Kiyosaki: “Savers are Losers” – A Sad Truth with a Catch

     

One of principle that has been emphasized by Robert “Rich Dad” Kiyosaki is that “Savers are Losers“. Yes, you read it right: the one who saves money are the losers. This is actually a sad truth that nobody can denied. But why he even say that? Is that mean we don’t have to save money at all ? What’s the catch ? Since when ?

Although personally I do not really like Robert (try to sit on one of his seminar, not only he is swearing a lot, but he is rude to practically anyone publicly), but it does not mean that what he preaches is not good. On the contrary, many and many of his teaching is pure gold and something really need to be adopted by every one. This is one of them….

Inflation is your enemy

Invest or become a loser

Most people will associate inflation with price increase, but that’s not really accurate – price increase is the effect of inflation, not the cause. The real cause is because there are more money in the market. If there are more money and resources is scarce then people will be willing to offer more money to secure the resource for himself. Because of this the price of that resource become higher. Read this article for better illustration.

But what makes more money exists in the market ? Government is printing it rather out of control. Before US President Nixon abolish the ‘gold standard’ on 1971, every $100 printed need to be guaranteed by about 3 ounces of gold (1 ounce is $35). So, since gold is precious metal that cannot be just made from thin air, this kind of controlling the value of money.

But since then, all moeny if the world is now without gold backing. It’s called “Fiat money” meaning the money only become valuable because the government make it so/force it by law – otherwise it will just worthless paper. But with gold backing, you can be sure that if you have $1000 you can go to the government to swap it with around 30 ounces of gold.

Why all government doesn’t want to use gold standard? Because it make it difficult to them. For example: just bailout of Citigroup on 2008 costed $300 billion. That required 9 billion ounces of gold or 900 million kilogram of gold. Not easy , right ? But that occasion, the treasury just sign a check and $300 billion “money” created from  thin air.

It’s only a matter of time that US Dollar in particular will lost most of its value because of their excessive debt. All other country have similar diseases but not as severe as US.

Invest Money

Invest Your Money

So, if you have some money, it’s not really good to just save it. You have to invest it. Buy property, stock or better just buy gold or silver. But it doesn’t mean at all that you just spend your money without control. You need to come to the level of investor. In order to do that you need to first save your hard earn money first, have some emergency monry to survice at least 6 months, then invest the rest of the money. You need also to be comfortable with debt, because debt leverage your money and make you achieve your goal much faster.

Some number for illustration: if 20 years ago, you have $50,000  and inflation is at 5% per year, then:

• If you buy small house in outside Melbourne, it is now worth $200k
• If you just invest in IBM stock (was $30, now $120), it is now worth around $200k
• If you invest in S&P500 index (was 300 pts, now 1000) it will worth more than $150k
• If you buy gold (was $400/oz, now $1000/oz) now it is $125k
• With 3% interest, your bank account will be around $90k
• Save under your pillow or in your drawer, it will still be $50k

Of course, this is hindsight. But we need to treat hindsight as possibility -or- statistically probable (as it has happen), right?

Have a quick look if you have debt? With inflation the debt become les and less in value, in other word your debt is actually decreasing in value. That’s one of the reason why having debt is a must for the rich…

What To Do

If you really want to back in charge on your own financial affair, the level of hurdle that you need to overcome is roughly like this:

1. You start earn some money: the more you earn the more the bill is
2. Budgeting comes to play: make sure whatever your expenses MUST BE less than whatever you earn. You start create a saving .
3. Your saving is growing and start to pile up more money in your bank account.
4. Once you have enough for emergency and the amount is quite substantial START INVESTING.

This is the essence of what Robert Kiyosaki said, don’t be a losers just by sitting around doing nothing with your money. Learn how to invest – it’s your money anyway and be a winner. The investment vehicle itself is totally up to you.

If you want fast and high return with unique capital protection capability then sharemarket investment probably suitable for you. If you like more calm investment and longer term, then property investing is your choice. Or if you want real action of business, then invest in a business and start make money. The key here is choose the one that you know, do not rely to someone else.

And of course while you are doing your investing, don’t forget also to protect yourself with insurance.

Conclusion

“Savers are Losers” is a true statement. You need to learn about investing and then invest your money with an investment vehicle that you know and comfortable with. Don’t let it just staying in bank account. Beat the inflation and go toward your own financial freedom.

Hope this helps.

Hear Robert Kiyosaki yourself: rich_dad_difference3

Related Posts

• Improve Your Finance Position: The Big Picture
• Debt is Good: Only for Investing & Business Though
• Debt Is Bad: Insight From Franklin and Gandhi
• Inflation Is NOT Price Goes Up: Common Misconception
• For the Savvy, There is No Junk Mail ?

Denis Kristanda  

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