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Robert Kiyosaki Why the Rich Get Richer

Robert Kiyosaki, Why the Rich Get Richer

Finding Your Magic Investing Formula

by Robert Kiyosaki

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Posted on Friday, May 11, 2007, 12:00AM

People often ask me, "How do you find great investments?" My standard reply is, "You have to train your brain to see them. Great investments are all around you."

I know that's not a very satisfying answer. Most people want something more specific and concrete. But my reply is as accurate as possible. If we could've seen all the great investments just in the past decade, we'd all be multibillionaires.

Missing Out on Millions

There have never been more opportunities to become rich than in the last 10 years. And there'll be even more opportunities in the next 10.

Let me explain. Like many investors, I didn't see the power of eBay almost a decade ago. If I had, I'd be a billionaire today. Nor did I see the power of YouTube, or Google, or MySpace. Being an old guy, my brain isn't trained to see investing opportunities in cyberspace. So I missed them.

Thirty years ago, when my business career was just starting at Xerox, I was introduced to a new type of computer. I wasn't tuned into computers at the time, so little did I know that I was looking at the early version of what was to become the Macintosh. So I also missed that billion-dollar opportunity, too. How many billion-dollar opportunities have I missed? Maybe millions.

If I've missed so many million- and billion-dollar opportunities, why am I writing for Yahoo! Finance? That's a valid question, and the answer has to do with helping you find great investments.

Perseverance Pays Off

I took my first real estate investment course in 1974 in Honolulu. The cost was $385, and I believe it was two or three days long. Toward the end of the class, the instructor said something I've never forgotten: "Now you know the difference between good real estate investments and bad real estate investments. Now you all know what to look for."

He paused and then added, "The problem is, most people will tell you such investments don't exist. Your friends will tell you so, and so will real estate agents." Truer words were never spoken. For the next few months, I went from real estate office to real estate office, looking for investments. As promised, the real estate agents told me what I was looking for didn't exist. My friends and co-workers at Xerox told me the same thing, and said I was either dreaming or smoking funny cigarettes.

Finally, in a small, obscure real estate office in downtown Waikiki, I met a scruffy little broker who said, "I have what you want." The next weekend I was on a plane to Maui, where he'd found an entire condominium development that was in foreclosure.

I purchased my first piece of investment real estate for $18,000, putting the $2,000 down payment on my credit card. The one-bedroom/one-bath condo paid me a positive cash flow, even after all the expenses and mortgage payments. My investment career had begun. More important, I was training my brain to see what most people don't see. That $385 real estate course has made me millions of dollars over the years.

Keep an Open mind

Last month, around tax time, I wrote a Yahoo! Finance column called "Think Rich to Lower Your Taxes." It was about an investment strategy known as the "velocity of money," and how I use it to invest, make a lot of money, and then legally use the tax laws to minimize my own taxes. I suspected the column would spark some controversy, and it did.

For a couple of weeks, I kept track of the reader responses to it. Some of the less-complimentary comments reminded me of what those real estate agents and my friends at Xerox said to me back in 1974.

You see, our brains are either our greatest assets or our greatest liabilities. As I said, when it comes to investment opportunities in technology, my brain is a liability; I just don't get it. When it comes to investment opportunities in real estate, gold, oil, and silver I'm above average, but not great. And that's because I've trained my brain to see opportunities in those areas.

So, instead of criticizing the readers who were close-minded (or even mean-spirited) about my advice, I encourage them to keep an open mind and find their own way of seeing investments most people miss. That's how you get rich. People who refuse to open their minds to new strategies seldom become rich -- which I guess is why there are more critics in the world than rich people.

Finding Your Magic Formula

One of the most important things my rich dad taught me was to never say, "I can't do it" or "I can't afford it." Those thoughts are self-limiting, and it's hard to find great investments when you're basing your behavior on limitations. In today's world, there are more investing opportunities than ever before. Why would anyone want limited financial results in an unlimited world?

One of the reasons I write for Yahoo! Finance is so I can put forth ideas that challenge the way people think about investing. If you want the same old financial-planning dogma of "work hard, save money, live below your means, get out of debt, and invest in a well-diversified portfolio of mutual funds," then my column is obviously not for you.

My job is to stimulate your thinking, inform you about why rich people get richer, and encourage you to find the magic financial formula that works for you. I found mine, and I want you to find yours.

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608 Comments

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  • Yahoo! Finance User - Friday, July 6, 2007, 9:49PM ET  Report Abuse

    • Overall: 5/5

    Thank You.

  • Robert N - Friday, July 6, 2007, 7:16PM ET  Report Abuse

    • Overall: 4/5

    Better than your average advice.

  • suneeta - Saturday, June 30, 2007, 11:02AM ET  Report Abuse

    • Overall: 4/5

    it is amazing when you read your thoughts through someone's writings. I share the common sense of Robert's writings and Im not rich. Most of my business thoughts are strong gut feelings but I dont act on them and later realized I could have gotten an extra thousand out of it. Robert has given me the confidence to go out and try until it works. Thank you sir.

  • Yahoo! Finance User - Saturday, June 30, 2007, 12:32AM ET  Report Abuse

    • Overall: 1/5

    Wow this guy writes books for a living.

  • ikem - Tuesday, June 26, 2007, 9:00PM ET  Report Abuse

    • Overall: 4/5

    as usual straight to the point and with underlying conviction

  • david - Tuesday, June 26, 2007, 11:26AM ET  Report Abuse

    • Overall: 2/5

    never any substance to his articles, his hindsight is always 20/20.

  • E.F. - Saturday, June 23, 2007, 9:54AM ET  Report Abuse

    • Overall: 4/5

    Very good article, i could have written it myself if i only have the credentials. nice to see RK never stops writing even storms of critics floods his time.

  • Yahoo! Finance User - Friday, June 22, 2007, 9:10PM ET  Report Abuse

    • Overall: 4/5

    As ever, good advice from Robert for those with their minds open - it seems extraordinary to see critical reviews but of course, angry people are just covering their own fear and insecurity and genuine financial liberation requires courage.

  • John - Wednesday, June 20, 2007, 2:12PM ET  Report Abuse

    • Overall: 3/5

    I've got a great idea- WHY NOT PAY OFF ALL THE CREDIT CARDS AND DEBT BY USING THE BANK'S MONEY & AN INTEREST CANCELLATION PROGRAM!! Being financially responsible is the first step- but what really made a difference to us is by getting on the program through United First Financial. We build up equity each month and we don't have any lifestyle changes- no extra payments out of our pocket or anything like that. It really works! The video on this website www.u1stfinancial.net/johnfechik explains how it works- not everyone fits the criteria- you must have a credit score of at least 620 and be fairly current and on time with all your payments- but our financial future looks great now & I can finally sleep at night NOT worrying about how we will ever get out of debt!! For someone that wants to save a lot of money in interest off of their mortgage and possibly payoff all their debt and their house in ½ to 1/3 the usual time- this is the program! If the President made it a law for all homeowners to get on this program, we could have America on the road to recovery soon with all the debt we have burdening us and have a lot less foreclosures!!

  • Yahoo! Finance User - Saturday, June 16, 2007, 3:27PM ET  Report Abuse

    • Overall: 3/5

    Overall a pretty good article. Those who are overlly critical are maybe missing the big picture of learning how to see opportunity. Maybe these are people who want to be told hot stocks or hot sectors. Remember the proverb about teaching a man to fish.

  • David - Thursday, June 14, 2007, 2:02AM ET  Report Abuse

    • Overall: 3/5

    Hot bad for an RK article. Pats himself on the shoulder, but gives no real advice but "you can do it".

  • Wolfgang - Thursday, June 14, 2007, 1:38AM ET  Report Abuse

    • Overall: 1/5

    RK's column is self-serving - selling his books and real estate training. -ws

  • olivier - Wednesday, June 13, 2007, 6:23PM ET  Report Abuse

    • Overall: 5/5

    It's also very funny to see the negative comments and finding no consistency about the arguments they used. I read Robert 's books and I only see consistency with book of other master investors and entrepreneurs : A few books : The intelligent investor, The winning investments habits of Warren Buffet and George Soros, The E Myth revisited. Very funny that one of the detractor used the E Myth from a certain Michael who mentions the concept of organisational systems which generates cash. Michael enhances the system concept and the innovative power of entrepreneurs and Robert enhances in a pyramid form, with a decreasing order: cash-flow, communication, systems, legal and products surrounded with mission, team and leadership Robert also mentions the brain as the best asset to put money in you pocket. Where’s the contradiction. Let me tell you, dear colleagues, if Robert was not worth being present as a investment expert on yahoo finance, do you really think that a certain Donald who knows a little about real estate and recovered from $ 6 bios debt would have written a book together with Robert and a certain Warren who knows a little bit about fundamental investing (net worth $ 50 bios) is a moron with mentioning that cash is king (as written in a book called Financial Intelligence written by Karen who's certainly a moron too). It’s certainly a strange coincidence that Robert wrote a book named The cash-flow quadrant. Well, dear one star opinion leaders, if all the first names and books seem unfamiliar to you, it is reasonable to assume that your view on the art of investing is biased. Maybe my perception is biased like every human being, just like a certain Georges would mention as English isn’t my mother’s language. That’s the alchemy of words.

  • mharieelhag - Thursday, June 7, 2007, 12:21PM ET  Report Abuse

    • Overall: 4/5

    i would like this guy, along with other wealthy millionaires/billionaires like suze orman, oprah winfrey, etc. have an open discussion regarding iras, savings, income and everything about money.

  • Anthony - Monday, June 4, 2007, 12:29AM ET  Report Abuse

    • Overall: 5/5

    Good column. People who post negative comments obviously have nothing else to do with their time other than focus on negativity. Focus your time on something more productive. =]

  • Yahoo! Finance User - Sunday, June 3, 2007, 11:08PM ET  Report Abuse

    • Overall: 1/5

    Rich dad charged him $385?

  • Yahoo! Finance User - Sunday, June 3, 2007, 8:06AM ET  Report Abuse

    • Overall: 1/5

    This 'advice' column continues to be not very full of advice. I'm so utterly disgusted that Yahoo! continues to give this ill-informed charlatan a platform that I am going to resume my search for a contact email where I can provide more direct feedback to Yahoo! Finance. The problem with the Internet era is that there is no accountability for publishing 'information' like these useless (and sometimes dangerous) fluff pieces. I'm not going to revisit the 1 million reasons why this gentleman has no credibility to comment on investmenting strategy or personal financial solvency (just google his name plus "criticism"). Instead, I urge people reading another one of these horrible articles to help me find a contact email address so that we can find a way to get him off of at least one of his public platforms.

  • Yahoo! Finance User - Friday, June 1, 2007, 8:46PM ET  Report Abuse

    • Overall: 5/5

    Let's all thank God for Robert Kiyosaki. He has a very simple way of removing the veil of long held traditional beliefs about money and investing. After reading, Robert's and Donald Trump's book, "Why we want you to Be Rich". And Kim's book, "Rich Woman". My eyes have been open to the possibilities. I can now see money in place I could not see before and I discover new places to find money everyday. I'm currently employed and look forward to retiring soon as a billionaire one day. I used to desire to be financially independent with hope if acquiring a Million dollars or more. But with the help of Robert, Donald and Kim, I now see unlimited opportunities where I can make money now and in the future. We are now living in a global economy and the only limits there are the ones we place on ourselves. It takes time and education to see pass the dogma and in to a future so full of possibilities your mind starts to explode. As Robert says, "The greatest asset you have is your mind". And it can also be your greatest liability. See Brown Cleveland, Ohio

  • Manolo - Thursday, May 31, 2007, 2:21AM ET  Report Abuse

    • Overall: 4/5

    Rich dad has changed my way of seeing things. I wish I could have a mentor like this 20 years ago, I would be a very wealthy man today. It saddens me the comments of the skeptics, which to me is the same as saying, "the lazy ones", for they just critizice instead of getting off their couches and go and try to find that next deal of the century. Poor souls, I guess they are happy just coming home from work everyday and getting the beers out of their fridge and wasting their lives away watching Barry Bonds and his cheating steroids skills trying to break the home run's record.

  • fred j - Wednesday, May 30, 2007, 3:44PM ET  Report Abuse

    • Overall: 1/5

    This article was inspirational, but it does not really teach me anything.

  • angel p - Monday, May 28, 2007, 10:05AM ET  Report Abuse

    • Overall: 5/5

    Great financial advice!!! As always their are these fearful, financialy ingnorant, lazy people who cant find anything better to do than to bash someone who has diffrent views. Its time to break out of your boxes and see that your old time thinking is getting you nowhere, or getting you there but extremely slow. Robert and the whole Rich Dad Team has changed my life. At such a young age i`m already light years ahead of where I thought I would be. Thanks to Jesus Christ and great mentors like Robert Kiyosaki.

  • Michael - Saturday, May 26, 2007, 11:05PM ET  Report Abuse

    • Overall: 3/5

    Excellent point. I remember thinking Microsoft DOS was junky, OS/2 would probably crush it. Oops. Didn't take into account the craftiness of Gates, and how skillfully he wielded his monopoly - DoubleStore should've been a lesson. To the naysayers: instead of knee-jerk criticism, that is the same regardless of the column, why don't you actually read the column and provide constructive criticism? Guess that's why you're comments are buried in with 500-600 other comments (!!), and we're all reading Kiyosaki !!

  • Yahoo! Finance User - Saturday, May 26, 2007, 8:13AM ET  Report Abuse

    • Overall: 1/5

    Part of the reason so many people have a problem with this guy is that he makes such outrageous statements that just don't make sense. For example he makes the statement about probably missing out on MILLIONS of opportunities for becoming a BILLIONAIRE over the last 30 years. First I doubt that there are millions of billionaires in the world and second DO THE MATH. Just using 2 million as a number that comes out to 66,666 missed opportunities a year and about 183 missed opportunities a day or almost 8 missed opportunities an hour.How could anyone think this is possible even for this guy.

  • Michael - Friday, May 25, 2007, 6:29PM ET  Report Abuse

    • Overall: 5/5

    What I really like about Rich Dad is that he doesn't accept excuses. Everyone who bashes him in these columns is always making an excuse for why he is so rich. He didn't get to be a multi-millionaire, golf playing buddy of Donald Trump because he got lucky. He is a rich dad because he is both a great businessman and an exceptionally talented communicator. The question you should ask yourself, is why are you here in the comment section and why aren't you up there as a finance rock star? Hmm? Let me tell you this, luck has little to do with it.

  • J - Friday, May 25, 2007, 3:51PM ET  Report Abuse

    • Overall: 3/5

    I like the disclaimers at the end of Mr. Kiyosaki's article. His articles do challenge many traditional views of investment and money management and that can be applauded as long as his readers always understand that his methods can also be VERY risky for the average guy with few liquid assets. As long as you take the courses, do the necessary homework, and are willing to live with the risks, then I suppose Mr. Kiyosaki's strategies really can get you rich...after about a decade or so of hard work (and with a little luck)...(OK, with ALOT of luck)...

  • Yahoo! Finance User - Friday, May 25, 2007, 2:15PM ET  Report Abuse

    • Overall: 5/5

    Awesome Article. I am so glad you responded to all these closed minded critics on yahoo. Your advice has really helped me change my thinking and I am so much closer to being financially free and I much of that is thanks to you. For those who are interested in getting out but have a lot of debt, read Robert's & Kim's getting out of debt book...it certainly helped me eliminate ~$30K debt in less than 1 year. Robert, please continue to write these columns despite the critics because I find value in them. For those people who just criticize and take personal digs...why do you waste your time reading these articles? If you think they are so bad, then don't read them; Perhaps if you invested the time responding & criticizing the article in something else that might benefit you more you could be the one writing articles on Yahoo. It doesn't make sense to read something you don't like week after week...why waste your time? Thanks Robert and please keep writing.

  • Serge - Friday, May 25, 2007, 1:46PM ET  Report Abuse

    • Overall: 1/5

    The commentary for this guy is great, so like many of you, I never miss an article. Perhaps the reason we hate him so much is that many of us are already motivated and don't need a personal cheerleader, such as Kiyosaki. I truly hope other young people like myself out there don't fall for this crap, thinking that they're getting an education. If he has nothing to teach us, at least give some detailed examples of good and bad decisions he's made over the years...perhaps negotiating copywrite terms for a book deal.

  • Yahoo! Finance User - Friday, May 25, 2007, 10:40AM ET  Report Abuse

    • Overall: 3/5

    RK is right on. Wealth is created when you can see the difference between what something is selling for and its true value. As for clownboy's comments, everyone in Silicon Valley knows that Xerox was the first company to create the mouse and GUI. Apple is the first to market it at the consumer level. Steve Jobs made a visit to the Xerox campus and the rest is history.

  • Yahoo! Finance User - Thursday, May 24, 2007, 11:39PM ET  Report Abuse

    • Overall: 5/5

    One of the few, if not the only, Outside The Box thinkers on Yahoo!

  • __A_YAHOO_USER__ - Thursday, May 24, 2007, 9:42AM ET  Report Abuse

    • Overall: 5/5

    I enjoy reading all the people slam this guy, don't take him off. Besides, I will continue to read his posts because in reality he has helped me and continues to do so.

Showing comments 6-35 of 608<< PreviousNext >>
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