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In the groundbreaking first episode of Money Revealed, we were introduced to Robert Kiyosaki… Author of Rich Dad, Poor Dad, entrepreneur, and real estate tycoon. While one might think that his brilliant and well-educated father was his primary inspiration, it turns out that his father actually inspired him to take a different path; Kiyosaki was determined not to end up over-educated and underpaid.
Kiyosaki was always interested in learning about money. He shares an eye-opening experience that he had at the age of nine when asking about money at school:
“So at the age of nine, I raised my hand… and I asked my fourth-grade teacher, I said, ‘When will I learn about money?’ And she looked at me …and she goes, ‘we don’t teach money at school.’ So I asked her, ‘Why am I in school then?’”
He pursued this line of thought and came to his own conclusion: school teaches people how to be good employees, and he was not satisfied with this prospect. He turned to a friend’s father for what he considers the beginning of his true education. He concluded, instead of getting a job and working for money, why not create jobs and create wealth? He adds that real teachers are, “somebody who is actually doing the real thing in real life” and he encourages us to seek these kinds of people out.
Kiyosaki is concerned about the gap in education where money is concerned, and fears that it is influencing our current political situation for the worse. While a certain amount of education is certainly important, the lack of basic education about money and wealth is “why today we have a rise in socialism and communism and fascism and the anger against the rich…there’s these young senators and congressmen and they want to tax the rich and charge them 70% taxes and all this.” Additionally, higher education is expensive and leaves students with the legacy of weighty student loans to pay off.
So what options does one have to avoid the rut of simply being an employee and working for money? As an entrepreneur, Kiyosaki focuses on business models and how to use them to create wealth. He offers the example of McDonald’s, a model he says that he follows. While most believe that McDonald’s is in the hamburger business, he explains that it is really in the real estate business, and that the business was created in order to buy real estate.
The way it works is to think of real estate in terms of debt and taxes. It is one area in which debt protects from taxes while allowing the investor to leverage upward to larger and larger projects and purchases. In describing this approach, he says, “So I’m using debt to get richer… I buy real estate and because I have $5 million in real estate, I pay no taxes.”
He goes on to explain that contrary to much current thought, there is such a thing as good debt. Borrowing money and pursuing business opportunities puts more money into the system, and the government incentivizes entrepreneurs like him by offering tax breaks for their approach. The result: “So the more I borrow, the happier the government gets because I’m actually putting money into the economy. So I borrow, let’s say 5 million. I buy a $5 million piece of property. Then the tax law allows me to appreciate, depreciate it and amortize it. Zero taxes. I collect all the income from that property tax-free. That’s the game.”
Kiyosaki’s approach is maverick and not for the faint of heart, yet it is worthwhile to learn from someone who has made the system work for him. He concludes, “People think I’m a real estate guy. I am an entrepreneur. I have many, many different companies and I create jobs. I don’t have a job. I don’t have an office. I’m not allowed into my own company. See, an entrepreneur is just a free person. That’s all it is. You don’t ever need money again.”
You can learn more about Kiyosaki’s approach and system of wealth growth on Money Revealed and by reading his works on growing wealth (available in our Expert Bookstore).