Why Rugby Is Not Physical

If rugby is such a physical game, why is it not physical? Most games define players by physical characteristics. For example, the best basketball players are very tall, lean and agile, with great eye-hand coordination. American football players are tall, big, solid, and heavy. Soccer players are generally average in height, thin, quick, nimble, and fast. Jockeys are tiny, light, and strong. A jockey’s team is his horse. That is why there are no 250-pound professional jockeys. Race horses do not like fat jockeys.

Different Sports… Different Strengths

The game of golf and golfers are different. A golfer is does not need a team. A golfer is able to play the game by themselves. Golfers can practice by themselves.

Team players cannot. Team players need a team to practice with and a team to play against. Golf is a game you play with yourself and against yourself.

Rugby players come in all sizes. There are positions for short players, tall players, fat players, fast players and slow players. Physical size is not important.

At the core of all rugby players is the love of the game and the love of their team because, unlike golfers, rugby cannot be played by yourself or against yourself.

Business and Sports

Pictured below is my rich dad’s CASHFLOW Quadrant. It’s also the title of book number two in the Rich Dad Series of books: Rich Dad’s CASHFLOW Quadrant.

Cash Flow Quadrant

E stands for employee.

S stands for self-employed, small business, or specialist such as doctor, lawyer, web programmer, plumber, etc.

B stands for Big Business owner… with 500 employees or more.

I stands for Investor… professional investor or insider investor.

Most people are passive investors, investing in pension plans, savings plans, stocks, bonds, mutual funds, and ETFs. They invest from the outside.

Our educational system teaches students to be E’s and S’s. My poor dad wanted me to get my Masters degree and climb the corporate ladder in the E quadrant. My mom, a registered nurse, wanted me to become a medical doctor in the S quadrant.

My mom and dad saw the game of money like golfers, a game played by themselves and against themselves. They did not cheat. They never asked for help. They saw the world through the lens of the E and S quadrants.

Although he never played rugby, rich dad saw the world of life, business, and investing as a rugby player does. Rich dad was taught by real teachers, professionals from the real world of business. Hence, he saw the world through the B and I quadrants.

When it came to money, poor dad was not a team player. That is why he was poor.

Rich dad was. He had a great team of business professionals. That is why he was rich.

When it comes to life, money, business, and investing, team is important. It’s everything. You can’t reach success alone.

Are you a team player? And who is on your team?

What’s more important than money?

Your team.

If you want to know who is on my team, the Rich Dad book More Important Than Money features sections by each member of my team, including my wife Kim.

Kim is the most important member of my life and my business team.

Make sure any partner you have is worthy of joining your team!

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Let Me Share the One Thing That’s Made Me a Success…

This post Let Me Share the One Thing That’s Made Me a Success… appeared first on Daily Reckoning.

This time of year always makes me reminiscent. With all the holiday time spent with family and the New Year approaching, I like to look around at what I’ve accomplished. And look back at my life to think about how I got to where I am. Your next two issues will be special—one piece in two parts. I’ll discuss something near and dear to me; something that’s helped me to become not only the financial success that I am today, but the man I am as a whole.

This is one thing I’ve known for a long time…

Life is a team sport. School is not.

When I was in school, at test time, I always sat next to the smartest girl in class. I asked for help on tests. The problem is that asking for help in school is called “cheating.” Which is why I was often in the principal’s office. I kept asking for help.

My poor dad (my real dad) was the head of education for the State of Hawaii. When I was in elementary school, he showed me his Teacher’s Manual, to educate me on the definition of cheating. The manual’s definition was clear: “giving aid to someone on an individual assignment.” To me, giving someone aid sounded like a good thing. But my father explained that the purpose of tests was to test each student’s individual aptitude. And I still don’t understand the point. Why fail alone when you can succeed together? But one thing is obvious: in school, giving aid to someone who needs it is a bad thing.

My rich dad, my best friend’s father and a man who stopped going to school at 13 because his father died, “cheated” constantly. Rather than go to school, rich dad took over the family business, and “cheated” his was to success as an entrepreneur and a real estate investor. His education came from his family’s bookkeeper, accountant, attorney, banker, business managers, and employees. When faced with business problems, my rich dad learned to ask for help.

My poor dad, on the other hand, never asked for help, because—in his world—asking for help was cheating. That is why my dad died a poor man.

My rich dad taught his son and me to ask for help when solving life, business, and investment problems. That is why my rich dad died a very rich man, despite not attending school past the age of 13.

My poor dad, a government employee, had no need for bookkeepers, accountants, or attorneys. As a government employee, he was protected from the real world of business.

Rich dad, a true entrepreneur, learned early to count on his team from the real world of business. Rich dad’s real-life education came from his professional advisors, as well as his employees, who helped him take the “tests” of the real world.

Poor dad was not a team player. He did not have a team. He was the smartest person on his team.

Rich dad was a team player. He had a great team. And, most importantly, he was not the smartest person on his team.

Trying New Things

As a kid growing up in Hawaii, I played baseball, football, and surfed. I liked baseball and football, but I was passionate about surfing. So it isn’t surprising that I was a better surfer than I was a baseball or football player.

All through high school and college, I played baseball and football. I loved both games, I loved my teams, but I was not passionate about those sports.

In 1969, the Vietnam War was still being fought, so after graduation, I volunteered for the U.S. Marine Corps and was sent to Pensacola, Florida for Navy Flight School.

The Navy had a football team. It was nearly semi-pro. For example, the quarterback for the Navy team was Roger Staubach, who later became a Dallas Cowboys’ superstar.

My flight school roommate, Bruce, was a tight end from the Naval Academy. He had played with Roger at the Naval Academy. Bruce did not want to receive any passes from Roger. According to Bruce, Staubach threw the football so hard that he “put a hole in his chest.”

One day, after a particularly grueling practice, Bruce said to me, “Football is no longer fun. The players trying out for the Navy team are some of the best-of-the-best from colleges and universities all across America. We are out of our league.”

I had to agree with Bruce. Football was no longer fun. It seemed as though we were trying out for a professional football team.

One night after football practice, while we were having a beer, out of nowhere, Bruce said, “Let’s go play rugby.”

“What’s rugby?” I asked. The year was 1969, and rugby, an English game, was not well-known in America.

“I don’t know, sort of like football” said Bruce, “but I’ve heard rugby players drink a lot of beer.”

That was all I needed. I was in.

A few days later, Bruce and I wandered onto a vacant field and joined the Navy rugby team. Although I had never played the game, the moment I “packed down” in the “scrum,” I was at home. It was mystical. I knew—I knew—the game. It was as if I had played the game all my life.

Since that day in Florida, my passion for the game of rugby has carried me all over the world, playing all across America, Australia, New Zealand, Canada, and England. I have been a spectator at every Rugby World Cup and will attend the next World Cup in Japan in 2019.

I had found my game, a team sport that I was passionate about.

Why Rugby Players Are Different

Rugby football originated in 1895 at Rugby School, in Warwickshire, England. The genesis of rugby occurred when a soccer player, frustrated with the game of soccer, picked up the soccer ball and ran with it. Immediately, the opposing team ran after him and, when they tried to tackle him, the rule- breaking soccer player broke the rules again and passed the ball backwards, to a team member, who then also passed the ball backwards. Once tackled, a “loose ruck” or “maul” was formed over the ball, the ball came out, was passed backwards… and the game of rugby was born.

Rugby, soccer, and American football are all called football. These three football games all originated from soccer. There are also rugby league, Irish football, and Australian football, all similar yet very different and with different rules of play.

Soccer is the most popular of all football games. I’ve played soccer but did not like it as much as rugby. It did not make sense that in playing “football,” I was not allowed to tackle or hit other players.

For decades, there was an unspoken rule that rugby was played by rich, educated white “school boys,” boys who attended private boarding schools. Soccer, by contrast, was played by the masses.

Rugby Headed a Nation

In 1995 South Africa, a country still torn apart by apartheid, rugby was generally played by white men. Soccer played by black men.

In 1995, after being imprisoned for 27 years for his views on apartheid, Nelson Mandela emerged from prison and was elected President of South Africa. One year after being elected, Mandela united a country torn apart—black vs. white, rich vs. poor—using not the game of the oppressed, but of the oppressors. A rich white man’s game. The game of rugby.

In 1995, Nelson Mandela, one of the greatest world leaders in history, brought decades of horrific racial division together in hosting the 1995 Rugby World Cup. In my opinion, it was a dangerous, courageous and brilliant decision.

When the Springboks, South Africa’s now racially-integrated national team, beat the world’s greatest rugby teams for the championship—including New Zealand’s All Blacks, which is the team if you know anything about rugby—the world took notice and South Africa was transformed. Apartheid was officially over, and the process of uniting the country could begin.

The movie Invictus, starring Morgan Freeman and Matt Damon, tells the story of this world-transforming sport and sporting event.

In 1995, Mandela and rugby united the world. It makes me wonder where the next Nelson Mandela and rugby revolution is today? We need them.

In the information age, we’re seeing everything all at once and all the time. And when you have a president as polarizing as Trump, and he’s all that anyone’s ever talking about, it’s not a marvel that we feel like our country has never been more divided. I can only hope we have our own rugby revolution soon.

In tomorrow’s issue, I will get into more about how the understanding of my journey with rugby can inform yours. You need to find your game to find success. Sometimes that success comes as a tangent to a deeper understanding you get from something else. I would never have achieved the wealth and success I have in business without the transformational experience of rugby.

We’ll talk more tomorrow about how you can do the same.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

The post Let Me Share the One Thing That’s Made Me a Success… appeared first on Daily Reckoning.