What our young entrepreneurs need to know in the present economic climate
The author of Rich Dad Poor Dad gives our young entrpreneurs expert advice.
Robert Kiyosaki the author of the best selling personal finance book gives his view on why South Africans are poor.
The poor economic climate
According to Kiyosaki there is no such a thing as a poor economic climate. Intelligent and savvy entrepreneurs can make money in any economy. Once you blame the economy you’ll give up before you begin. He advises that you should be focused on what you can control and at least you’ll get out and give it a go. Many well-known companies started their businesses during a recession. This includes Microsoft, FedEx, and Hyatt Hotels.
Should we get a job?
Riyosaki says that money comes in one of four ways:
- You can be an employee
- Self employed
- Business owner
- An investor.
According to Riyosaki being a wage slave is your worst option. The reason for this is that the poor and middle class are getting poorer because real income is stagnant or declining. He says that we should be investors or business owners because these are the people that own the assets. He concedes that business and investing can be risky, but earning a salary gives us a false sense of security. Your employer may go bankrupt; you could lose your job or placed on early retirement.
Should we save more?
Kiyosaki believes that saving is for losers. Money in the bank barely keeps up with the rate of inflation and it is taxable. Money has become worthless. You need to invest your money in assets preferably property where you avoid tax by using the bank’s money.
Should we stay out of debt?
Consumer debt is bad. Using debt to buy cloths, furniture or even cars is what gets people into trouble. Using debt to buy appreciating assets like property and businesses is good. Kiyosaki has built a R4.3 billion property portfolio that he started with a credit card payment of R27 000. How? Using the bank’s money.
Many investors have gone bankrupt when they found themselves unable to pay their bonds but done prudently it’s the way many others have grown rich.
Is bankruptcy bad?
The world’s number 1 wealth-creating guru has been pilloried for going bankrupt. To Kiyosaki bankruptcy is a rite of passage. That’s the real education. “You go to school, make mistakes you are labeled stupid. Make mistakes at work you get fired. Make mistakes as an entrepreneur you get smarter. Success comes from experience and experiences come from failures. Failure is only terminal when you don’t get up.
Should we go to university?
Controversially, Kiyosaki’s advice is to skip university. He says that if you studied more than a few years ago the information is probably obsolete. That’s a bit like saying Plato is obsolete because his last book came out about 2500 years ago.
Where Kiyosaki has a point is that student debt in the US exceeds housing debt and many of these gravely indebted graduates are not finding jobs. South Africans are in a similar situation. The present education system does not teach anything in the way of personal wealth creation.
Kiyosaki laments that the education system wants you to put your head down and get a job. The problem is that there are no jobs!
Advice for the poor
Kiyosaki is not in favour of handouts. He says, “You can’t solve money problems with money. You solve money problems with education.” Not the formal kind that education: The kind found in books like his. He thinks the biggest beneficiaries of hand- outs are the rich through tax breaks and corruption. “The entitlement mentality is epidemic,” he says, creating people who expect their countries, employers, or families to take care of them. Learn to take care of yourself!”
Source: Justin Cohen