The best way to become a millionaire in five years or less 02

Video Statistics and Information

Video
Captions Word Cloud
Captions
the quick reminder when we covered the last part was a 19th century and the world changed actually from socialism to capitalism and the reason that's so important is because the world changed and shifted to a 401k or pension plans is because it forced many people who were easy neces to become investors like I said my poor dad was a very smart good man but he was a non investor there's people who are passive investors and that's what most people are the goal of their company that has given put in the 401k and they hope and pray that person managing their money is smarter than they are and the third type is the active investor now if you're going to be an active investor then you have to have financial education and one of the keys to financial education you know a lot of people say well it takes money to make money some people ever heard that statement well that that's absolutely not true because you'll prove tonight it doesn't take money to get money to make money what it begins with is a thing called words or vocabulary the English language has approximately two million words in it and each of us as individuals the estimate has command of about five thousand words so one of the ways to start increasing your wealth and your financial ability is change your vocabulary and one of the reasons is my poor dad was poor that's a good man he had the vocabulary of a schoolteacher you know he thought Germans and prepositions were really important but I've never made a dollar off of German or preposition yet that I know of you know I need this between Abbot ah Pease our wise irr that's what makes me rich so just know that words make you rich and I'll be going into right now the basis of financial education is words and this here is a thing called financial statement as my Rich Dad often said to me you know this is your report card when you grow up when you leave school as my Rich Dad said his banker has never ever asked to see his report card yet you know banker never said say tell me what college you went to are you an A student are you B student they never asked that if you're a professional investor they will ask you for something called a financial statement if you're a non investor or a passive investor like a 401k they'll ask you for credit report so to begin becoming rich as you must have one of these I mean it's a must these people have credit reports these people have financial statements it's very very big differences here so let's begin with words here and one of the biggest words that people have mistaken on wrong definition for are these words here assets and liabilities how many people very hurt people say my house is an asset good that's using the wrong definition that's the problem so I'll give you the definition my rich dad gave me you won't find this in the regular dictionary this is very simple definition because this is the guy to wealth a definition of an asset is something that puts money in your pocket whether you work or not that's very simply it okay so when you look at this financial statement this is an income statement and balance sheet is one more form that basic I'm not an accountant but basic County requires it's called the statement of cash flow and what that shows you here is this assets are putting money in your pocket so for example I have a house and every month let's say I collect $100 for method paying all my expenses the house is an asset but if the house goes on rented and every month is now costing me money that same house is a what liability so this is the cash flow pattern of a liability so when a person says their house is an asset I then ask them I say is that house putting money in your pocket they so know nobody's gone up in value that shows lack of financial intelligence or financial IQ okay I'm not saying don't buy a big house I'm not saying any of that so I'm just saying don't call a liability a what asset and that's the problem is using the wrong word for the wrong thing here or I could have a car if I use a car as a taxi and every month and put a thousand dollars in my pocket it's an asset but I have my BMW here and it's costing me a thousand dollars a month it's a liability so that's very simply it so don't call asset or liabilities assets and that's where people get in trouble the next thing at the sale your banker my banker never asked me for my report card yet and my banker if I'm going to borrow a lot of money from they want to see my financials and what a banker was looking for is your financial IQ they don't care how your academic IQ they want to see how smart you are with money and it's not that I you know wear nice clothes and have a nice watch and have a nice house a nice car banker doesn't care because how many people know people who are looking good but I flat broke I'm talking about here so and that's that's the big problem here so when a banker looks at this thing the banker is looking again at cash flow so when a banker looks at this let's say the person has a job the money comes in and the money goes out they look at that that's the cash flow pattern of a poor person if they don't change your pattern they'll be poor it is not how much money you make it is how much money you spend is the issue here for example I know of a doctor friend he makes about four hundred thousand dollars a year he's very proud he has no debts you know his people think that debts bad and that's really moronic but anyway so but he makes a hunt for hundred thousand and he spends four hundred thousand so even though he makes the Nashville pattern of a what poor person what the middle-class generally tend to do is the first thing they want to do is have a big house and they have a thing called a mortgage and the different definition of mortgage comes from the French word more tear which means death that's pretty simple so what happens they have a mortgage get the nice BMW or Mercedes that they're looking good but go and broke that and goes ah I can see a cash flow pattern as this and this is the cash flow pattern of the middle-class it's working hard and going broke you know they never get ahead they buy big houses they do a home equity loans and they think they're a Donald Trump with realist has real estate investors all they got is a big house they're in debt - a lot of people use their house as an ATM machine and every time it goes up in value they borrow the money out you know that is really a losers point of view there I mean that's not bankers love you because you're greatly in debt but it's not a way to get ahead and this is the cash flow pattern of a rich person they have assets here and so generally what it is is they have a business they have real estate and they may have dividends from stocks and bonds and stuff like that it was interesting so those are assets so oftentimes I ask people think about it this way if you stop working today let's say you're married you have a spouse if you stop working today how much money keeps coming in your pocket and how much money keeps going out all the things that are taking money out of your pocket are what liabilities and anything putting money in your pocket is an asset so the reason my wife and I could retire is very simply we have money going like this this means we're wealthy you know we don't have much in savings and all that but every month it's hundreds of thousands of dollars going like this and that's how you get wealthy you know just have assets to produce money every single month when I did this program in Singapore I asked people raise their hand and say would you mind telling me some of the assets you have it's women raise their hands yes she says ah ah my best asset is my husband and I said man ma'am I'm talking about non-human inanimate objects she says that's him might make lots of money for me I'm not talking about human beings slavery has been you know abolished for a while here and all this so everyone centers mean assets versus liabilities the cash flow pattern and that's why bankers do not ask you for your what report card they want to see your financial statement if you have a good financial IQ they'll give you lots of money even bad financial IQ they'll give you a credit card or home equity loan that's the difference here and years and years ago I went to Sunday school I'm not a Bible stall scholar enough pushing volition anybody I remember the story of the you know the rich man I think he had three sons with some blenders and he gave one son X amount of dollars here the second son x1 or talents he called them and then the third son talents and the first son blew it got rid of all his money he said okay second son came in and what you did with the money and the son said I buried it and then the footlight you know came back with him a thousand dollars came back with $5,000 and at that point the father or whoever the guy was took all of the money and gave it to the what the third son who multiplied the money and that's what I learned in Sunday school is that not God what who ever does not like people who blow their money people would just bury the money see the poor spend their money the middle-class bury their money you know just put it in 401ks or savings and the rich know how to multiply their money so the real key is this it's not so much how much income you make but where you put your money it's expensive do you expense your money in this way this way or this way that's why people who always try to make more money they don't get ahead very simply because they're looking in the wrong place it's over here is what do you spend your time and money on that's why I thank you guys for you know being here tonight and those of you at home supporting public television and your education you're spending time and hopefully some money to support your education and a great cause here that's really important is how you spend your time and your money that makes the difference and then the third thing is this just to cover this thing while your house is not an asset is when your banker says your house is an asset your banker is not lying to you this will explain it better because to understand this if you have a mortgage on a balance sheet it must balance so well mortgage is your liability it has to balance so you see mortgages your bank's asset that's the difference so that's why your banker says your house is an asset not saying it's not lying to you it's just saying it's not whose as it is it's their assets you know and the way you know that again is assets put money in your pockets and liabilities what take money from your pocket so when you look at this money comes in when it goes out goes in here and comes back here so it's taking money from your pocket and it's putting money in the bank's pocket and that is basically you know why your banker says your house is an asset and why it's very important to understand the definition of the word you're using don't just use a word because if you keep saying your house as an asset when there's a liability where you see a car is an asset when it's really a liability and your vacation to Hawaii is that citrus a liability or your home equity loan is an asset you're going not going to make it that makes sense you guys here but what most people tell you is this repeat after me work hard save money get out of debt invest for the long-term and diversify how many people heard this okay and the reason I bring this up here is that because around 1996 I was watching this very famous morning show let's broadcast all across the nation and they have these nice handsome you know couple who was a host and hostess and they come in and today we have the financial expert of all times and he's going to give us the financial advice for that New Year's is like 1996 or whatever it was you know and it welcome so and so in their clap you know and out comes a financial expert he goes hi everybody yeah what I recommend for this year 1997 is work hard save money get out of debt I can't even do it straight invest but long-term and diversify and the and the host host oh it is so brilliant oh thank you for your infinite wisdom on this on financial we thank you the next year then buy them back same thing and for the new year I recommend you guys what work hard save money get out of debt invest for the long-term and diversify and the hosted hosted oh I can't believe what a genius what a financial team just give him my head I can't believe it every year same guy same message same advice they think it's brilliant then after 2000 the stock market started to crash and they bring the same expert on and he comes on and what I recommend is work hard save money get out of debt invest for the long-term and diversify and the market kept crashing and he's keep giving the same advice and this is what I want to say about that advice between the year 2000 and 2004 millions of small investors lost an estimated 7 to 9 trillion dollars the same time Wall Street pays them as big as bonuses out and this is the advice that we're giving people here I want to save you this advice used to work it doesn't work today I'm not saying it's bad advice and saying it used to work after 1994 1974 it started to change and what I'm gonna be going into is how that change can about and why people are getting in trouble following this advice especially this one here because you're going to find out the most risky of all investments are savings stocks bonds and mutual funds they are the riskiest of all investments but most people think they're safe and that's what you'll find out and that's why I thank Public Television for allowing me to say what I'm going to say because there's many people as I said in organizations who do not want me to tell you what I'm about to tell you and all the little people they hire who are financial experts but they're not really financial experts do you realize most of financial experts are not eyes they're really ease and SS they're salespeople and I'll be going into some of those differences okay so I know I'm an investor very simply because I live by my income on my investments I don't live by my commissions and there's a very big difference here so going into it the reason work hard is obsolete advice is because 1943 the US government punished anybody was an employee after 1943 is a thing called current tax payment act at that point anybody who was an employee the government got paid first how many we ever opened up your paycheck and gone what happened to my money that was 1943 so the problem with being an employee and working hard is the more you work and the more money you make you go up in tax brackets if you don't get ahead these guys here are taxed heavily these guys have all the tax loopholes that's why I can I can make a lot of money and legally the difference is I'm on this side here but our school system teaches us to bid this side in 1986 they passed the 86 tax reform Act and they taxed all doctors lawyers are called a students they nailed and so well the attorneys I don't mind but anyway but what happened here is this is that guys like me you know the C students we we can make more money and pay less taxes than the a students which proves there's a god somewhere the next thing is saved money the reason save money is an obsolete a duck idea is because in 1971 a man named President Nixon took us off what's called the gold standard when the Bretton Woods Agreement and at that point what happened in 1971 money turned into a currency so what you started to save after 1971 was not money but a currency and the problem with the currency is the government can print it faster than you can save it another thing about this if you understand economics especially Keynesian economics is that when you look at a dollar a currency let's say this is one dollar and this is forty years here a currency is designed to go down to five cents over 40 years a currency is designed to lose money so the government can keep running up debt that's the reason so they can print it faster than you can save it that's the big problem with it the next thing is this if you look at the real stats is this as a reason I don't save money if you look at this in the last few years like I said 1995 to 2005 what's happened is the dollar has gone this way and the way you know how much is lost is gold went from $250 up to $500 in the same time that means your dollar lost 50% it lost 50% of us buying power and the banks are paying you one percent interest tell me that smart to save money that's why the debtor started to win because what was happening as this was going up and all this and the reason this happens is for one very big flip this is not the only thing it's not just gold because I can hear the Animus boy he doesn't know what he's talking about well I'm not saying I'm an economist I'm saying just look at the price of gold it takes twice as many dollars to buy the same amount thing but not only that my father's house which he purchased in I think nineteen nineteen sixty-five or something he paid fifty thousand dollars for it and took five million it's the same house so it means the purchasing power of the dollar went wear down the house didn't go up in value your dollar went down and the other thing the accountants well that's not really good indicator but look at this in 1995 oil was about ten bucks today it's 60 bucks so that means your dollar has you need six more dollars to purchase the same amount of oil and then the economists say well oil doesn't affect inflation I'm going they want you to believe that investing is risky how many people have heard investing is risky good what this section is about of this program is how risky risk isn't anything but lack of control the number one difference between an active investor and a passive investor is a subject of control so what I'm going to show you tonight is how what I do as an active investor is I want control if I have control I don't have any what risk and that's the difference so using a metaphor that most of us can understand over here we have you know a example of a car okay now how many people realizing there's risk driving a car good but car driving doesn't have to be risky like those guys wants you to believe investing is risky so some of the controls the six controls a car must have number one is a steering wheel right how many people would not buy a car if it had no steering wheel good you know I mean so I'm gonna sit down here like this so I sit down I get in my car and control number one I want to check on is I have a steering wheel control number two gas pedal now you have a gas pedal you better have some what brakes how many people have ever driven a car without brakes you know you don't need coffee for about six weeks after that yeah and then you have a forward and reverse you know gearshift like this the other thing you also have to have is a driver's license for driver's ed and you have to have insurance so if I'm driving down the road you know doing a little bit too fast I hear the baby me me me me being the cop pulls me over a policeman pulls me over what's the first thing a policeman asks before driver's license and proof of what insurance how many people would not let somebody who is uninsured drive your car how many people not let somebody with you have no drivers that drive your car you know I mean that's stupid but that's what investors are doing they're actually investing in savings stocks bonds mutual funds with no control and what happens that's like weighing like this and that's why they think it's risky now this is the worst part yes who else has no control your financial adviser your financial adviser fine diversify diversify or what they do is this is they go oh I predict this I predict that that's the kind of financial advice most people I get it you know that's risky that's not what I do I want control so let me help you get out of this wreck ah so when I'm as an investor I want six controls - if a car has six controls I want six controls as an investor control number one you look on the screen over here is I want control of my income control number two expenses three is asset value 4 is liability five is I want financial education or management and six that one insurance those are the six controls I want as an active investor so when we come back what I'm going to talk about is one of the ways to get rich is find that native genius that's well inside each and every one of and that's what the next section about
Info
Channel: Tibor Horvath
Views: 3,503,009
Rating: 4.7634487 out of 5
Keywords: Robert Kiyosaki, Kim Kiyosaki, Success, Money, Business, Training, Marketing, Cash, Freedom, Work, Network
Id: YoN1XM8SndA
Channel Id: undefined
Length: 22min 0sec (1320 seconds)
Published: Sun Mar 24 2013
Reddit Comments
Related Videos
Note
Please note that this website is currently a work in progress! Lots of interesting data and statistics to come.