Rich Dad coaching experiences?

[.toe]

My opinion of Rich Dad, Poor Dad is that it's not that well written, and the meat of the book is obfuscated by a huge amount of overly-sentimental padding. I could probably boil it down to around 10,000 words and not lose any content.

The basic advice is live below your means, save and invest, and work for yourself. To an extent that's sound, but I've got a couple of concerns.

The first is that being self-employed is hugely risky. 90% of all new ventures fail within five years. Kiyosaki's counter-argument is that a financially literate individual can massively improve the odds, but my first job was with a well-funded start-up founded by some impressively big brains, and it's still just about going twelve years on. I doubt the investors ever saw a return.

The second is that he talks about saving enough for a passive income. In a world of low yields, that requires a huge amount of capital. The $2,000 per month he mentions would need around $500,000 to generate.

I've not made it through the whole book yet. I don't think that reading it is a waste of time, but I don't believe that it's the source of all knowledge that some people claim it is.

Graemsay you must have read a kiyosaki book that I haven't because that's not what I read at all. According to Kiyosaki self employed are the highest taxed so self employment is out.

He is mostly about three things:- Create income using OPM, use legal methods to avoid tax, assest protection. Underlying all these is education.

His early books were about the basics & they were gentle because most people were so removed from that thinking. Right now his best stuff is live appearances, in real life you can be far less politically correct than in print. He is more forthcoming onstage.

By his method $2000 a month might have some startup costs but ultimately it should be free, ie. using OPM. I have read & heard him telling several methods of doing this. Though his books aren't about how to do it as such, because his point is that once you are clear about what you need to achieve, you will find your own version of it, his version might slow anyone else down, you find your own.

 

[lizzie]

I found the first book extremely helpful ... only because, even after taking a very confusing accounting course at school, I was completely cashflow illiterate and his example of cash in and out - income and expenses - assets and liabilities - was a real eureka moment for me.

I then had to go on and make my own mistakes to learn some important lessons - however - if I had listened more to what he said at the time about buying stock standard rentals (I lost a lot of money trying to be fancy) - buying cashflow positive, or at least close to neutral (I lost a lot of money trying to be fancy) - then hubby and I could be retired by now on a very comfortable passive income with no debt.

I don't care whether what he said was factual or made up - the fundementals of what he teaches to the financially illiterate masses is worth listening to ... even if they only take away some of it.

As for doing a mentored course ... no thanks. Rather spend the course money on a deposit for a real life learning experience - ie - an actual IP.

 

[Graemsay]

I've only read the first half of Rich Dad, Poor Dad, and should really get round to finishing it off.

I'm probably mixing-up self-employment with being incorporated as a limited company, corporation or similar legal structure.

Doing so in the UK allows earnings to be paid as dividends which are subject to capital gains tax, which is levied at a lower rate than income tax. I'm guessing that the same is true in both the US and Australia.

That falls under "legal methods to avoid tax".

I suspect that I'm a bit jaded about some of the above because I've been a freelancer for years, and had an unsuccessful attempt at a small scale start up, so I know a certain amount of what he's teaching. In contrast, it was a real revelation to one of the guys I was working with in my last contract.

I strongly agree with the education part. Unfortunately the best way to do learn something is to do it, and that's often the most painful way.

(OPM is something that I'd be a bit wary of in the early phases of some start-ups, but that's another thread.)

 

[Gun It]

I dislike the Kiyosaki books for all the reasons mentioned above.

An interesting read is John T Reed's analysis of Rich Dad Poor Dad. http://www.johntreed.com/Kiyosaki.html

Be warned, though, John T Reed has no time for Kiyosaki and rips him and his arguments to shreds in the analysis.

The best thing about the analysis though is that he has really investigated what he is talking about. For example where he covers the factual errors in the book he goes to the effort of explaining what the actual explanations should be.

I would skip the coaching classes (especially at the sky high prices) and have a look on the internet. There is a lot of outstanding (free / relatively cheap) information out there. For example a great source for budding internet entreprenuers is http://mixergy.com and I'm not sure what a coaching class could teach you that a good selection of books and this website (somersoft) could not about Australian property investment.

 

[geoffw]

An interesting read is John T Reed's analysis of Rich Dad Poor Dad. http://www.johntreed.com/Kiyosaki.html

Be warned, though, John T Reed has no time for Kiyosaki and rips him and his arguments to shreds in the analysis.

John T Reed has no time for many "gurus". Except himself. He has several of his own books for sale. Surprise.

 

[buster]

Graemsay you must have read a kiyosaki book that I haven't because that's not what I read at all. According to Kiyosaki self employed are the highest taxed so self employment is out.

He is mostly about three things:- Create income using OPM, use legal methods to avoid tax, assest protection. Underlying all these is education.

His early books were about the basics & they were gentle because most people were so removed from that thinking. Right now his best stuff is live appearances, in real life you can be far less politically correct than in print. He is more forthcoming onstage.

By his method $2000 a month might have some startup costs but ultimately it should be free, ie. using OPM. I have read & heard him telling several methods of doing this. Though his books aren't about how to do it as such, because his point is that once you are clear about what you need to achieve, you will find your own version of it, his version might slow anyone else down, you find your own.

JUst goes to show kiyosaki is talking crap if he says the self employed are the highest taxed. The self employed use loans , which is what the "OPM" spruickers talk about is. They have many legitimate ways to minimize tax They have many more options than a wage earner to reduce tax. It is a recognized fact that wage earners pay an unfair burden of tax. There are many high flying self employed people who are critized because of the very very low tax rates they pay, if any at all. A good way to spot a spruicker is when they use the term OPM, as if it is some profound new idea.

 

[Aaron_C]

He never said self employed were the highest tax. He said PAYG workers were the highest taxed because they pay tax first before spending money. Whereas business owners (or self employed) spend money first, then pay tax.

 

[Rolf Latham]

It is a recognized fact that wage earners pay an unfair burden of tax. .

without a doubt.

My experience of assessing financials of self employed vs PAYG isnt so much that the self employed have more legit ways of minimising income tax.

The vast majority of business owners that have a fully traceable cashflow dont do hugely better than a PAYG income earner. The major exception to that is the FBT free one tonner. Everything else is really playing at the margins where a PAYG manager earns 150 k a year or a self employed earns 150 k a year.

I believe there is a misconception out there that being self employed means you can write off all and sundry and have "nil" taxable income. Almost every SE rtn that comes across my table that has huge business expenses, actually has huge business expenses. Their accountant isnt good at " writing things off", the expenses just ARE.

The cash economy is possibly a much major contributor and one day we may wake up.

ta'rolf

 

[Aaron_C]

It is a recognized fact that wage earners pay an unfair burden of tax.

Isn't that the entire point of a capitalism system? Reward those who create employment (i.e. self-employed people/businesses). Why is it unfair for a wage earner to be burdened more so?

Businesses don't pay less taxes per se, but they can pay taxes at a later date rather than upfront.

 

[lizzie]

JUst goes to show kiyosaki is talking crap if he says the self employed are the highest taxed.

ummmm - obvious you haven't even read the first book. Hard to make an opinion on something you know nothing about ...

Even if he helped only 1% of those who read his books - like myself - then yahooo - 1% less relying on government pensions.

 

[Rolf Latham]

Rk's biggest claim to fame I believe is that he was the first financial writer that caused "mass awareness" of the concept of "what if".

Yes there have been thousands of others (including one of my faves of Think and Grow Rich) but not with the same global impact of getting people to look UP and forward.

I know many many folks that put the start of their financial path down to one of the purple books.

ta
rolf

 

[.toe]

JUst goes to show kiyosaki is talking crap if he says the self employed are the highest taxed.

The self employed are usually in the highest wage bracket & tax write offs are minimal. Running a business under a company is not self employed. Also you have to remember that he is talking principally about U.S. tax law

The self employed use loans , which is what the "OPM" spruickers talk about is. They have many legitimate ways to minimize tax They have many more options than a wage earner to reduce tax. It is a recognized fact that wage earners pay an unfair burden of tax.

So how does that negate RKs arguement that if you want to avoid tax you should avoid being a wage earner or self employed ?

There are many high flying self employed people who are critized because of the very very low tax rates they pay, if any at all.

Really, sole proprieters? in the U.S.? Care to share?

A good way to spot a spruicker is when they use the term OPM, as if it is some profound new idea.

Yeah but OPM is my term, which I used because I knew people would know it. RK uses the term Infinite ROI. He is saying that if you quickly move to a position where you have none of your own money in the deal, and it's cash flowing, then you don't have to care if the market dives. Not easy to achieve, hence the emphasis on education.

What other spruikers have such a risk strategy? And how could they fleece you by teaching you how get so much meat out of the deal?

.

 

[Aaron_C]

toe. how is running a company structure not self employed? It is one of the most common vehicles for self employment (along with the family trust).

 

[.toe]

Isn't that the entire point of a capitalism system? Reward those who create employment (i.e. self-employed people/businesses). Why is it unfair for a wage earner to be burdened more so?

Absolutely. It's government stimulus that promotes productivity & job creation. Unlike FHOB which is counter-productive, increasing the cost of housing along with the private finance burden.

 

[.toe]

toe. how is running a company structure not self employed? It is one of the most common vehicles for self employment (along with the family trust).

Sure Aaron, everyone is going to have their definitions. As this thread is about Kiyosaki I'm using his definition. In the book 'Cashflow Quadrant' there are four sectors, ESBI. Employed, Self Employed, Business & Investor. Business & investor get all the tax benefits because they 'produce' more than any single person could. Self employed translates in Aus as sole trader.

By definition a company is a group of people. One of the ideas of a company structure is that since more than one person has an interest then if a director is sued it is unfair to allow the claimant access to the company because 'innocent' parties will be affected. I believe this started with the East India Company & is what allowed merchant shipping to continue despite the numbers of ships that sank. Of many systems tried this was the most workable.

 

[Aaron_C]

Sure Aaron, everyone is going to have their definitions. As this thread is about Kiyosaki I'm using his definition. In the book 'Cashflow Quadrant' there are four sectors, ESBI. Employed, Self Employed, Business & Investor. Business & investor get all the tax benefits because they 'produce' more than any single person could. Self employed translates in Aus as sole trader.

Point taken toe. In either case you are trading your time for money, which is the difference between rich and poor.

 

[.toe]

Point taken toe. In either case you are trading your time for money, which is the difference between rich and poor.

Sure,,,,,.

 

[Gun It]

John T Reed has no time for many "gurus". Except himself. He has several of his own books for sale. Surprise.

Agreed. I have never read his books either so have no idea how good they are.

Whatever his motivations are - his analysis of Rich Dad Poor Dad is excellent. He supports nearly all the claims he makes against Kiyosaki and the content of the book.

 

[lizzie]

He supports nearly all the claims he makes against Kiyosaki and the content of the book.

Of course he does, otherwise he wouldn't make the claims. I do wonder if the claims or the justifcation came first tho?

And what is to be achieved by someone most of us haven't heard of bagging out an internationally reknowned writer that has educated so many of the financially illiterate masses - asides from self-promotion?

Even a mass murderer can justify what they did - doesn't make it right.

 

[buster]

without a doubt.

My experience of assessing financials of self employed vs PAYG isnt so much that the self employed have more legit ways of minimising income tax.

The vast majority of business owners that have a fully traceable cashflow dont do hugely better than a PAYG income earner. The major exception to that is the FBT free one tonner. Everything else is really playing at the margins where a PAYG manager earns 150 k a year or a self employed earns 150 k a year.

I believe there is a misconception out there that being self employed means you can write off all and sundry and have "nil" taxable income. Almost every SE rtn that comes across my table that has huge business expenses, actually has huge business expenses. Their accountant isnt good at " writing things off", the expenses just ARE.

The cash economy is possibly a much major contributor and one day we may wake up.

ta'rolf

The buisiness expenses are made because they are tax deductable in the present year , but produce income in future years . Its a transfer of wealth to the future, a wage earner transfer his wealth to the government. It is no misconcetion you can have nil taxable income, have high gross income and increase networth, by more than most people earn in many years. Although its probably a good idea to keep your tx rate over 10 to 20% Thre are many advantages to being self empoyed, you can have a company pay a maximum of 30%, have a partnership and split the income, There are offsets, averaging, FMDs, etc etc. Just because your clients dont do something doesnt mean it cant be done. It not how much you earn or pay tax on that counts it is what you do with it.