Robert Kiyosaki on Financial Education & Cultivating Entrepreneurial Genius

Robert Kiyosaki on Financial Education & Cultivating Entrepreneurial Genius

On this Flash Back Friday originally published in July 2014 as show number 387, Jason Hartman is joined by Robert Kiyosaki acclaimed author of Rich Dad Poor Dad. Robert talks about issues with the current education system and how it hurts entrepreneurship.

Jason Hartman 0:00
Welcome to this week’s edition of flashback Friday, your opportunity to get some good review by listening to episodes from the past that Jason is hand picked to help you today in the present, and propel you into the future. Enjoy.

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Jason Hartman 1:08
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Jason Hartman 2:02
It’s my pleasure to welcome Robert Kiyosaki back to the show. Of course you know his name. He’s an international bestseller. And he wrote the number one personal finance book of all time, which you’ve probably read. It’s Rich Dad, Poor Dad. And we’re going to talk about his latest work today, which is entitled Rich Dad scams, eight financial scams disguised as wisdom. And this is very timely for today’s world. And Robert, welcome back. Good to talk to you. Thank you very much. Well, it’s good to have you on the show. So tell us about some of these things that people should really be aware of unconcerned about out there in the world. There’s snake oil salesmen everywhere. That was true hundreds of years ago. It’s true today.

Robert Kiyosaki 2:44
Well, Mike, my question has always been, you know, why don’t we have financial education in schools? So in my opinion, this financial crisis we’re in today, and it’s a serious crisis really starts in the classroom. You know, when I was a little boy about nine years old, I kept asking My teachers, and I went one with a learn about money. And the teacher finally told me the truth. You don’t we don’t teach about money in school. And so that’s when I kind of that’s at nine years old. So Barbara, find out who is somebody who can teach me about money. And that’s when I met my Rich Dad was my best friend’s father. And then I began to realize the biggest scam of all is education. And they only train you to be employees to work for the rich. And as long as you know nothing about money, they can control your life. So that’s where the scam starts.

Jason Hartman 3:32
Yeah, it sure does. That whole system was designed by the industrialist hundred plus years ago. To create employees. It’s kind of like a factory. They were just a you know, educating, if you will, employees, as you’ve talked about in depth in in some of your work over the years, to just work for them and not to think not to be entrepreneurs not to be successful investors. So why why hasn’t that changed? I mean, are the powers that be National Education Association is Steve Forbes calls the national extortion Association. so powerful that we just can’t make a dent in the system.

Robert Kiyosaki 4:09
That’s that’s part of it. You know, you were talking about 100 years ago, the exact date was 1904. A gentleman and john D. Rockefeller found the Standard Oil Company, basically highest at the educational system by creating the General Education Board and in 1984, so 110 years ago, and what the general education system did that that lack of fellow control was he then dictated the content or the curriculum of schools. So as you know, to be successful today, in the real world, world, you need academic education. You need professional education, and you need financial education. And the reason most people are highly educated, very smart people like my poor dad is they don’t have any financial education and they think they’re Smart. So as long as you come out of school with this false sense that I am smart and you’re not, then it’s really tough to learn from I’m smart. I’m great. And you’re an idiot point of view. So what we have today, when you look at politics, you have a bunch of very highly educated smart people really don’t know much about money as from the President on down. So that’s my problem.

Jason Hartman 5:24
Yeah, I certainly agree with you there, Robert. So what what can we do to overcome this? I mean, reading Rich Dad, Poor Dad is a great start that’s inspired millions of people of course. But to take a deeper dive, where should people really focus their effort when you talk about financial education? And do you include entrepreneurship in that, by the way?

Robert Kiyosaki 5:47
Well, I don’t know. It’s not about so much entrepreneurship is he has no assets from liabilities. And you know, the richest people on earth never went to school. They’re called Steve Jobs. Bill Gates. The Beatles open Winfrey. And what they did was they created mega brands and mega businesses. And the same as Google. And you know, Facebook and all this. Walt Disney never finished school. So what they did was they created they were great entrepreneurs. But you don’t have to be that big an entrepreneur. I have a friend. It’s my age. And he started when he was in high school with a think 12 chickens. And he just started taking the eggs from his chickens and reinvesting his eggs. And today, his chicken farm factory out of Ohio produces 10 million eggs a day. So if your figure is making 10 cents an egg or whatever you makes a lot of cash flow and then he off sells a fertilizer and chicken me and all this and like I never went to school as a chicken farmer. And you know, and Colonel Sanders all he had to sell was the chicken recipe. And JK Rowling’s who was on welfare roll Harry Potter. So a lot of it is very, in a very understanding the world of business. And you don’t have to be an entrepreneur to tap into it. So JK Rollins is hardly an entrepreneur. And she just tapped in.

Jason Hartman 7:14
Yeah, good. Good point. So, you know, I’d like to talk to you about some sort of related issues if we could. Yesterday, I posted on my Facebook mentioning that I was going to have you back on the show today, and I had a few questions that people brought up and one of them is the seemingly very exciting area of crowdfunding. I have a feeling you would it have something to say about that? Especially as it comes to maybe funding real estate deals?

Robert Kiyosaki 7:40
Well, crowdfunding to me is a scam also, man, it’s not the way I would do it. But as long as the stay small people will not get hurt. But as you know, this right now a lot of con men who are going to float to a BS, you know, deals and people will send money in like this. To Bernie Madoff, and then somebody’s gonna get burned. There’s gonna be a big hullabaloo about it, and then they’re gonna try and set it down. I mean, you can see it coming. You know, without really thinking much about it. It’s sort of like Bitcoin and I try and get my head around it. But I’m going, well, eventually, somebody’s gonna get burned. So every time you have people just kind of rushing into something, then you better step back a little bit, pay attention

Jason Hartman 8:24
and think, but as an alternative to Wall Street. I mean, we know that wall street’s a scam in so many ways, even though it’s legalized through lobbyists and PR firms and lawyers and accountants, but it just seems like there’s going to be a lot of a lot of opportunity for the little guy to get a deal off the ground. Nowadays, of course, there will be scam artists. We know that’s coming. There will be tons of litigation. But we already have that we have scandals galore on Wall Street, even after all the the so called corporate governance reforms. Get So, what’s your question? Well, I don’t know. Just, I guess you answered it. So thank you for that.

Robert Kiyosaki 9:07
What are you going to do about it? And you know, I’ve, I’ve, I’ve never changed my tune. I’ve always said you have to have financial education. But the biggest scam of all is what Wall Street passes off for the education system, as financial education, for example, what Wall Street and the financial planners of the stock brokers in the school to say is financial education is saved money, invest for the long term and a well diversified portfolio, stocks, bonds and mutual fund and you’ll be rich. Well, that’s how they rip you off. Because what the way you get ripped off in the stock market is as you know, the market always goes up because they pump it up with quantitative easing right now. And so all the amateurs come running in because they see the stock market at all time highs, and then the bottom is going to fall out and amateurs will get ripped off by the professionals. All the time

Jason Hartman 10:04
it happens every time. You know, it’s always the amateurs that come in. When the news is so positive and everybody’s, you know, the adrenaline junkies and they always they always there, they’re playing musical chairs and the music stops and all the big guys have already pulled out, haven’t they?

Robert Kiyosaki 10:21
Well, that’s the game. I mean, it probably too young to remember this but in the comic strip peanuts, you know, like Charlie Brown, and Lucy Lucy at all is hold the football and Charlie Brown says you’re going to pull it out, aren’t you? You know, she goes No, no Kick, kick the football. And every time Charlie ball, Charlie Brown winds up runs up the football. Lucy pulls the football away and he falls down. It happens every single time and people don’t learn.

Jason Hartman 10:46
It’s amazing how short people’s memories are, aren’t they?

Robert Kiyosaki 10:50
Well, if you look at what’s going on in Iraq, I mean, somebody said, Oh my god, this is just like Vietnam. I said this always been that way. Why not start a fight for peace where they’re at a fight for the military industrial complex because it’s very profitable to explode bombs in the desert. And it’s very profitable that people killed. Well, we’re there to save the Rockies. That’s BS. They’re fighting for the military industrial complex. And the moment you recognize that, you know, I’m a former Marine, I fought in Vietnam twice. One day I woke up and I said, This is not about world peace. This is about money. And that’s why, you know, I don’t regret going to Vietnam, but I kind of woke up. And I see the same thing going on in Iraq today. This it’s a warm, I could never win.

Jason Hartman 11:37
Yep. No, no question about it. So Robert, is we’ve got a little time left. I’d like to ask you, you’ve made some predictions in the past that have just been amazingly accurate and prescient. What do you think is coming next for us? I mean, are we going to see a lot of inflation what we see deflation, it seems like without without money printing, we ultimately got to see inflation. But I don’t know there are those who think both ways.

Robert Kiyosaki 12:05
Yeah, that’s the truth. You don’t really know which way it’s going to go. But obviously, the government wants inflation. Because if you can fight inflation can’t fight deflation. So, you know, when prices start to go down, they accelerate down. And let me give an example if if you knew today that you’re, you’re going to buy a new Kia, and it was 10,000 bucks, but you knew tomorrow it’d be 8000 bucks you wouldn’t you wouldn’t you wouldn’t Spain spend 10 grand if you knew what’s going on eight, from eight to six, he would wait again. And so that’s what the bottom drops out is because people are waiting for the crash anyway, so that’s deflation. So the Fed obviously is trying for inflation. And the only thing they’re inflating is the stock market and they’re trying to inflate the housing market. And as I said, we don’t learn From the mistakes we didn’t learn from Iraq, we didn’t learn from Vietnam and we didn’t learn from the last crash. So they’re doing exactly the same thing. The stock market isn’t really up. What is happening is that the CEOs are basically repurchasing their own stock. So it gives the illusion that the price is going up, but they’re just drying up the supply of stock. And eventually, the average was gonna come rolling in again. And it’s gonna be a wily coyote moment. No baby, and you’ll fall off the cliff. Now.

Jason Hartman 13:31
That is, that is true. And I remember when the Dow went above 15,000 and you know, of course, CNBC was going crazy and everybody was talking it up and, and all you do is you you compare the real and nominal dollar return. And really until the Dow got to course, you know, the s&p is a more accurate gauge because it’s much broader. But just looking at the Dow, since it’s quoted the most, it had to be 15,800 to be in real dollars. Exactly where you were about 11 years earlier. And they’re they’re talking about record highs. And you know, most people, they just don’t even realize it. They don’t even get it. It’s like trickery with numbers. That’s correct. And I can lie with words. For example, when the crash hit and you know, 2007 2008 all these big companies came on the scene, we beat the s&p. And what that entire s&p went down by 57% and it only went down by 50%.

Robert Kiyosaki 14:34
Yes, that’s you know, you have somebody says, You can’t cure a stupid Yeah, yeah, that’s for sure. It’s the same. What making the same mistakes again and again and again. And the average person will will never learn so Shame on them.

Jason Hartman 14:50
Remember, you’re listening to flashback Friday.

Robert Kiyosaki 14:52
Our new

Jason Hartman 14:54
episodes are published every Monday and Wednesday. Yeah, no, you’re

Robert Kiyosaki 15:01
right. If I just had a crash was a good thing, I made more money between 2007 and 2014 than I did all the years of my life prior to that. But I was prepared for it. I experienced education. I had my partners, I had my team. So when the crash came, and I thought we went to heaven,

Jason Hartman 15:21
you you were ready to seize upon opportunities, when most people either weren’t or they were just scared because they didn’t, they didn’t know any better. So they just were full of fear. You know, they were just allowing the media to program their minds.

Robert Kiyosaki 15:35
Well, Worst of all, they don’t have the skill set to take advantage of the crash, if you know what I mean. So that you know that they may have they may be a PhD in microbiology, very smart people, but they know nothing about crashes. So and I’m afraid the next crash may be a long one. You know, the 1929. The dollar went down from a high of 381 and it took 25 years. Creating one again. So went down in 1929 and didn’t hit three anyone until 1954. So this next one may stay down for a long time because they’ll be redemption up to redemption, which means old guys like me will be cashing in their stocks because they don’t have time. You know, so they cash now.

Jason Hartman 16:20
Yeah, very good. Very good point. Very good point. And I think probably what really rescued, if you will, the stock market way back then was the fact that Merrill brought so many people from the general public into the stock market, they started promoting the stock market so much more widely. And when the average john q public started bringing bringing their their savings into the market, that probably helped quite a bit too.

Robert Kiyosaki 16:48
Well, as quick as it took. They took Wall Street to Main Street metal didn’t do that. And then the worst thing between 1929 and today was a 1929 only A few people were at the stock market. And today what you’re bringing up is, I would say most people in one way that’s where their funds are retirements are in the stock market. And if you look at the Dow today, it’s in a triple top and a triple top is possibly the most ominous you know, it’s like the same as almost like they thought they showed a double funnel tornado yesterday. Well, a triple top was like a Triple Tornado headings. So that’s why I look at all that stuff. And I listen to CNBC and and I feel for every person My age is going, what should I do? What should I do? You know, I’ve got the money in the stock market and I’m receiving nothing and interest in my savings and I don’t know where to put my money. Those are all symptoms of a person who may be highly educated and lacks any financial education. This is really a good time coming up. Unfortunately, millions of people will be wiped out.

Jason Hartman 17:56
Yes, you are most definitely right about that. It is a Going to be painful for very, for a lot of people. What are you doing with your real estate portfolio nowadays? And I, by the way, I want to tell you something that I just discovered about two weeks ago, I was reading your Wikipedia entry. And someone put in there that you were on my show in 2011. And it said, but you own 1400 apartment houses. And you know, I’m sure that was units they sort of misquoted you probably, and talked about investing in warehouses, triple net leases, and I know you talked about oil wells to back then. And just kind of wanted to see where you were in real estate. We talked a lot about stocks.

Robert Kiyosaki 18:39
Well, first of all, I wouldn’t believe anything I read on the web. Anyone will. Yeah, fair enough. I don’t know how people believe that stuff. I mean, I’m an old guy, you know, so I sit down, watch it, and I go, you can say anything I like, why would you believe and the other thing too, is not 1400s 4000 interesting. And what I’m doing the real estate is I have about 500,000 million dollars in debt. And right now the average floating debt is around 5%. And a company just came by and says will refinance at all for less than 3%? Well, if you don’t have to be a rocket scientist to know that if you take 5 million at 5%, and you drop it to 3%, that’s $2 million in extra cash flow to the reduction in mortgage payments. So that’s why debt makes people rich. And yet, listen to all these so called financial experts was saying get out of debt. That’s really bad advice. You should be getting into debt.

Jason Hartman 19:37
Oh, I completely.

Robert Kiyosaki 19:39
Are you kidding me?

Jason Hartman 19:40
Yeah, yeah. Unbelievable. And what are your thoughts on the real rate of inflation? I mean, you know, of course, we’ve got the official numbers. But if you’re if you’re getting your debt at 3%, I would argue that you’re probably got it you have a negative real interest rate there.

Robert Kiyosaki 19:56
Yeah, I do. Yeah. Because Well, it depends on how you compute CPI company. Consumer Price Index, because a 1972, I think was Nixon changed evaluations for the CPI consumer price index. And he took out food and took out fuel from inflation. So that’s how Yellen can get up there or Obama because we have no inflation. But if you go shopping, you’ll see inflation all over the place. And you know, when Obama took office, gasoline per gallon was about $1 at a gallon, and today, it’s about 350. ago. So that’s 100% increase in so many years. But yet Yellen and Obama can say that no inflation so the That’s what I’m saying. It’s like Facebook or the web. I don’t have to believe anything today.

Jason Hartman 20:40
Yeah, no, you really have to read between the lines and people have got to think they’ve got to have an education. They’ve got to think for themselves and just you know, know how to dissect this stuff and to understand it, and buy a mutual fund rather than, you know, accumulate some good long term fixed rate debt against Real Estate. Especially Robert, when as real estate investors, we don’t even pay our own debt. Our tenants pay our debt for us, right?

Robert Kiyosaki 21:09
Correct. I mean, the key to life is other people’s money. So you borrow your bank’s money. Your tenant pays back the bank. Yeah, what a deal. There is a god someplace.

Jason Hartman 21:19
Yeah, all you need to do is get in the middle of that deal. And you can get fabulously right like

Robert Kiyosaki 21:24
right Imagine that. I mean, the bank will give you the money to buy something that makes you rich. And then the tenant will pay to live there and then pay off the bank. On top of that, you get appreciation, depreciation, amortization, all these tax breaks. And then you hear out by complaining about raising taxes, rising taxes, but if you own real estate with debt you don’t pay any taxes. So you know, that’s that’s what this book I guess was about eight financial scams disguised as wisdom. You can get it at Rich Dad calm when it starts with school. You know, being successful in school doesn’t make you rich. Yeah. That’s for sure. This kind of a rip off, I kind of look at these student loans I feel for the young people leaving school with all these millions, you know, 20 $30,000 in student loan debt that’s hard to hard to pay back.

Jason Hartman 22:12
It sure is, especially when there aren’t jobs out there waiting for him. And the fact that that debt is the only type of debt not dischargeable in bankruptcy, so they’ve literally created a generation of indentured servants that don’t get a second chance.

Robert Kiyosaki 22:26
I said, I’m worse than that. I mean, there’s what you’re saying is accurate. This the worst possible type of debt. You know, if I screw up on an apartment house, I can just be kicked back up to you know, I’m free and clear from the debt, but I can’t bankrupt a student loan debt. On top of that, I don’t learn anything about money on top of it. So when I spend that money for a car, it goes back to what I was saying when I was nine years old, raise my hand I said, What am I gonna learn about money? The answer was never. So why am I going to schools? You know, that was my question. Look at the richest people on earth didn’t finish School, Steve Jobs Bill Gates, Michael Dell, Zuckerberg, Walt Disney, Henry Ford, Oprah Winfrey, just to name a few.

Jason Hartman 23:08
Yep. And don’t forget Jason Hartman in there. Because, because I just felt like when I was in college, I was listening to a government bureaucrat, essentially, teach me about something that I’m just never going to use. I was anxious to get out there in the real world and buy properties and I bought my first rental property at 20 years old. And you know, it’s been on from there. And successful people are doers. You know, they they learn, of course, you’ve got to balance learning and doing, but they get the kind of education that is real world education, financial education.

Robert Kiyosaki 23:42
In 1973, I returned from Vietnam, I was a pilot for the Marine Corps. And my poor dad obviously wanted to get my MBA and I Rich Dad, so lots of waste of time. But anyway, so he suggested I take a real estate course I took a three day real estate course. As well as sign up From my MBA, and I learn more in three days in the real estate course I did in my MBA program. So finally after falling asleep every night of the week and the MBA program I just dropped out and make God rich. buying real estate.

Jason Hartman 24:13
Yeah, that’s true because

Robert Kiyosaki 24:15
it was last time I made more money cuz it’s cost me three days and spent $85 was a lot of money back though, back in 73. I became a multi millionaire over and over and over again for that Trinity $5. And I pay zero taxes legally. What let’s start with that.

Jason Hartman 24:30
Hey, Robert, I want to take a guess. Was that like William Nickerson his course or something way back then?

Robert Kiyosaki 24:36
It was it was Yeah.

Jason Hartman 24:39
Yeah, yeah, that’s, that’s fantastic. That’s the old days of real estate investing in real estate that gurus out there. But Fantastic. Well, your website is rich dad calm Of course, and people can get this book. It’s a it’s a download right from the web. I found it really fascinating how you did conspiracy of the rich, which was fantastic. By the way. Really enjoyed that one. Okay.

Robert Kiyosaki 25:01
And you know how it was kind of this collaborative effort? Did you do that with this new book? This new book is to be truthful what now that book is coming up. These are books I wrote a long time ago. So but what I said a long time ago, it’s coming true, still true financial scams. I mean, it’s really hard to believe a financial scam is quite a school. And a job is the worst thing you can get because you’ll pay more in taxes. All the harder work a higher tax rates you move into. And why would you save money? Every place? You got to save money? Why would you save money when I can borrow money at you know, 3.8%? And then why would I invest for the long term in the stock market? I’m gonna get ripped off when the market crashes. And why would I buy a house when your house is not an asset? And so they’re really that’s a scam. The scam has to do with what so called the rich have perpetrated upon us without financial education. So what the scam is what we think is smart is actually stupid. So that’s really what the 888 scams are is it guys? If you really want to find out how big a scam, that information is, that’s why she got the book and maybe I’ll stop thinking that way, maybe won’t be looking for a job, maybe you won’t be going back to school, maybe you won’t be thinking your house is an asset. Maybe you’ll think maybe I should get rich and settle work for somebody else. And that’s the purpose of my work. You know, I don’t, I’m not saying what you should do, but I would think think differently. And the biggest scam is a lack of financial education and our school system. Like I said, it started in 1984 with a man named john D. Rockefeller, and the General Education Board. If you read the interview that bylaws and General Education Board, the purpose of the General Education Board was to take farm kids and turn them into employees and factories. That was the mission and nothing has changed. And so if you’re going to school for a good job, and all that good Soccer. That’s the worst part about Absolutely. I’m not saying education. I’m poor. I’m saying that may be obsolete.

Jason Hartman 27:06
Right. Right. And and, and, you know, the worst thing is, is to see people get these useless liberal arts degrees. You know, it least if you’re going to go to school, be an engineer or do something that’s real. You know. I can’t tell you, Robert, how many people over the years I’ve hired who have degrees in psychology, you know, that they’re not using I mean, it’s just unbelievable, but good advice. Well, very sage advice again from Robert Kiyosaki. It’s a pleasure to have you back on the show. His website is rich dad.com. go and download this book. I think you’ll really enjoy it. And Robert, again, thanks for joining us.

Robert Kiyosaki 27:44
Thanks for the time.

Robert Kiyosaki 27:51
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