Is Kiyosaki Now Against Gold Investing And Silver Investing? Creating Wealth With Kiyosaki

For the last ten years or so, Robert Kiyosaki, a strong advocate for creating wealth, had been stressing the importance of gold investing or silver investing and the need for owning physical bullion. However, in the last many months or so, he seemed to have “gone off” gold and silver; if nothing else he seemingly stopped promoting it.

I found this interesting as the fundamentals for investing in silver or investing in gold had not changed, if anything they had gotten better:

  • the Fed has continued to print money while our national debt continues to expand with no end in sight,
  • unemployment and jobless counts remain high,
  • inflation continues to rise across the board as the economy still continues to struggle forward even with all the government’s efforts to stimulate and prop it up…

 

So I found it strange that Kiyosaki, having touted gold since it was only $250 an ounce (now almost $1600/ounce) and silver when it was only $3 an ounce (now over $36/ounce), no longer seemed to be an advocate for the precious metals (though to be clear he has never advocated against gold and silver either).

But then I attended one of his seminars (where he discusses the importance of financial education and creating wealth) recently and heard something shocking that I think pretty much explains why…

Kiyosaki on Creating Wealth

During his seminars, Kiyosaki usually uses some of his own antidotes and personal experiences to illustrate his points and show examples of what he means. He has always been a strong advocate of accumulating assets, more specifically investments and businesses and such that put money into his pockets each month (versus investments others like to make purely or mostly for capital gains, ie, flipping homes, buy low to sell high, etc a much riskier way to invest, especially today).

Over the past year or so he has made reference to investments in large resort properties in Arizona, large apartment buildings in the South, oil and gas drilling and wells, along with a gold mine in China…

Each of these investments again was made due to the great investment fundamentals each showed, in that each asset had the ability to provide a large cash flow once the asset was “put into production” so-to-speak (apartment units all constructed and rented out; wells pumping out gas and/or oil; mine producing tons of gold, etc).

And then it came out at this recent seminar at the very end during a question and answer about investing in gold or investing in silver. You could tell Kiyosaki was thinking carefully about how to formulate his response. This question brought out some real passion. He answered the question saying that although he liked the Chinese as a people on a personal level, and that the people of China make him a lot of money (from all his books and games perhaps?), he would NEVER AGAIN do business with the Chinese (you’ll see what he meant shortly).

That was quite a shocking statement, both in it’s delivery and in the message itself. Kiyosaki usually makes short statements like these and then expounds on them further to allow the message to sink in and really get the lesson across. It was clear from his experience that Kiyosaki HIMSELF had just learned a very important lesson…

He then went on to explain how his gold mine that he had been investing in and developing in China for a few years now – a venture you could tell he was very excited about whenever he mentioned it previously – had recently struck gold. The problem is that as soon as he struck gold the Chinese took the mine – it was no longer his! He lost out, everything gone, finished. No more gold mine, no more gold… He went on to say how China will become the most powerful country in the world very soon and that we should all prepare for that accordingly.

This isn’t the first time an asset or business has been taken over in a country. China has a history of this and today has major influence or control over many important resources, namely rare earth minerals (material necessary for the latest technology today, from iPhones and iPads to solar panels and Hybrid cars).

Yet the same thing has happened in other countries where the government simply takes over a business (Saudi Aramco Oil in Saudi Arabia – one of the largest oil companies in the world for example – used to be an American-owned oil company prior to the Saudi’s nationalizing it). Be on the lookout for this trend to continue in the future as resources around the world become scarce, as energy becomes more expensive and as the global economy continues to wobble…

From this relation by Kiyosaki and his recent experience specifically, you can fully understand and appreciate his deep hatred for communism. Yet, though we may view ourselves as capitalists here in the USA, he pointed out that we are heading down the same path in our country (he will not invest in California or New York for these very reasons). People are wanting the government to provide more and more yet expecting and demanding to work less and less. Take from the rich and give to the poor. More and bigger government. More entitlement programs. You name it. While Eastern Europe continues to fight off communism from the past, we in the USA appear to be fighting the emergence of communism.

Creating Wealth: Gold Investing? Silver Investing?

Kiyosaki finished his response to the question of gold investing or silver investing by saying that purchasing physical silver or physical gold of course does NOT produce any cash flow or generate any income. So in terms of creating wealth, just buying these precious metals in the physical form will NOT get you closer to financial independence nor will it increase your passive income…

However, it is prudent to have a good 6 months or so worth of savings set aside just in case – something very evident in today’s economy – but NOT in dollars (they are going down in value, fundamentals are very bad for US dollars as they are for all fiat currencies today) but rather in precious metals like gold and silver.

He finished by saying investing in gold or investing in silver is more a way of preserving your wealth, protecting your purchasing power, rather than as a method for creating wealth and that he would much rather save gold and silver than paper money today.

So given that gold and silver are more a means of protecting your purchasing power against the dollar and a way to hedge or protect yourself from inflation and the potential collapse of the monetary system, what then can you do today to move towards financial independence in terms of creating wealth?

Kiyosaki suggests building assets that produce cash flow. You want to improve your financial intelligence by increasing your financial education so that you are able to create passive income – income that comes in month after month whether or not you work. Once that level of passive income exceeds your personal expenses, right then and there you are financially free!

Why Invest and How To Do It: Avoiding Landmines In Your Investing Life

At the beginning of the New Millenium, the concept of
investing, of “doing something” with your excess capital, has
never been stronger. While this applies to citizens
everywhere, nowhere has it hit home as much as in the U.S.
where many of our clients live and do business.

SAVINGS SHMAVINGS

Various “analysts” and “experts” have moaned that the
savings rate of the U.S. citizen has gone negative. What
they fail to understand…or choose to ignore…is that savings
no longer represents anything in the United States. First,
there is inflation, always understated by the government,
usually by at least 50%, which uses various tricks and
numbers games to convince the unwary that all is well. The
value of savings is constantly going down.

Additionally, the American Internal Revenue Service has
chosen to tax even the negligible rate of return on savings,
actually punishing sound savers for doing so. The “market”
has responded by pulling savings out of the banks and
risking it on what is arguably one of the strangest bull
markets in history.

KEY QUESTIONS

 

But two questions come to mind: (1) Why should anyone
invest? and (2) how should they go about it?

While we would not claim to have the definitive answers to
either question, we feel we have enough background to at
least offer some suggestions.

WHY DO IT AT ALL?

1. To get a better rate of return than one can get on bank
savings.

2. To create a large enough egg to retire on without having
to sacrifice your current quality of life, particularly if you
happen to live longer than expected.

3. To provide for the ever growing cost of your children’s
university educations.

4. To safeguard yourself should major illness strike.

5. To ensure that your spouse and children are not left
destitute should you die.

6. To provide funds for travel, study, rest and recreation.

7. To pay off debts and obligations and to live as credit-free
as possible.

8. To take full responsibility for your life and not rely on
government doles, pensions and/or Social Security
Systems should they fail, a distinct possibility in the
future.

9. Add

10. Your

11. Own

How?

Here we’re going to explore a lot of possibilities. Some of
the thoughts are ours; others came from sources whom
we’ve come to both admire and respect. In any case, you’ll
need to choose what works for you.

First, we believe you need to work out who you are
as an investor. Much of what you do should be based on
your own personality, knowledge and what makes you feel
comfortable.

We suggest that you honestly evaluate the kind of person
you are. Do you really like risk? Are you the kind of person
who likes to plunk down $20 to $100 bets on impulse at the
racing track or casino?

Or are you the kind of person who, 50 years ago, would have
been exclusively into blue chips, utilties and similar “safe”
investments, holding on for the long haul? And who, if he
does visit a casino, plays quarter slot machines and avoids
the expensive games?

Maybe you are a combination of these, wanting solid
investments, but willing to take a risky flyer now and then?

Whatever the case, we feel you need to consciously
recognize who you are as an investor, what kind of player
you’ll be at the table, no matter in which country that table
may be set up. (There is nothing “wrong” with being at one
end of the spectrum or the other. One is not “better” than the
other.) The reason is simple: If you invest contrary to your
nature, you are not going to be happy with your investment
strategy nor will you sleep well.

CONSERVATIVE?

If you’re strictly conservative, making a lot of high risk
investments will leave you feeling out of control, nervous
and very out of sorts. You won’t trust your choices, will trade
emotionally, getting out of those which frighten you because
of their volatility, just when you should be letting some of
them ride. Or, worse, remaining in losers long after they
should have been dumped, buying more of that stock on the
downhill run, desperately trying to recoup your losses. Your
emotions will seriously colour your choices, never a good
investment method.

GAMBLER?

At the opposite end, if you’re risk taker, trading slow moving,
stodgy and conservative stocks will leave you totally bored
and unsatisfied with what you’re doing. You’ll miss the
excitement of the game and will constantly be wanting to get
out of the slow movers into something with more pizzaz, as
the Americans put it.

So, to quote the old adages, “Know Thyself” and “To Thine
Own Self Be True.” Only in this way will you find satisfaction,
happiness and peace of mind.

Secondly, we believe you need to work out a
philosophy of things in which to invest. Find areas of
investment which interest you. If you understand energy
issues, for instance, there are plenty of both high risk and
conservative stocks and commodities in which to invest.
You’ll enjoy continuing to study the field, happy that you are
working with known values.

If you have a good background in technical or biomedical
issues, you’ll be far more knowledgeable in your investment
choices sticking to these areas.

One group which we’ve studied, relies on what they call
“freedom” issues, companies which produce goods or
services which empower individuals, which makes things
either cheaper to buy or easier to use. They scour the world,
willing to make investments anywhere they find solidly
managed companies which are making a difference in the
way we live, “freeing” us up to expand our lives. We find this
particular philosophy a sound one. However, you may have
an entirely different one which suits who you are and what
you know. Keep to it.

Thirdly, you need to plan some constant study.
Never before in the history of humankind has there been
such a rate of change as we’re experiencing now. And the
rate itself is increasing. What was sound six months ago is
unworkable today, simply because some new technology
has entered the picture. Old industries, once considered
financially sound, are being overtaken by newer
technologies…or being undercut by the same industries
located in other countries with a far lower labor rate and
materials cost.

Technology changes even the old. Robotics, really
instituted by the Japanese whose “old” infrastructure was
completely destroyed during WWII, almost totally overtook
the American auto industry which was relying on 1930s
technology in old and very outmoded factories. That
particular US industry either had to change…or fold. They
changed. Note, however, how that changed the fate of the
autoworkers unions. They, too, had to adapt, to go with the
new realities.

CONSTANT EDUCATION

So you must keep constantly educated as to the newest
developments in your field of interest. And no longer can
you restrict your education to just what is happening in your
own country. Changes and improvements in other
countries will rapidly impinge on world markets. Keeping
up with such changes is your best insurance that you’ll stay
ahead of your investment game.

GLOBAL VISION

Fourthly, Learn to Think Globally! It would be
difficult to overstate this critical strategy. Virtually all markets
are now international. India, as an example, has some of
the best computer programmers in the world. Their
software products are world class. They can compete with
anyone. And they do it at wages lower than most of the
“developed” nations. If you’re investing in technologies and
ignore the information and products coming out of India,
you’re playing with a short deck.

Other countries, too, are growing in their competitive
structures. Individuals, as never before, are acting as
corporations, able to do business from anywhere in the
world which connects to a modem….or a satellite. Creative
entrepreneurs, carrying six pound laptops, are complete
businesses, able to compete with anyone, anywhere.

ADAPTATION

And Fifth, learn to adapt. Even if you’re a
conservative, work to become used to the idea of being
ready to change your game plan quickly when new
information becomes available. Sticking with the old, which
has already become outmoded even though it’s only a few
years – or a few months – old, is a recipe for financial
disaster. Think of being a chameleon, ready to shift to the
new background while still maintaining your sense of who
you are and how you best work.

We wish you happy and successful investing.

The Difference Between Investing and Trading

Many financial experts are saying that this is an excellent time to begin investing, but when you start shopping for investment products, you find that there is a huge variance between the product offerings. Understanding the terminology assigned to the various types of funds and products will help you choose the best one for your needs. Two terms that are commonly interchanged, and wrongfully so, are investing and trading. While these may seem like similar actions, they have some distinct differences.

What Is Investing?

Investing refers to purchasing an asset and holding it for a long time, in the hopes that it will increase in value. Many people invest in real estate. They purchase a piece of property, live in it or rent it for a while, and hope that over time it will be worth more when they go to sell. In the world of finance, investing works the same way. The investor purchases a financial product, such as stocks or funds, and holds onto them for a long time, hoping that they will increase in value during that time. A retirement plan is an example of investing.

 

In general, investing is putting money into something in the hopes of making more money after a long period of time. Investments are typically held for years before they are cashed in for profit. The longer the investment is held, the more its potential for earning will be.

Investors will study the long-term success rates of the companies they choose to invest with. They will look for funds or stocks that have steady growth over several years. They will try to buy when prices are low, but will not be as concerned about temporary drops or down times if the overall profit margin of a particular investment looks good.

What Is Trading?

Trading refers to using money to buy something in an attempt to make more money by selling or trading it quickly for something else. While it is similar to investing in the fact that the money is being used to buy something of relative value, it is different because the asset is only held for a few days or weeks before it is sold and something else is purchased. This is typically done with individual stocks or other commodities, not large funds or tangible assets like real estate.

Traders will buy assets when they take a sudden dip, and then sell them quickly for a profit when they increase in value again. Traders do not concern themselves with the long-term success history of the company in which they are putting money, but rather in the short-term trends.

The Difference Is Time Frame

Many people who are involved in trading consider it investing. In reality, there is little difference between the actions involved. In both money is used to purchase assets, and those assets are at some point sold in hopes of making a profit. The difference lies in the amount of time the investor holds onto the asset. In investing, it is for the long term. In trading, it is a temporary purchase.

This is, of course, a general definition. Some who are involved in trading will decide to hold an asset for a longer period of time if they stand to benefit, and some investors will sell quickly if they feel it is best. Overall, however, the goal is long term for investors and short term for traders.

So which is better? Both investing and trading have their benefits, but one option is likely to appeal to you more than the other based on how involved you wish to be in the growth of your money. The only way to decide which is best for you is to talk to your financial professional and weigh the potential returns against the level of risk you feel comfortable taking.

Financial Investment Planning Process to Get Started

Investing your money is probably the best use of funds you own. However, if it is invested in various financial products without proper research, you can lose every thing you owe. Hence, the process of financial investment starts with effective planning and research.

But you cannot start with financial investment planning if you don’t have a specific goal in mind. Hence, one of the foremost requirements is ascertaining a goal. It can be either of the two goals mentioned below:

– Conservation of existing funds
– Growth of existing funds
– Or both of them

What you do with the money you conserved or grew depends on your personal preferences. Unfortunately, not many people have goals in their mind before investing their money. Hence, they money they create or conserve is misused often. Financial investment planning involves going through a step-by-step process. Let us have a look at it.

 

– Setting goals
– Analyze your risk taking ability
– Asset Allocation or portfolio designing
– Select investment products that suits your needs
– Regular monitoring of your investment
– Redesigning your portfolio when necessary

This is one of the money processes to go about investing your funds. You can alter this process according to your needs. This is, however, a very broad one and may be applicable to every individual.

Just knowing the process isn’t important. You must know about all the available investment options and know which one to invest in.

If you don’t intend to take much of risk, you can invest your money in cash products or cash equivalent products like currency, bank balances, money orders, coins, GIC, commercial papers, T-Bills, money market accounts, saving accounts, Certificate of Deposits, and so on. These are comparatively safe investment products.

If your risk appetite is a bit higher, you can invest in products like mutual funds, stocks, and real estate. It must be noted that there are various ways to invest in each of these products. For instance, you can invest in real estate by investing in REIT (Real estate Investment Trust), Real Estate Funds, Property, Rental Property, and so on.

For people who want to seek high profit and are ready to take bigger risk, products like stocks and derivatives are probably the best options. Specialized knowledge, however, is required to gain from these products. Stock may be further divided into aggressive growth stocks, common stocks, and American Depository Receipts. Derivatives too can be divided into futures and options.

Financial Investment Planning wouldn’t happen just by itself. It requires enormous planning, proper implementation, efficient follow-up, and essential redesigning. There is, however, a popular myth that investment is for rich people. Rich or poor, every one wants a secured future. Every individual is vulnerable to financial emergencies, and one must always be prepared to face it. And there is no right age to start investment planning. Even if you are nearing retirement, you must start investing. However, the early you start, the better it would be for you.