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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 281  
Subject: Rich Dad, Dumb Dad? Date: 8/18/2006 12:00 PM
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Here is a recent article from Selena Maranjian on Fool.com news:

http://www.fool.com/news/commentary/2006/commentary06081801.htm?ref=foolwatch

She points out in this article that Kiyosaki feels that 401Ks are too risky for most people. What risk can Robert Kiyosaki be talking about here? Could it be that most people have all there eggs in the 401K basket?

Thoughts?

Alejandro
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Author: RayKinsella Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 215 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/19/2006 5:37 PM
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She points out in this article that Kiyosaki feels that 401Ks are too risky for most people

Kiyosaki implies that 401k = mutual funds. This isn't necessarily true. You can have the growth and matching of a 401k and go with a much safer vehicle.
Ray

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 216 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/21/2006 10:23 AM
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Ray,

I agree with you. If the concern is risk in a mutual fund, there are safer vehicles out there. Ultimately, the individual is responsible for choosing the level of risk. But how many people sign up for a 401K at work know what they bought into? Many folks just buy in and forget about it.

I think the author takes Kiyosaki's comments the he slams mutual funds misses the point. Kiyosaki points out the following.

"I am very concerned, personally, about the number of people [who] will never be able to retire in their lifetime. Because these 401(k)'s and mutual funds... are so risky, I don't think people will be able to retire on them. And that's really sad. ..."

Is it not risky to count on only a mutual fund for retirement? What kind of nest egg will you have if you are ready to retire in a period of poor performance?

Is the fund going to yield the return you will need to retire? I think he is right to say that most folks won't be able to retire on it. Most people don't invest enough or actively manage the retirement funds.

"But most people don't have a prayer -- because there's no Social Security and these mutual funds are so risky."

Correct again! Those who are counting on the Social Security are foolish. They don't have a prayer! Combine that with an inadequate mutual fund and you do have a really sad situation. Is this true of everyone? No. However, I think enough people are disconnected from reality that the situation does raise some concern.

Alejandro

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 217 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/22/2006 1:27 PM
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Hey Guys,

>> Kiyosaki implies that 401k = mutual funds. This isn't necessarily true.

Usually it does. IE the 401k for one company I worked with only provided around a dozen Fidelity funds.

Sure, you can access bond funds or (possibly) REITs, but they all share the same flaw of being massively diversified investments in an incredibly efficient market.

>> She points out in this article that Kiyosaki feels that 401Ks are too risky for most people. What risk can Robert Kiyosaki be talking about here?

Inflation and market risks.

In a mutual fund (as RK points out), you'll probably do a point or two worse than the market. But your nest egg will be chewed away by the full effect of inflation.

Assuming 10% market returns and 4.5% inflation (historical averages), you're looking at 4% growth. Given the time and quantity of money most people have to invest, they will be retiring in poverty, even if there isn't a major downturn in their last 5 years of investment.

I did a numerical analysis in another thread on this board, but I can do another if there's interest.

>> You can have the growth and matching of a 401k and go with a much safer vehicle.

Such as?

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 218 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/22/2006 3:27 PM
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Assuming 10% market returns and 4.5% inflation (historical averages), you're looking at 4% growth. Given the time and quantity of money most people have to invest, they will be retiring in poverty, even if there isn't a major downturn in their last 5 years of investment.

This is the situation a lot of people are in and they don't even know it! Most folks think a mutual fund is all they need. It's financial ingnorance instead of "Financial Intelligence" as Kiyosaki calls it.

Alejandro

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Author: TMFSelena Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 219 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/22/2006 6:24 PM
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Frodo52 --

<<In a mutual fund (as RK points out), you'll probably do a point or two worse than the market. But your nest egg will be chewed away by the full effect of inflation. >>

First off, you shouldn't necessarily do so much worse than the market in a mutual fund. You can often choose a broad-market index fund, which will give you pretty much exactly the same return as the market, minus an expense ratio (which is typically very low for index funds) and maybe minus another smidge.

That said, it's also very possible to do *better* than the market in other, managed funds -- you just have to pick the right ones, which can be done.

<< Assuming 10% market returns and 4.5% inflation (historical averages), you're looking at 4% growth. Given the time and quantity of money most people have to invest, they will be retiring in poverty, even if there isn't a major downturn in their last 5 years of investment. >>

I think that 4.5% average is on the steep side... [let's pause now while I look up evidence]

Oops! It looks like you're darn close. I found this:

<<Prices, as measured by the consumer price index for wage earners (CPI-W), increased at an average rate of 4.4 percent a year during the four decades between 1959 and 1998, but by only 3.2 percent a year during the decade from 1989 to 1998. In projecting that inflation will rise to only 3.3 percent by 2005 and remain at that level thereafter, SSA may be giving too much weight to recent experience (see Figure 6). However, the inflation booms of the 1940s and 1970s were clearly linked to events--such as World War II and the OPEC oil embargo--that are unlikely to recur, which makes SSA's assumption seem more reasonable. >>

from here: http://www.cbo.gov/showdoc.cfm?index=3235&sequence=3

So it looks like anywhere from 3% to 4.5% is a reasonable average inflation rate to expect. If we average *those*, we get 3.75%, but there's no reason to expect that the average will happen, either.

Selena

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 222 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/28/2006 5:48 PM
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Frankly, I don't understand why anyone pays much attention to Kiyosaki. In more than one way, he is basically a fraud, in my opinion. His thoughts on accounting are silly, for example. He brags about investments that he has never done. He has written a book that is supposedly non-fiction but based almost entirely on a non-existent "Rich Dad." In spite of the fact that he is glib, entertaining, and comes across as sincere, he is not the guru he wants you to belive him to be.

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 223 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/28/2006 5:52 PM
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The major risk in 401Ks, at least as I see it, is investing all or a major portion in your own company. Enron is the only example you need to show the wisdom of NOT doing that.

The next big risk is what has already been stated; folks tend to sign up, select their investment direction, and forget it. This is not a good strategy.

GlennRim

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 224 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/29/2006 9:52 AM
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"Frankly, I don't understand why anyone pays much attention to Kiyosaki. In more than one way, he is basically a fraud, in my opinion. His thoughts on accounting are silly..."

Exactly what thoughts on accounting did you think were silly?

Alejandro

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 225 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/29/2006 8:16 PM
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Well, for one thing to call a libility anything that isn't producing income is silly.

GlennRim

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 226 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 10:22 AM
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Well, for one thing to call a libility anything that isn't producing income is silly.

I agree with Kiyosaki when he teaches teaches that anything that takes money out of your pocket is a liability. It may not be an accounting standard way of looking at it, but I think there is a value to looking at finances from his prespective.

Do you have an example of anything that does not produce an income that should not be called a liability?

Alejandro

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 227 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 12:54 PM
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Do you have an example of anything that does not produce an income that should not be called a liability?


For starters, the cash in your wallet.

Cheeze

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 228 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 2:34 PM
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...For starters, the cash in your wallet.

Come on. Let's keep this in context. Does anyone keep all thier money in thier wallets? Do you think that Kiyosaki is talking about people's finances in terms of what's in their wallets?

You said for starters, what else?

Alejandro

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 229 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 5:10 PM
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You said for starters, what else?


Your house. Your car. Your Krugerrands. Your stamp collection. Mineral wealth still in the ground. Idle machinery. Dinosaur bones. Jewelry.

And so on.

All of these could be listed as assets on a conventional balance sheet. None of them produce income.

Hope this helps,

Cheeze

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 230 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 7:41 PM
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Hey Cheeze,

First of all, you misquoted Kiyosaki. An asset is anything that is generating a net income. A liability is anything that is COSTING YOU MONEY to maintain. Rocks in your yard aren't liabilities because they don't cost you anything to maintain.

Thus, since the cash in your pocket isn't costing you anything to maintain, it's not a liability. Although, when you look at it, cash in your pocket is being eroded by inflation AND represents an opportunity cost (you could have that cash in the bank earning interest at the very least). It's still not a liability because it doesn't negatively affect your cashflow.

And on to the others.

>> Your house. Your car. Your Krugerrands. Your stamp collection. Mineral wealth still in the ground. Idle machinery. Dinosaur bones. Jewelry.

Your house costs you a great deal to maintain. Likewise your car. You have to earn money to keep them. If you don't have other assets, this money is going to be generated by the sweat of your brow. They are making you poorer, not richer.

Likewise, your Krugerrands, your stamps, your dinosaur bones, etc. are likely insured, meaning that you have to earn money to keep them. Likewise the taxes on your raw land. These are speculations and (while they are being held) liabilities.

The salient point here is that you have to work to maintain them. At this point, they are akin to debts. You are essentially a slave to them until the point that you convert them to cash or income producing assets.

If I own a cashflow positive building, I'm being supported by it. It maintains my lifestyle rather than my lifestyle being forced to maintain it.

Note that when you turn your dinosaur bones into cash via a sale and buy some Tbills, you now have an asset.

Who is truly financially independent? A guy with $5M in RE generating $500K in annual income, or a guy with $5M in artwork who has to pay $50K per year to insure?

Guy 1 can do whatever he wants. Guy 2 has to work to earn enough to pay the insurance on his 'asset'.

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 231 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 7:58 PM
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>>In more than one way, he[Kiyosaki] is basically a fraud, in my opinion

While it is true that Kiyosaki does misrepresent himself and his history, it does not logically follow that what he has to say is worthless.

IE if it could be proven that Jesus Christ was not born of a virgin birth, would that make his message of love, tolerance, and charity worthless?

>> He has written a book that is supposedly non-fiction but based almost entirely on a non-existent "Rich Dad."

It's almost certainly true that the historical "Rich Dad" is vastly misrepresented in the Kiyosaki books if not a total fabrication.

But "Rich Dad" in character is a fairly good amalgum of most self-made millionaires I know. Personal businesses, income generating assets, investments in inefficient markets, frugal in their private lives -- that's what these guys do. I imagine that Rich Dad is essentially that - an amalgum of the financial teachers that Kiyosaki has had.

_Amalgum of financial teachers I've had / Poor Dad_ doesn't make a very good title...

>> Frankly, I don't understand why anyone pays much attention to Kiyosaki.

I'll tell you why. His books inspire and motivate people to become active in their financial lives and break out of the earn-and-consume lifestyle that the vast majority of the middle class live.

RD/PD (in conjunction with other books, but I give it a lot of credit) inspired me and my wife to overcome our fear, learn about inefficient markets, invest in inefficient markets, and network with financially independent people.

In the five years since I read the book, I've made major changes in my finances that have brought me much farther, much faster towards true financial independence than I thought possible.

That's why people pay attention.


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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 232 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 9:28 PM
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Well said frodo52

I understand that it seems silly to a lot of folks to see thier home as a liablilty as Kiyosaki teaches. When everyone has been programmed to thinks it is an asset. Especially, if the bank holds the note,it's thier asset. It just makes sense.

Unconventional yes - but a valuable prespective. I think he does a great job teaching what he calls "Financial Intelligence". I appreciate it. It's better than the convential broke thinking that most folks are mired in.

Alejandro

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 233 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 10:15 PM
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First of all, you misquoted Kiyosaki. An asset is anything that is generating a net income.


It is impossible for me to have misquoted him, since I didn't quote him in the first place. I was merely responding to a question.

There's a difference between cash flow and net worth, and that is the distinction upon which the Rich Dad empire is founded. There's nothing new about these concepts -- they are a revelation to some but they are, in fact, as old as the art of accounting. And there's nothing wrong with Kiyosaki bringing the idea to the masses.

The books, however, are written in baby talk, and there's about half an idea in each one of them.

And regardless of the cost of insurance, art objects and dinosaur bones and whatnot are still classed as assets, and I see zero cause for redefining the term.

Cheeze

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 234 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 10:29 PM
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I'm not totally against being very concerned about things that take money out of your pocket. I'm just against the thought that all of those things should be considered a liability. As I see it, that is too simplistic and nearly worthless.

Some examples of stuff that don't produce income but are still assets:

Children
Refrigerator
Shelter
Clothes
Cars
Furniture

I am completely aware of what Kiyosaki is trying to say, mainly that one should do less spending and more investing and growing wealth. I just think it is truly silly to say that stuff we own, (perhaps would have a hard time living without), are liabilities. I think it is much more practical and educational to talk about needs and wants, or some other similar attitude toward our purchases, than to just clump everything into two categories; assets and liabilities.

For example, nearly everyone in this country would have a hard time living a normal US lifestyle without a refrigerator. Because it is that important how can it possibly be considered a liability? One could argue convincingly that a $10,000 refrigerator would, at least for most folks, be a significantly exhorbitant expense compared to a $2,000 one that would do just as good a job. So, I would say that the $8,000 difference could be considered somewhat of a liability since that money could have been invested to grow net worth. The same argument could be made for a $90,000 Mercedes compared to a $20,000 Camry. If there is a true need for a refrigerator or a car, then pick the one that fills the need at the least cost. That would mean that a person actually understands the concept that money in the pocket is better than the money in the fancy appliance or the leather seats. I'm not saying that the Mercedes has no place in one's life, only that it should be purchased if the person has already taken care of other financial needs.

A big problem in this country and for the overwhelming majority of our citizens is that they see the Mercedes or the Plasma TV or the big house as a pretense that they have money that they don't actually have. They are tying their sense of self and their egos to things they can buy and show off, not to how they are growing their net worth. For example, I am friends to quite a few folks who have significant incomes but if they lost their job or their health, they couldn't survive more more than a few months before they would be absolutely broke.

To me, teaching about how to live below one's income and making wise purchasing decisions is just a better way to teach about handling personal finances. I think it's more logical and applicable to everyday life for most folks than the method that Kiyosaki has chosen.

OK! I've preached long enough.

GlennRim



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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 235 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 10:43 PM
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"Who is truly financially independent? A guy with $5M in RE generating $500K in annual income, or a guy with $5M in artwork who has to pay $50K per year to insure?"


Your argument is good only as long as the lessee is viable and the building is occupied. Is this building considered a liability if it is breaking even or if it goes unleased for a year or two.

Bottom line, as I see it, there are way too many variables in personal financial planning than to call everything either an asset or a liability based solely on whether or not it produces a net positive or a net negative cash flow. I maintain that, regardless of how simple and nice it sounds, Kiyosaki's asset/liability approach does little in teaching people how to handle their finances. I still maintian that if some item is required for living it is an asset, regardless of whether or not it subtracts from, adds to, or is neutral to current cash flow. That's why I say it is better to understand the need-vs-want balance and then know how to make wise purchases.

GlennRim


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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 236 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/30/2006 10:58 PM
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"While it is true that Kiyosaki does misrepresent himself and his history, it does not logically follow that what he has to say is worthless.

IE if it could be proven that Jesus Christ was not born of a virgin birth, would that make his message of love, tolerance, and charity worthless?

It's almost certainly true that the historical "Rich Dad" is vastly misrepresented in the Kiyosaki books if not a total fabrication."

Well, Jesus was certainly not born of a virgin yet about a billion people will say that it is absolute fact that he was. In fact there is a huge industry milking money from really poor people based on that truly ridiculous concept of anyone being born of a virgin. (By the way 3 stories preceding Jesus were identical to his) That has nothing whatsoever with the discussion at hand. Jesus never claimed to be born of a virgin. It was everyone else who were dersperately trying to prove he was something other than a normal human being who told that tale.

Kiyosake, in contrast, has intentionally lied to folks. He lied about his "rich dad." He lied about his net worth. He lied about his real estate deals. If you want to simply overlook those things, that is your choice and I'm glad that something he said got you to do something about your finances.

However, I think his integrity is very much a part of who he is and whether or not he can be trusted. From my way of looking at him, there are too many folks who are honest who have great things to say about personal finances for me to waste time with a fraud. That he has gained fame from a bunch of really gullible folks does not mean that I have to accept anything he has to say. I choose not to support liars, regardless of whether some of the stuff they say may have some value.

GlennRim

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 237 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/31/2006 10:44 AM
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…Bottom line, as I see it, there are way too many variables in personal financial planning than to call everything either an asset or a liability based solely on whether or not it produces a net positive or a net negative cash flow. I maintain that, regardless of how simple and nice it sounds, Kiyosaki's asset/liability approach does little in teaching people how to handle their finances...

I think you may be missing the whole point. As simple and as nice as it does sounds it is teaching "people how to handle their finances". I respect the fact that you don't like the man and his approach, but don't discount the fact that it is working positively for so many.


...Well, Jesus was certainly not born of a virgin yet about a billion people will say that it is absolute fact that he was. In fact there is a huge industry milking money from really poor people based on that truly ridiculous concept of anyone being born of a virgin...

Hmmm, I find it interesting that you know with certainty that Jesus was not born of a virgin. Also, that poor people were being milked by this so called "ridiculous concept".


I may be wrong, but I think you're struggling seeing value in things you don't agree with.

Respectfully,
Alejandro

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 238 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/31/2006 11:47 AM
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Hey Cheeze,

>> There's a difference between cash flow and net worth, and that is the distinction upon which the Rich Dad empire is founded.

Well, that and the concept of investing outside of the incredibly efficient world of paper assets. Virtually every other mass market personal finance book out there emphasizes (to the exclusion of virtually all other investment) paper assets, typically those held in tax advantaged retirement accounts.

RK doesn't. In fact, he warns people of the risk of relying too heavily on them. Which is really valuable stuff.

>> The books, however, are written in baby talk, and there's about half an idea in each one of them.

To each his own, I suppose. But dissing the guy over style isn't very effective given the number of books he's sold.

>> And regardless of the cost of insurance, art objects and dinosaur bones and whatnot are still classed as assets, and I see zero cause for redefining the term.

Kiyosaki is trying to emphasize to his readers in the traditional earn-and-consume middle class that buying crap that costs money doesn't make you rich. IE his poor dad earned a lot of money over his lifetime, but he purchased 'assets' that forced him to work harder to maintain them, like a big house, cars, etc. When he lost his job, his 'assets' were an albatross.

For these people, it is worthwhile to see a distinction between cashflow positive assets and cashflow negative assets. Maybe you don't agree, but I do.

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 239 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/31/2006 12:20 PM
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Hey Glenn,

>> I think it is much more practical and educational to talk about needs and wants, or some other similar attitude toward our purchases, than to just clump everything into two categories; assets and liabilities.
...
>> For example, nearly everyone in this country would have a hard time living a normal US lifestyle without a refrigerator. Because it is that important how can it possibly be considered a liability?

Because it costs you money every month. You need to earn money every month to cover the electric bill, either by the sweat of your brow or by the income of your assets.

Do you recognize that you need to earn money to support it? And that, because you own it, you need to modify your lifestyle to earn money? That's all that liability means.

Dude, RK doesn't say "Avoid all liabilities like the plague! Never buy a liability! Liability is a bad, bad word! If you have liabilities, you should just go shoot yourself now!" Quite the opposite. Hell, he talks about buying some very high end liabilities himself. He just emphasizes that you should be working to have your liabilities paid for by assets rather than the sweat of your brow.

Being a liability isn't a bad thing. It just means that it's costing you money. You need liabilites. You don't *need* assets, although they sure make things easier for you.

>> I'm not saying that the Mercedes has no place in one's life, only that it should be purchased if the person has already taken care of other financial needs.

Exactly what RK says. He encourages buying liabilities that you desire when your assets pay for them.

>>To me, teaching about how to live below one's income and making wise purchasing decisions is just a better way to teach about handling personal finances. I think it's more logical and applicable to everyday life for most folks than the method that Kiyosaki has chosen.

There are at least a hundred books out there with that message. Not one of them can really help you become rich because they don't tell you why you need to invest in inefficient markets and they ignore assets. That's RK's niche.

>> Your argument is good only as long as the lessee is viable and the building is occupied.

As a side note, an investor who owns $5M in RE is almost certainly has that diversified among several buildings/tenents.

But you are right that it is only an asset when it has a net positive cashflow. Which, over the longer term, the building will be assuming you did due dilligence when you bought it.

How many people can say that for their art collection?

>> That's why I say it is better to understand the need-vs-want balance and then know how to make wise purchases.

That's why you will never be rich.

>> Jesus never claimed to be born of a virgin.

And you know this how?

>> However, I think his integrity is very much a part of who he is and whether or not he can be trusted.

I take it that you don't vote...

RK has probably exaggerated his past and lied about Rich Dad and this does concern me. But in doing so, he has made a much more effective book. Given that his readers are more interested in escaping the ratrace than in a 100% accurate biography of RK, I think it's a pardonable sin.

>> That he has gained fame from a bunch of really gullible folks does not mean that I have to accept anything he has to say. I choose not to support liars, regardless of whether some of the stuff they say may have some value.

It really depends on how valuable the stuff he has to say is. Given my bottom line, I disagree.

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 240 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/31/2006 9:01 PM
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Alejandro

The discussion about the virgin birth and poor people being milked by wealthy churches is not appropriate on this board beyond what it has already gone, in my opinion.

However, I am more than willing to discuss it with you personally. You can contact me via e-mail. My preferences allows for that.

To make one final comment; I actually am quite capable of seeing anyone's point of view except when their argument is full of holes that are easily pointed out but that cannot be seen by those folks who simply must hang on to their belief systems.

I'm looking forward to an interesting discussion, should you choose to try it.

GlennRim



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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 241 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 8/31/2006 9:06 PM
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What I said is that I don't have to pay attention to a fraud when there are many non-fraud types out there who have far better information. Whatever you choose to do is your choice. I have no problem accepting that many folks, you included, seem to have gotten off your behinds financially after reading RD/PD. It just seems strange to me why folks are so loyal to this guy even when admiting that he is less than forthcomming. Why not just drop him and hang on to folks who say better things while being honest?



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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 242 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 9:25 AM
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GlennRim,

A appreciate your offer to continue or discussions on "Faith". You are correct. We can pick up that discussion elsewhere.

As far as Kiyosaki is concerned, I have no loyalty to him. I'm happy for his success but your are right, there are plenty of authors out there with something to offer. I'm sure if you dug deep enough you can find some skeletons in some of thier closets as well. I just see value in some of the things he teaches. Now I have made good money using some of his real estate techniques. I don't care if his "Rich Dad, Poor Dad" story is made up. I still get his point.

Alejandro

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Author: frodo52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 243 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 10:12 AM
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>> It just seems strange to me why folks are so loyal to this guy even when admiting that he is less than forthcomming.

Loyalty is a bit strong. While I really enjoy his basic message and I commend a couple of his books, I also think that many of his books and most of the "advisors" series books are very poor -- See the book review thread.

>> Why not just drop him and hang on to folks who say better things while being honest?

Like who?

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 244 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 12:16 PM
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For these people, it is worthwhile to see a distinction between cashflow positive assets and cashflow negative assets. Maybe you don't agree, but I do.


I do agree, and it is an important distinction. Most of these cashflow positive assets, however, have a catch, and that is that they require some added work or risk to enjoy their rewards. Real Estate, for example, requires a good deal of management. Plus, its returns are not guaranteed the way a government bond would be, not that you would want to have all of your assets in bonds but there is a whole lot more to personal finance than buying up a lot of property.


To each his own, I suppose. But dissing the guy over style isn't very effective given the number of books he's sold.

McDonald's sells a lot of hamburgers, too. That doesn't mean I should be required to believe they are edible.

I tried reading one of his books once. After he made the same point twelve times in six pages, I realized that he was publishing his first drafts and that he didn't have a good editor working with him. He isn't writing so much as wallpapering.

I think his message is fine as far as it goes, but you'll get far more information elsewhere, from a variety of sources I could recommend, starting right here at TMF.

Again, if he speaks to you, that's fine. I just don't seem to have the kind of brain that responds to whatever his appeal might be.

Cheeze

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Author: cyberisme Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 245 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 3:10 PM
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Well, for one thing to call a libility anything that isn't producing income is silly.

In your opinion.

It's pretty eye opening for lots of people.

It changes the way they 'invest' and the way they manage their money.

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Author: cyberisme Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 246 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 3:14 PM
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"Your house. Your car. Your Krugerrands. Your stamp collection. Mineral wealth still in the ground. Idle machinery. Dinosaur bones. Jewelry."

And the point is, they are still all liabilities.

Your house requires money - even if there is no mortgage. Maintenance, taxes, etc. It will still spend money rather than produce money or pay for itself.

Your car is a HUGE liability - it depreciates every day, and costs money to run. You also have to replace it at some point.

Etc. Etc. Etc.

People are missing the major point - his idea that in order for something to be an asset, it must pay for itself (break even) and/or produce more cash than it costs to have. The additional cashflow can then be utilized for more break even/cash flow assets or can be used to pay for liabilities (car, jewelry, etc).

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Author: cyberisme Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 247 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 3:22 PM
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"To me, teaching about how to live below one's income and making wise purchasing decisions is just a better way to teach about handling personal finances. I think it's more logical and applicable to everyday life for most folks than the method that Kiyosaki has chosen."

That's the whole concept of "Your money or your life" - a book that frankly, I found very unappealing. I could scrimp and save and live a meager existance so that money didn't control me - OR, I could rethink my method and bring more money into my life - aka RK.

I prefer the second method. The first method got us only so far - the second method made us wealthy.

Used it and now 5 years later we are:
1) debt free (except of course leveraged RE debt)
2) have a networth double digits over the average networth for people 2 decades older than us
3) enjoy the challenge of leveraging our income
4) love our lives
5) can 'retire' yesterday should we so choose

That is the point of RK. Build residual income - put cash flow assets into your portfolio (and benefit from appreciation when you sell the assets).

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 249 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/1/2006 11:43 PM
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>>That's why you will never be rich.

That's an assumption that is completely wrong. I retired 10 years ago at age 51. I'm now living solely on my assets and my net worth increases every year by many times what it costs me to live a very nice life. I'm certainly not mega-wealthy, but by just about any standard you wish to apply, I'm certainly not poverty-stricken. I got to where I am not by huge income and I had absolutely zero in inheritance from a very poor father. I got here by managing my money wisely based on a lot of reading of all those books you seem to be not too fond of.

In truth, I'm happy for you that you think RD/PD is of value. If it helped you I certainly think that is great. I just don't agree with you.

Based on what I've read, there are better things out there that actually help folks much more thoroughly and practically than RD/PD. For example, if one is to deal in real estate, I find the information in RD/PD to be way too simplistic, virtually worthless in the real world of buying and selling such things. He doesn't go into any details of what's important, what to avoid, how to know if you're getting a good deal, how to estimate/calculate cashflow, how to negotiate, how to find properties, how to evaluated the neighborhood, etc. However, there are several excellent books that go into minute details on such things. So, while RD/PD talks a lot about buying RE, he really doesn't tell you how, at least I certainly didn't see it when I read it. The same goes for TLDs. He barely mentions them but makes them sound like it's easier than falling off a log to buy them and get your guaranteed return on the investment.

By now, I've slogged this dead horse quite enough.

GlennRim

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 250 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/2/2006 12:47 AM
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And the point is, they are still all liabilities.


Nope. They're all still assets. Yes, they cost money to maintain. But that doesn't mean they don't have value.

Really, you're trying to say that black is white. There's a difference between intrinsic value and cash flow. That's why businesses are required to have more than one kind of financial statement: to capture these nuances.

Making the words mean the opposite of what they mean does not help anyone achieve clarity.

I could sit here and say that owning real estate was a liability: you have to deal with tenants, and mortgage payments, and insurance, and inspections, and code violations, and surveys, and termites, and on and on and on. The property might bring in an income, and it might even bring in a posiitve cash flow. But I'd be as justified in calling it a liability as you are in applying that term to a car or house, just because I find owning it for one reason or another onerous. And I'd be as wrong as you are in using that term, too.

These words have very specific meanings. I don't see how it is in any way helpful to invert them.

Cheeze

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 251 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/2/2006 3:29 PM
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<< These words have very specific meanings. I don't see how it is in any way helpful to invert them.>>

I couldn't agree more! Plus changing the meaning of these terms really doesn't say much about a person who brags about having "financial intelligence"

GlennRim

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Author: cyberisme Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 252 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/3/2006 6:58 PM
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"Nope. They're all still assets. Yes, they cost money to maintain. But that doesn't mean they don't have value."

Ah... this is where your missing his definition - he's not saying they don't have value - he is saying that by themselves, they are creating a drain - basically, it cost money to have them, and they aren't 'covering their expenses' so to speak, which creates more of a liability than an asset.

What I find interesting is that the arguers get so caught up in the 'traditional' term of assets and liabilities that they bite themselves in the butt and refuse to see the truth in what he begins to teach.

In this case, 'traditional thinking' is keeping people 'inside the box' and chained to the 'traditional' way of financial thinking.

Of course he is basic - take a look at the world - they are basic thinkers. The very proof of this is bickered over daily on these forums. People don't know how to handle their money, they don't know where to begin, they don't understand the intricacies of investing - they don't even understand the concept of the starbucks principal.

When someone like RK can get people out of the daily grind (pun intended) and get them using their money in different ways, helping them to create businesses, investments they understand, cash flow, etc, then he's doing something right.

There are always those that a) can't stand that they didn't get to it first b) are jealous c) don't have any understanding of personality types and how people learn d) don't understand marketing methods and our basic behavior and that it takes an average of 6-8 times heard or seen before something sinks in e) that some people are unique individuals and want more than just a 'satisfactory' retirement, etc. etc.

Everything we've done we did without RK - we read his methods in the midst of our doing and agree with (most of) what he says. It isn't his job to get into the guts and bolts of changing your financial life, his goal is to simply be the catalyst for change - and for many people, he is.

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Author: cyberisme Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 253 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/3/2006 6:59 PM
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"I couldn't agree more! Plus changing the meaning of these terms really doesn't say much about a person who brags about having "financial intelligence""

One's inability to think outside the box is foretelling of their "financial intelligence".

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 254 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/4/2006 11:08 AM
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Ah... this is where your missing his definition - he's not saying they don't have value - he is saying that by themselves, they are creating a drain - basically, it cost money to have them, and they aren't 'covering their expenses' so to speak, which creates more of a liability than an asset.


I'm not "missing" the definition. I'm saying it's wrong.

He offers no revelation. What he teaches is nothing that hasn't been revealed to the world for hundreds of years of basic capitalist theory. When you say that Kiyosaki's thinking isn't "traditionalist," you're simply misapprehending what the tradition is.

Just because it's new to a lot of people doesn't mean it's an innovation. It also doesn't mean it's not valuable. Except insofar as the language is muddled and poorly expressed, which is my entire point.

Cheeze

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 255 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/4/2006 1:03 PM
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I think the whole point is that Kiyosaki is trying to change the meaning of some long-standing financial/accounting terms that are clearly understood and have been for a long long time. By doing so, he is unnecessarily muddying the waters.

He could very easily have decided to simply state the obvious without going to the lengths he does trying to define what is a liability and what is an asset. He could, for example have said that some assets do, in fact, create a negative cash flow and that by doing so they might hurt your overall financial picture. He could then argue quite effectively that to be financially intelligent, one should thoughtfully weigh what one purchases and why. That is a concept that is pretty easy to grasp and it doesn't require any convoluted definition of assets and liabilities.

Instead, he has chosen to set up a completely false story about a non-existent "rich dad" and portray himself as some sort of guru; when, in fact, he is anything but.

I say again, just because he has sold a bundle of books that may have actually gotten some folks to think about their net worth, that doesn't make him an expert. He doesn't do nearly as good a job as dozens of other folks.

GlennRim


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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 256 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 6:33 AM
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The books, however, are written in baby talk, and there's about half an idea in each one of them.


The books are written to appeal to a broad audience. The level of financial intelligence represented matches the level of many of the readers. Hence the reason the books are popular.

The more complex and technically accurate books are read by a lot fewer people.


And regardless of the cost of insurance, art objects and dinosaur bones and whatnot are still classed as assets, and I see zero cause for redefining the term.


Many words have multiple meanings. Language changes all the time.

The point about the assets being a liability is one that I remember reading long before RDPD came out. People were making the point that holding gold has a cost (storage mostly and then the cost to transport when sold). Similar for art and other assets like commodities.

Many of the paper based market places were created to solve the issues of holding physical assets. Stock certificates that can be traded independent of the company buildings, options and futures contracts that settle in cash rather than with physical delivery.

RK is somewhat restating what is taught in more sophisticated investment circles. Many asset classes come with an attached liability given the lack of income the asset produces. Many real estate investors avoid raw land as they do not want the expense without income.

I give RK credit for raising the debate and getting a lot more people engaged in the dialog. His points are not in line with accounting rules and regulations. He was not debating accounting and any accountant who only looks at what column an asset is listed on seems to be focused on the balance sheet while ignoring the P&L. Assets without cash flow in a business is a liquidity problem. Businesses that run out of cash but hold assets many times fail and find the assets hold little true value when converted to cash quickly.

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 257 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 6:36 AM
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Kiyosake, in contrast, has intentionally lied to folks. He lied about his "rich dad." He lied about his net worth. He lied about his real estate deals. If you want to simply overlook those things, that is your choice and I'm glad that something he said got you to do something about your finances.


If we labeled what he wrote a fable would that help?

Many fables were created to make a point without there being a set of facts to prove that the fable happened.

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 258 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 6:50 AM
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Why not just drop him and hang on to folks who say better things while being honest?

I do not think I have ever met a person who has not lied at some point in the past. Even family members.

Yet many people I associate with are basically good people with useful things to say.

The experts used to think the world was flat. Science is based on the principal that something is true unless we find out later that it was not.

Math is the only field where something can be proven to be true independent of the time at which the proof was developed. All other fields are mostly based on experience and opinion as to what is going on. Over time the 'facts' do shift or are exposed as being different than was first though.

RK has made some good points about the philosophy to investing. He has done so in a language that many people who are likely not represented on the MF can understand.

Very few financial books are more than a philosophy for how to succeed financially. Even if the author believes strongly in what they write the passage of time tends to confirm that the views are based on opinions or temporal facts. Wisdom is not the same as fact and you can gain wisdom from people even if all they are relating is a fable or other made up story. You can gain wisdom from experiences even if the experiences were failures by some measure.

The beauty of financial books is there are lots of them that contradict each other. Being a contrarian is by definition believing something different. RK is not that different. In the world of real estate books he is right in the mix when it comes to story telling. I can provide some examples where well know investors, firms, authors suggest strategies that fly in the face of common wisdom (Lynch, Buffet, Graham, efficient market theory, the book Fooled by Randomness, LTCM, UBS).

Note that I have made a lot of money from reading RE books even if the authors are not well liked by all. I started out about the same time as RK and invested in some of the same markets. I never met the guy and I do not have the same track record. What he rights is close enough to get people to think about the future and investing so I would recommend the book to people. The number of new investors who now understand why cash flow as he defines it is rather amazing.

Play the cash flow game with new investors and watch what happens over a matter of months.

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 259 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 6:52 AM
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I don't care if his "Rich Dad, Poor Dad" story is made up. I still get his point.

Very well said. Have a rec.

Fables, the major religious books and other 'stories' were tailored to deliver a message without always keeping to the literal facts.

For a real tangent watch a copy of "What the Bleep Do We Know." Some of the people speaking on the film are scientists who deal in facts but what is a fact?

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 260 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 6:59 AM
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Cheeze,

You weaken your point when you write:


McDonald's sells a lot of hamburgers, too. That doesn't mean I should be required to believe they are edible.


Edible as defined commonly would be self-evident from the repeat customers.

What you really seem to be saying that it does not work for you. Just like RK does not speak to you. You noted this when you wrote:

Again, if he speaks to you, that's fine. I just don't seem to have the kind of brain that responds to whatever his appeal might be.


Hence most of what you are point out is you have your preferences and they are different from someone else's preferences. You can not defend the point that McDonalds is not edible. Just that you do not choose to eat there. You might not like RKs style or you might find his points a bit simple. It is hard to argue that more people than you do.

As you somewhat conclude you are but one vote and your vote is cast somewhere else. What others choose to eat and read really does not impact you in a meaningful way.

I would have suggested to agree to disagree. Then I realized that even that is not going to work as you are agreeing that RK serves a purpose or a group AND RK does not work for you.

Live and let live?

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 261 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 7:10 AM
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Cheeze,

I agree and disagree with your points. See below.

As a general statement understanding can come from challenging widely held believes and assumptions.

Really, you're trying to say that black is white. There's a difference between intrinsic value and cash flow. That's why businesses are required to have more than one kind of financial statement: to capture these nuances.


Good observation about businesses.

There is a profit and loss statement (P&L) which is mostly about cash flow. Can the business cover its operating expenses from operating income or special one-off events?

Balance sheet. What assets and other things of value that may or may not be producing income does the business control.

Then there is the 'off-balance sheet' things.


Making the words mean the opposite of what they mean does not help anyone achieve clarity.

I could sit here and say that owning real estate was a liability: you have to deal with tenants, and mortgage payments, and insurance, and inspections, and code violations, and surveys, and termites, and on and on and on. The property might bring in an income, and it might even bring in a positive cash flow. But I'd be as justified in calling it a liability as you are in applying that term to a car or house, just because I find owning it for one reason or another onerous. And I'd be as wrong as you are in using that term, too.

These words have very specific meanings. I don't see how it is in any way helpful to invert them.


Here is where I disagree with you. 'Thinking out of the box', brainstorming and other techniques are to break down the assumptions, the barriers and the restrictions of day to day life. It does mean to redefine things. To create something new. To consider if you need to invent a new label or otherwise change the prior meaning to include a new variation.

English as a language is known for evolving. Where words change meaning and new words come into fashion.

Accounting does define many of the concepts we are talking about. In strict accounting terms there is little need to redefine the terms. As a practical way to understand day to day financial decisions accounting offers much less guidance. RK is clearly saying that a person's ability to sell time for income is limited in many ways. Hence buying things that demand regular income for the care and feeding of the thing is not wise in the absolute. Just like people should save for retirement people because they can not work for ever. RK is saying that there is no reason to wait until you body is failing to retire. Just build up assets that are self supporting plus produce a surplus. You use the surplus to pay for the liabilities of life (the things that take money each month to maintain control).

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 262 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 7:13 AM
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I couldn't agree more! Plus changing the meaning of these terms really doesn't say much about a person who brags about having "financial intelligence"

GlennRim


While I agree that asset and liability might seem like terms clearly defined be a bit more open to alternative viewpoints.

The 'experts' use to think the world was flat. The Catholic Church even took a position on the matter.

Some of the time there is a reason that the facts are wrong but the reason is not understood. If a term is defined to mean something then the definition was made up by someone so it could change in the future. Other than Math there is very little that is absolute in life.

The RK 'redefinition' causes people to think. It challenges conventional wisdom so that people can see things differently.

Accountants can continue to use the term as you expect. That still does not mean that flipping around the meaning does not offer insight into the true nature of an asset or a liability. Not all assets and liabilities are the same. Otherwise people could not use a collection of them to obtain a balanced portfolio.

John Corey

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/5/2006 7:05 PM
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Here is where I disagree with you. 'Thinking out of the box', brainstorming and other techniques are to break down the assumptions, the barriers and the restrictions of day to day life. It does mean to redefine things. To create something new. To consider if you need to invent a new label or otherwise change the prior meaning to include a new variation.


We are now officially talking in circles, but one more time just for giggles:

RK is NOT thinking outside of the box. He is thinking well inside of the box. He doesn't come close to the edge of the box. His insights, to use a generous term, are not his own. It is merely conventional thinking expressed very poorly.

There is no need to "redefine" the terms because the existing language is already adequate to explain the ideas he presents, and in fact they have been adequate for over a century.

I don't begrudge his success. Obviously people respond to his message. Like McDonald's, it's edible, but not exactly good for you.

Cheeze

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 264 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 7:14 AM
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His insights, to use a generous term, are not his own. It is merely conventional thinking expressed very poorly.

...the existing language is already adequate to explain the ideas he presents, and in fact they have been adequate for over a century.

I don't begrudge his success. Obviously people respond to his message.


He might be expressing himself poorly and distorting the definitions that have been used for 100 years. Lets agree that he is doing this now that you have suggested it.

As he is very popular, sells a lot of books, etc and has people talking about how the concepts can be applied I would say he is doing much better than the prior authors and experts. Somehow his use of language has changed the conversation so a lot more people are engaged. Some appear to be taking action.

If we measure the impact the experts who use the classic definitions have had when it comes to encouraging understanding I would say they are coming up short compared to RK. And it is also true that RK is still wrong at a technical level about the definition of a liability.

Similar to Microsoft. The best OS was not produced in Redmond. It just happens to be the most popular for any number of reasons.

There is room for RK to be effective and successful without being technically correct or right. People can still benefit from what he has shared in his books even if he had to make it up and change definitions to get his point across.

John Corey



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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 265 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 9:28 AM
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If we measure the impact the experts who use the classic definitions have had when it comes to encouraging understanding I would say they are coming up short compared to RK.


You think so?

200 years of capitalism vs. a few hundred thousand books sold?

The entire global economy vs. whatever microscopic portion of that belongs to RK and his devotees?

You are still laboring under the misapprehension that these ideas are rare and little understood. On the contrary, they are common and basic to the function of any company that ever turned a profit, ever.

Cheeze

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Author: AlejandroOrtiz Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 266 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 12:16 PM
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"The RK 'redefinition' causes people to think. It challenges conventional wisdom so that people can see things differently."

Absolutely, It reminds me of something I have learned from one of my heroes, Bruce Lee. He taught, "using no way as way, having no limitation as limitation."

"Using no way as way" means do not presuppose a way. Be in the moment. Be present. Be open to the moment in which you find yourself.

"Having no limitation as limitation" means keep an open mind. Do not limit yourself or your thinking. Do not let your beliefs or your style limit your experience or the possibilities.

As Bruce lee himself said, "Where there is a way, their lies the limitation."

Bruce Lee re-defined the martial arts and fought thousands of years of conventional thinking.

Therefore, I feel this discussion is not just about Kiyosaki. It's about being challenged. Accounting is still accounting and 1 + 1 still equals 2. However, when you close your mind you close your opportunities.

Alejandro

Quotes used here are the property of The Bruce Lee Foundation http://www.BruceLeeFoundation.com

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 267 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 5:42 PM
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John

<<I do not think I have ever met a person who has not lied at some point in the past. Even family members.

Yet many people I associate with are basically good people with useful things to say.>>

You're missing my point. I'm not saying that everyone other than Kyosaki is honest. In fact, there is no such thing as an absolutely honest person. The point is that Kyosaki didn't just lie, he went over the top. He is presenting himself as something that he is not. He is NOT doing this in a simple way like one would do if not feeling well but when asked, "How are you?" would reply "Oh! Just fine." That sort of lying is what we all do all the time. That is not what Kyosaki has done. He has grossly misrepresented himself, his credentials, his history, and his current status. This is fraudulent, in my opinion, and not worthy of the type of person to whom I would give respect.

Besides, just because it is common to lie, does that mean that it is perfectly OK to do so?

<<The experts used to think the world was flat. Science is based on the principal that something is true unless we find out later that it was not.

Math is the only field where something can be proven to be true independent of the time at which the proof was developed. All other fields are mostly based on experience and opinion as to what is going on. Over time the 'facts' do shift or are exposed as being different than was first though.>>

Math and science have absolutely nothing whatsoever to do with Kyosaki nor the discussion of his misrepresentation. When scientists were saying the earth was the center of the universe, they were not lying. They were telling what they actually believed to be the truth. That it was later proven to be wrong did not change their stance into a lie. Kyosaki knew he was lying all along. There is no comparison whatsoever with his type of lying and scientific statement of truth as it is known at the time but may be disproven later.

<<RK has made some good points about the philosophy to investing. He has done so in a language that many people who are likely not represented on the MF can understand.

Very few financial books are more than a philosophy for how to succeed financially. Even if the author believes strongly in what they write the passage of time tends to confirm that the views are based on opinions or temporal facts. Wisdom is not the same as fact and you can gain wisdom from people even if all they are relating is a fable or other made up story. You can gain wisdom from experiences even if the experiences were failures by some measure.

The beauty of financial books is there are lots of them that contradict each other. Being a contrarian is by definition believing something different. RK is not that different. In the world of real estate books he is right in the mix when it comes to story telling. I can provide some examples where well know investors, firms, authors suggest strategies that fly in the face of common wisdom (Lynch, Buffet, Graham, efficient market theory, the book Fooled by Randomness, LTCM, UBS).>>

Again, this I have said many times that the fact that his book has gotten a lot of press and has gotten many folks to think about thier net worth is totally beside the point that he has done so by being a fraud. To compare his lying with a book that simply is contrary to some established idea is a comparison that I cannot grasp. Those are two totally different thoughts. He just lies about stuff. The other books are presenting ideas that are different with no lies or misrepresentation whatsoever.

<<Play the cash flow game with new investors and watch what happens over a matter of months.>>

Actually, I own the game both computer and card-table versions. I bought them simultaneously, in an effort to find out if he really had anything to offer to a novice. The games are interesting, but hardly educational. They are unrealistic in many ways. They don't represent reality in any meaningful way. I will admit that the card-table version is somewhat enjoyable to play, especially with a few folks who have some time to waste. The computer version (both 101 and 202) is rather the opposite, in my opinion, it's boring, simplistic, and silly. I think they are nothing more than a game. They lack an ability to teach anything of value about finances.


GlennRim


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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 268 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 5:46 PM
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John

<<Fables, the major religious books and other 'stories' were tailored to deliver a message without always keeping to the literal facts.>>

Fables cannot be compared to lying. Fables are understood to be fiction. As are any other books sold under the fiction label. Religious books fall into a category all their own. Most of them are believed to be true, but only by the folks who follow that specific relitious path. For non-believers, they are held to be a bunch of hooey. I don't see any connection between fiction and/or religious works and the work done by Kyosaki.

GlennRim

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 269 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/6/2006 5:54 PM
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John

<<Here is where I disagree with you. 'Thinking out of the box', brainstorming and other techniques are to break down the assumptions, the barriers and the restrictions of day to day life. It does mean to redefine things. To create something new. To consider if you need to invent a new label or otherwise change the prior meaning to include a new variation.

English as a language is known for evolving. Where words change meaning and new words come into fashion.

Accounting does define many of the concepts we are talking about. In strict accounting terms there is little need to redefine the terms. As a practical way to understand day to day financial decisions accounting offers much less guidance. RK is clearly saying that a person's ability to sell time for income is limited in many ways. Hence buying things that demand regular income for the care and feeding of the thing is not wise in the absolute. Just like people should save for retirement people because they can not work for ever. RK is saying that there is no reason to wait until you body is failing to retire. Just build up assets that are self supporting plus produce a surplus. You use the surplus to pay for the liabilities of life (the things that take money each month to maintain control).>>

I agree with you on many of your points. Where I diverge is that everything Kyosaki says could be done as clearly, if not more so, without trying to redefine basic accounting words. It just isn't necessary to define an asset with negative cash flow as a liability. It's merely an asset with negative cash flow. Negative cash flow can have an important impact on your future wealth. Understanding the benefits and costs of your spending choices is important. Teaching folks how to recognize how much something really costs does not need convoluted definitions.

GlennRim

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 270 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/7/2006 6:11 AM
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Cheeze,

We are talking about different slices of the population.

I am referring to the majority who work and can not figure out what goes on the two sides of a balance sheet. Assets and liabilities are not concepts they understand. Signing up for long term obligations keeps them in the job market long past their prime.

Capitalism happens to be older than 200 years. Accounting was invented even earlier. I am sure there are many people around the world who completely understand the terms using the classic definition. Having works for a number of investment banks I could even name a few such experts.

Insight does not come from reading a dictionary. Knowing the classic definition is not the same as someone getting the importance of the concept.

How about we both go back to our corners and think we each have won?

John Corey

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 271 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/7/2006 6:23 AM
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GlennRim,

Many of your replies raised useful points IMHO.

When you wrote the following you were offering your opinion:

Actually, I own the game both computer and card-table versions. I bought them simultaneously, in an effort to find out if he really had anything to offer to a novice. The games are interesting, but hardly educational. They are unrealistic in many ways. They don't represent reality in any meaningful way. I will admit that the card-table version is somewhat enjoyable to play, especially with a few folks who have some time to waste. The computer version (both 101 and 202) is rather the opposite, in my opinion, it's boring, simplistic, and silly. I think they are nothing more than a game. They lack an ability to teach anything of value about finances.

Having watched 1 person in detail and a few others more at a distance I can honestly say that the games and the books have changed their financial lives. Much more so than any more formal text on finances. Not sure if they would have had any interest in reading a more formal or classical text on finances.

The game (101 is all I am talking about) is not going to change the world for everyone. You and I are clearly two people who were past the level the game targets. It does change the world for some so the value is more than just a way to pass time.

The fact alone that there are a number of clubs around the world who play and engage in discussions about how the game concepts play out in real life is enough of an example.

No text or game will ever be complete or perfect for educating a person on the world of finance. A game or book that gets someone started and otherwise motivated to follow up with more study is a great contribution IMHO.

John Corey

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Author: TMFCheeze Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 272 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/8/2006 1:41 AM
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How about we both go back to our corners and think we each have won?


No. You must admit to being uttrerly vanquished.

I stride through Fooldom like a Colossus! A really big one, too!

Cheeze

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Author: GlennRim Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 273 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/8/2006 12:19 PM
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John

It appears that we are both rather polarized on this topic. It's too bad that you simply can't see how utterly wrong you are!!! (JUST KIDDING)

Clearly, we both have strong opinions that will probably not be swayed by any argument presented thus far.

So, I'm doing the same thing that Nixon did in the Viet Nam war. Pull out and declare victory.

Glenn

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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 274 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 9/8/2006 5:15 PM
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Win win I think we can call this. Well done!

John Corey

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Author: bobofool100 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 275 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 11/21/2006 5:39 PM
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You must admit to being uttrerly vanquished.

I stride through Fooldom like a Colossus! A really big one, too!


Cheese,
Are there any opening for the position of "small colossus"?
Bob

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Author: pkpdjh Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 277 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 12/4/2006 1:52 AM
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I don't think either of you can claim victory, but based on the actions of our Commander-in-Chief, you can both hold a big sign over your head that says "Mission Accomplished!"

Dave ...

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Author: YoungInvestor99 One star, 50 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 281 of 281
Subject: Re: Rich Dad, Dumb Dad? Date: 4/5/2008 5:50 PM
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I agree with the person who said Robert Kiyosaki is in essence a fraud.

I do not recommend buying any of his books or materials, it is all a commercial for his other books & materials, which eventually gets you to 'Rich Dad University' where he charges you $30,000 for a single seminar. Total garbage and a complete lack of integrity. Google Russ Whitney and Robert Kiyosaki to learn more about this.

And I'm not knocking a $30,000 course cuz it costs $30,000...if it was legit and took me by the hand teaching me to invest in real estate, I think it would be awesome. But it is not, google Russ Whitney and see how happy other customers have been with their 'services' and refund policies.

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