Many self employed people operate as a company to limit tax divedends are taxed and allocated in such away minimal tax is paid. Even so the maximum tax rate is 30%. Just because you are self employed doesnt mean you are a sole trader. Are we in australia or on a different planet.
Rich Dad coaching experiences?
Many self employed people operate as a company to limit tax divedends are taxed and allocated in such away minimal tax is paid. Even so the maximum tax rate is 30%. Just because you are self employed doesnt mean you are a sole trader. Are we in australia or on a different planet.
I agree, and as this thread is about Kiyosaki I suggest we make comments based on his language & systems. In this case what I see him saying is what you've said, a self employed person should operate under a company structure - a company by definition has more than one director & so there is no self employment - in order to save tax. Then further Kiyosaki would say that company should seek to expand to the point where the directors dont have to be there full time.
There have been a couple of books I've read, which haven't really 'worked' for me; in other words, I internally questioned the validity of the content, or accuracy of the claims. When I've look at John's analysis of the writing/author, he confirms my suspicions. I have a reasonable level of confidence in his analyses, but keep in mind that they are primarily (if not exclusively) US authors on which he comments.
Here are the headline points on John T Reed's blog along with my take on them.
Personally I don't care what his BS meter says. Reed fails on many counts, most often is taking single sentence out of context. and he fails to take into account that kiyosaki's stories are educational and aimed at having dunces like i used to be, understand how money works. i think what kiyosaki recognises that reed does not, is that you cant teach someone how to be a millionaire, you can only teach them how the system uses everyone in it, they have to find their own path to their new millionaire role within the system.
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Personally I don't care what his BS meter says. Reed fails on many counts, most often is taking single sentence out of context. and he fails to take into account that kiyosaki's stories are educational and aimed at having dunces like i used to be, understand how money works. i think what kiyosaki recognises that reed does not, is that you cant teach someone how to be a millionaire, you can only teach them how the system uses everyone in it, they have to find their own path to their new millionaire role within the system.
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I don't think that it matters if the Rich Dad was a real person, composite of several people, entirely fictional, or originated in a hallucination whilst Kiyosaki overdosed on crack during his bankrupt years. (The last one might not have happened. 
)
The stories are a framing device for teaching, and that's a style that goes back a very long way. For example, Plato made up an awful lot of what he attributed to Socrates, and that didn't his career or reputation any harm.
I agree with .toe that Kiyosaki's failures aren't an issue either. The failure rate of new businesses is around 90% within five years. As my father once told me, "The man who never made any mistakes never achieved anything."
That said, Reid is right in his assessment that Kiyosaki promotes a high risk / high reward style of investment. I'd agree that buying into the early stages of a new venture might not be the cleverest idea (that 90% failure rate), though VCs work by spreading their money across multiple start-ups.
Similarly, Kiyosaki advocates flipping shares, whereas there are studies showing that Buy and Hold is the most effective strategy. And it worked out OK for Warren Buffett.
Reid also disparages Kiyosaki's belief that the rich have access to better fund managers. The odds of one beating the stock market are around 20% over the short term, dropping to 5% over the long term. And you can't tell who's going to pull off the trick before the fact.
(Which is why I prefer cheap index trackers to expensive managed funds, or even share picking.)
That said, a lot of retail investors buy into asset classes towards their peak, and avoid them during the lows. A decent financial adviser might be a bit more contrarian than this.
However, in the US there are (or were) laws preventing anyone other than sophisticated investors from buying into hedge funds. The definition was based around a particular (high) net worth. I remember someone telling me that means a less wealthy investor cannot hedge risk in the same way as a richer one can.
)The stories are a framing device for teaching, and that's a style that goes back a very long way. For example, Plato made up an awful lot of what he attributed to Socrates, and that didn't his career or reputation any harm.
I agree with .toe that Kiyosaki's failures aren't an issue either. The failure rate of new businesses is around 90% within five years. As my father once told me, "The man who never made any mistakes never achieved anything."
That said, Reid is right in his assessment that Kiyosaki promotes a high risk / high reward style of investment. I'd agree that buying into the early stages of a new venture might not be the cleverest idea (that 90% failure rate), though VCs work by spreading their money across multiple start-ups.
Similarly, Kiyosaki advocates flipping shares, whereas there are studies showing that Buy and Hold is the most effective strategy. And it worked out OK for Warren Buffett.
Reid also disparages Kiyosaki's belief that the rich have access to better fund managers. The odds of one beating the stock market are around 20% over the short term, dropping to 5% over the long term. And you can't tell who's going to pull off the trick before the fact.
(Which is why I prefer cheap index trackers to expensive managed funds, or even share picking.)
That said, a lot of retail investors buy into asset classes towards their peak, and avoid them during the lows. A decent financial adviser might be a bit more contrarian than this.
However, in the US there are (or were) laws preventing anyone other than sophisticated investors from buying into hedge funds. The definition was based around a particular (high) net worth. I remember someone telling me that means a less wealthy investor cannot hedge risk in the same way as a richer one can.
I don't think that it matters if the Rich Dad was a real person, composite of several people, entirely fictional, or originated in a hallucination whilst Kiyosaki overdosed on crack during his bankrupt years. (The last one might not have happened.
The stories are a framing device for teaching, and that's a style that goes back a very long way. For example, Plato made up an awful lot of what he attributed to Socrates, and that didn't his career or reputation any harm.
I agree with .toe that Kiyosaki's failures aren't an issue either. The failure rate of new businesses is around 90% within five years. As my father once told me, "The man who never made any mistakes never achieved anything."
That said, Reid is right in his assessment that Kiyosaki promotes a high risk / high reward style of investment. I'd agree that buying into the early stages of a new venture might not be the cleverest idea (that 90% failure rate), though VCs work by spreading their money across multiple start-ups.
Similarly, Kiyosaki advocates flipping shares, whereas there are studies showing that Buy and Hold is the most effective strategy. And it worked out OK for Warren Buffett.
Reid also disparages Kiyosaki's belief that the rich have access to better fund managers. The odds of one beating the stock market are around 20% over the short term, dropping to 5% over the long term. And you can't tell who's going to pull off the trick before the fact.
(Which is why I prefer cheap index trackers to expensive managed funds, or even share picking.)
That said, a lot of retail investors buy into asset classes towards their peak, and avoid them during the lows. A decent financial adviser might be a bit more contrarian than this.
However, in the US there are (or were) laws preventing anyone other than sophisticated investors from buying into hedge funds. The definition was based around a particular (high) net worth. I remember someone telling me that means a less wealthy investor cannot hedge risk in the same way as a richer one can.
Hi Graemsay, I'd have to say that my main discrepancy with Kiyosaki is that many of the details were a long time coming. He began with ideas that needed expanding on quite a lot & those ideas have been trickle fed really. To the point now where many of the fresh stuff is only accessible through his live seminars & paid online feed. I find the online feed of his seminars far more revealing than his books.
What I like about Kiyosaki is his exit strategy. You must know from the start when you get your initial capital outlay back, while keeping the cashflow. That's his version of an exit strategy. It buys safety & allows the investor to safely buy what seem like risky investments. But the strategies require specific education which he does not teach. His advisors teach some strategies, but his main purpose is to have people understand what a good investment looks like, they then find their own investments.
On education, Kiyosaki talks about 'sophisticated investors' a lot. He advocates that we seek to elevate ourselves to that status. In the U.S. there are rules for sophisticated investors, which are there to protect dimwits. Sophisticated investors are given freedom of choice because they know how to protect themselves.
I hope you don't mind if I add to a couple of issues you've brought up. I don't see kiyosaki "advocating" types of investments. To me he is simply recognising some types which have the potential to pay for themselves very quickly. But he stresses that education is important because an investor needs to know how to remove the gamble out of each investment.
For example online he introduces the company he uses to invest in oil wells, but goes to great lengths to say that he is not advocating it & people should not invest with them because it's risky. He believes he has that risk under control, some reasons are that he does is to not rely on the success of any one well but buys into many (which requires great capitalisation), and he recieves a 28% tax incentive from the government within weeks of investing. The cashflow is very good which balances the risk. So you have to be prepared to build a portfolio of wells in order to do this.
He is happy to be unequivocal about investments to stay away from. He doesn't like shares much for a range of reasons(except being a selling shareholder through IPOs), & hates mutual funds. If you think about it the odds of beating the market are in fact 50:50, not 20%, (if you don't take fees into account). If it were 20% then you'd just go short all your picks, & win. When you add fees into the equation things change a huge amount.
If you take ALL mutual fund fees into account the average is 2.5% which compounded over 10 years means your potential gains are 80% less with a mutual fund than without. It's explained here under the heading 'Mutual Funds', & confirmed by the founder of the Vanguard Fund.
Kiyosaki's share advisor (he recognises that many people will buy shares despite what he says) likes covered calls. Which is an insite into how Kiyosaki thinks about buying profitable but seemingly risky investments where you manage the risk, & invest for income. Though covered calls fail kiyosaki's key requirement. Knowing when you get your investment capital back (while keeping the cashflow) before you start. Now that's an exit!
Just a last word on why Kiyosaki doesn't like shares. First is because he says shares are how the uber rich fleece us average schmucks (even advanced schmucks
). They sell us shares through IPOs, then use our money to make more money by leveraging productive companies. They then leave us to compete in a gambling match with big but hidden fees which are collected by the uber rich themselves. Another reason he doesn't like shares is because millions of baby boomers will be forced to sell the shares in their 401k's at age 72.5 in order to pay themselves a pension.Each person has their strategy that suits their needs and circumstances.
Just because Kiyosaki said he doesn't like shares doesn't mean shares are generally a bad class of investment and that his 50:50 rule is correct. There are heaps of people out there - many under 35 - who have made a lot more money than his books investing in shares even in Sydney and Melbourne alone.
I think some of the generic themes in his book is good, but it's not something you wouldn't have realised any way (eg spend less than you earn, invest your money early). If you didn't realise it without reading his book, you probably wouldn't put it in action after you read his book any way.
Just because Kiyosaki said he doesn't like shares doesn't mean shares are generally a bad class of investment and that his 50:50 rule is correct. There are heaps of people out there - many under 35 - who have made a lot more money than his books investing in shares even in Sydney and Melbourne alone.
I think some of the generic themes in his book is good, but it's not something you wouldn't have realised any way (eg spend less than you earn, invest your money early). If you didn't realise it without reading his book, you probably wouldn't put it in action after you read his book any way.
inflation and tax deduction can repay loan.
They can be deductible just one example is using chattell mortgage, or leasing the, payments are deductible. Finance with no penalty early payments. If it is a high income make extra payments on leased equipment. Income will be low and I want to hold currently acquired physical commodities. so just last week sold a front end loader so I wont pay too much tax on it and sold it for 20k more than purchase price. It was nice to see 160k deposited to the bank 50 k was used for deposite on new front end loader 80k balloon the other 110k plus Gst refund (pretty cool financing gst component extra 25k) to use over the next 4 years and geared up (pay for current gearing) used for the annaul installments. and it has saved me more than that in tax. The future capital expense is the 80k balloon which will never have to be paid if the process is repeated or refinanced. You can have a compounding effect with the tax savings
I would have thought the directors would not have to be there at all Unless it had expanded to a considerable size. A good accountant and they would only need to consult him perhaps twice a year . A lot of self employed companies consist of family members and arent complicated just set up for tax reasons.
That's why I prefer index trackers, whose fees are around 0.5% per annum.
There's a blog post by Terry Smith on just how much fees, particularly from hedge funds, can eat up.
Terry Smith said:
I probably misread Kiyosaki's tendency to invest in risky propositions as being an advocacy of this strategy. Or I picked it up from other critiques, such as Reid's.
That's why I prefer index trackers, whose fees are around 0.5% per annum.
There's a blog post by Terry Smith on just how much fees, particularly from hedge funds, can eat up.
I probably misread Kiyosaki's tendency to invest in risky propositions as being an advocacy of this strategy. Or I picked it up from other critiques, such as Reid's.
Wow, those management fees are killers in disguise. For U.S. stocks there's Guru Focus that tracks various big wigs portfolios (not sure if there's a similar Aussie site). This type of tactic would incurr way less in fees & you build a portfolio which the big guys have in their own portfolio.
Graemsay I guess Kiyosaki is suggesting the investors look at what are traditionally higher risk investments, but he advocates being 'sophisticated' about it by managing the risks.
Sure, so it's a company structure but self employed by nature, which is a smarter way of operating huh?!
I agree Deltaberry, it's just kiyosaki's idiosyncrasy. From what I see he doesn't advocate staying out of shares like he does with mutual funds, & I think he does trade dirivatives, so his position is less extreme on shares.
I think what a lot of critics miss is that RK is NOT teaching you how to make a million dollars ... he is teaching you how to recognise what skills you need so that you can make yourself a million dollars.
He is leading you to water - not showing you how to drink.
He is giving you options - suggestions - the wake up call - examples of what is possible - and then letting you loose to find your own way and investing style that suits you.
Methinks to many people try to analyse and read to much into what he is saying.
Just like reading "The Secret" ... if you took what was actually being said and applied the principle of what is being said to your own life, then some amazing things happen ... if you took what was written on the page as total gospel of step 1 X, step 2 X (rather than the principle of what was written) then you were doomed to fail.
It is those who force literal translations onto something that was not meant to be literal that do not grasp the concept.
Bit like religion really
He is leading you to water - not showing you how to drink.
He is giving you options - suggestions - the wake up call - examples of what is possible - and then letting you loose to find your own way and investing style that suits you.
Methinks to many people try to analyse and read to much into what he is saying.
Just like reading "The Secret" ... if you took what was actually being said and applied the principle of what is being said to your own life, then some amazing things happen ... if you took what was written on the page as total gospel of step 1 X, step 2 X (rather than the principle of what was written) then you were doomed to fail.
It is those who force literal translations onto something that was not meant to be literal that do not grasp the concept.
Bit like religion really
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Yes that's what she meant jaycee.
Surely not the school principal...
nah - touche Jaycee!
Actually - can't tell you if it's like Richest Man in Babylon. I didn't make it much past the first chapter as found RMIB boring ... whereas RDPD has me rivited.
Maybe it was more a case of timing ... should rebuy RMIB for another try.
I suggest you'll find RMIB still boring!
But perhaps "L'il Lizzie" would benefit from it.Similar threads
