Regular readers of Wealth Kept know that we’re big fans of people like Robert Kyosaki. This is a man who came from very modest beginnings and built a wealth empire for himself. His detractors would have you believe that he came to this wealth through the old Amway network. But you know what? There’s a whole lot more to it than that.
To Be Fair…
Okay, let’s be fair and admit that a chunk of Robert’s wealth does indeed come from selling the proverbial shovel. During the Gold Rush of 1848, millions of people raced to California to dig for gold, thinking they would all strike it rich. They were a bunch of suckers. Sure, a small handful of people really did strike it rich, but most lost everything.
You know who actually made a consistent fortune during the Gold Rush? The people who sold shovels and other supplies to the lemmings running after the big payout. These guys weren’t trying to get rich quick by digging into the ground and hoping to find that one big, hidden gold vein. They knew that supplying the suckers would make them much more money.
To a limited extent, the detractors are right – Kyosaki does make quite a bit of coin by selling his Rich Dad/Poor Dad books and other products. After all, we all want to be rich someday and he is able to capitalize on it. However, unlike the people selling shovels to the idiots in the California Gold Rush, Kyosaki does have some legitimate things to offer too.
In the great words of Lex Luthor, “stocks may rise and fall, utilities and transportation systems may collapse. People are no dam* good. But they will always need land and they’ll pay through the nose to get it.” Okay, so it’s a movie. But it’s true – land is a finite asset and in spite of the efforts of a few sheiks in the Middle East, they really aren’t making more of it.
The key of course is to be able to see opportunity. Just buying land without a plan is a fool’s bet. Kyosaki’s brilliance is that he understands how to spot an opportunity. It’s not hard really – it’s mostly a matter of seeing potential in a place.
Take me for example – I’ve saved enough that I’m now condo shopping here in New York. Now, I could look for a posh place on Park Avenue like Joe from accounting (yeah, we get it Joe – you think you’re sooo special because you have a nice address, even though you’re leveraged to the hilt). Instead, I’m looking at up and coming neighborhoods where my money will stretch further.
I’m also not afraid to buy a place that needs some work – I recently looked at a place which looked like a reject from the 1950s. It had ancient wallpaper (who uses wallpaper anymore anyway?) and fading carpeting in the living room.
For me – I could see potential – rip out the wall paper and paint with a brighter color, rip out the carpeting and polish up the hardwood floors underneath and voila – I take a place which looks gloomy and ancient and turn it into a place worth twice what I’ll pay for it. That’s what Kyosaki does – he take a dump, fixes it up and sells it to the lemmings who can’t see potential.
The same deal here – Kyosaki understands investing – the basics are, buy low, sell high. Now, I don’t suggest pumping friends for information about a company. That’s called insider trading and it lands you and your buddy in jail if the SEC finds out about it. But you know what is legal? Research – lots and lots of research.
Learn how to track stocks and industries. Specialize in an area you know something about and just like Robert, you can make a killing in stocks.
Robert also understand that good credit is vital to making money in this world. If you think that you can buy all the stocks and all the real estate just from the money you earn from your salary then you’re deluding yourself. You need to have a stellar credit to buy these things with other people’s money. You can then turn around and sell them for a profit, thereby making yourself rich.
The Confidence to Fail and the Forethought to Diversify
Finally, what sets Robert apart from many of us is that he has the confidence to fail. He understand that not every venture he touches is going to turn into gold. However, he has his hands in enough different business ventures that he can afford to take the occasional loss. In other words, he diversifies and if you want to be rich like him, you would do well to do the same.