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Rich Dad Radio Show: In-Your-Face Advice on Investing, Personal Finance, & Starting a Business
The Rich Never Stop Buying — Here's Exactly What They're Buying
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So much of what you think is right is wrong. Completely wrong. You know, savers are losers. But do you know what the rich actually do? They buy. Buy more. Keep buying. Today I'm going to show you exactly why and how to do it. The way that actually builds wealth. Not the way that looks good on paper. The way that sets you free. This is the Rich Dad Radio Show. The good and bad news about money. Here's Robert Kiyosaki. Welcome to the Rich Dad Radio show. The good and bad about money. This is Robert Kiyosaki and today is just you and me. And we're talking about what the rich are teaching their kids about money. I want to start today with three words. Three words that have followed me for over 20 years. Three words that still, still get me more hate mail than anything else I've ever said. Savers are losers. Financial planners despise me for it. Journalists call it reckless academics, the ones with the fancy degrees and zero net worth. They write long articles explaining why I am wrong. And every year, inflation quietly proves me right. Now I'm not going to spend a lot of time defending those three words. If you've been listening to this show, you know where I stand. Here it is in one sentence. Saving a currency that the government is printing around the clock is not a financial strategy. It's a slow leak. You work hard, you set money aside, you do everything they told you to do. And the whole time the purchasing power of every dollar you saved is quietly being drained away. Not by a bad investment, not by a market crash, by design. What I want to talk about today is the flip side. The thing nobody teaches you, the thing that actually builds wealth. Buy, buy more. Keep buying. Not stuff, not cars, not the bigger house. Your neighbors will be impressed by cash flowing assets. As many as you can find as fast as you can, get your money back and go again. That's it. That's the whole strategy. And it will make more financial advisors angry than anything else I've ever said. Good. Because they've been told their whole lives, save, be responsible, build your nestic. I understand it. I was told the same thing. But here's what changed. And most people still don't understand this. President Nixon took the US dollar off the gold standard. The moment he did that, money stopped being money. It became currency. A government issued, printable, depreciating piece of paper. The rules of the game changed overnight. The problem? Nobody told the savers. Under the old rules, saving made sense. Money held its value. A dollar saved was a dollar earned. Your Grandfather's advice was correct for your grandfather's economy. In today's economy, the government has every incentive to print more currency. Which means every dollar you save buys less next year than it does today. Think about this. The US dollar has lost roughly 95% of its value against gold since 1971. 95%. If you had stuffed cash under the mattress in 1971, it would be worth a nickel in real purchasing power today. A nickel. And here's what makes it worse. The tax code punishes you for saving and rewards you for borrowing. Save money, you pay tax on the interest you earn. Take out a loan to buy investment real estate, you get tax deductions. The system is not subtle about this. It is explicitly designed to move money from people who park it to people who deploy it. The wealthy don't fight this system. They use it. And that's what I'm going to show you how to do today. Coming up, my wife Kim. $145,000 house, a $25 a month cash flow and the machine she built from it. Don't go anywhere. Lehman Brothers, Washington Mutual, Bear Stearns. Three companies that helped create one of the worst financial collapses in in market history. And on May 27, you could add surprising new name to that list. I'm talking about one of the biggest AI companies in the entire world. And no, it's not Nvidia. But according to my friend and colleague Jim Rickards, the man who warned about the last two market crashes three full weeks in advance, this major AI company could trigger a catastrophe 10 times worse than Lehman Brothers, resulting in a devastating 80% market crash. Jim just revealed the name of this company. Plus five simple steps you should take right now that could help you win big, no matter what happens. For all the details on this urgent situation, go to meltdown26.com that's meltdown 26, paid for by Paradigm Press. Okay, we are back. Let's get to it. So the system is designed to reward people who deploy money, not people who park it. And that brings me to what rich dad taught me that poor dad never understood. Currency must move. It must keep moving, asset to asset, as fast as possible. A currency that stops flowing is a currency that is slowly dying. Think of it like an electrical current. The moment it stops, the lights go out. Rich dad called this the velocity of money. And it wasn't a complicated concept. The question was never, how much can I save? The question was always, how fast does my money come back? Let me say that again. How fast does my money come back? Because here's what most people do. They buy something, they park their money in it. They sit back and wait. Wait for appreciation. Wait for the market. Wait for someday rich. Dad called this the bird that flies away. He said your money should be like a good bird dog. It helps you find a bird, catch the bird, and then goes out and gets you another bird. Most people's money, it acts like the bird. It just flies away. The wealthy think differently. They buy an asset, they get their money back through cash flow, through refinancing, through both, and they immediately deploy that capital into the next asset. The original asset keeps producing. The money keeps moving, the machine keeps growing. That's the difference between parking money and deploying it. Now, here's what that looks like in real life. Because I know what some of you are thinking. Robert, that sounds great, but how does it actually work? My wife, Kim. Portland, Oregon. The economy was terrible. The timber market had collapsed. The stock market had just crashed. There are for sale signs everywhere. Most people were running away from real estate. Kim was walking toward it. She found a small two bedroom house. $45,000. She put $5,000 down. After the mortgage, expenses and management fees, the property produced less than $40 a month in positive cash flow. $40 a month. Most people look at that number and walk away. Kim looked at it and saw the beginning of a machine. She set a goal. 20 rental units in 10 years. She hit it in 18 months. Not 10 years, 18 months. That's what happens when you stop thinking like a saver and start thinking like an investor. Now here's where it gets interesting. When Kim hit those 20 units, she didn't stop. She didn't celebrate. She didn't sit back and say, I've made it. She sold them, tax deferred, rolled the gains into two larger apartment buildings and kept moving. Most people, when they finally start winning, they stop. They get comfortable. They pay down the debt until they own it free and clear. They celebrate having no liability. And here's a problem with free and clear. Your return on equity is terrible. You have a large asset with no leverage and a small income relative to the capital you have locked inside it. That is the parking brake. You have stopped the machine. Kim never stopped the machine. After looking at thousands of deals over the years and actually buying maybe 25 of them, she made the following investment. In 2004, she purchased a commercial property for approximately $8 million, 1 million down, which she borrowed, meaning the deal was 100% financed by debt. That property produced $30,000 per month in net cash flow every month. Now, do the math on the return. When you've borrowed your down payment and the property is still producing income after all expenses, your return on your own money isn't 8%. It isn't 12%. It's infinite. That is not a figure of speech. That is the literal mathematical result when you divide net income by 0 of your own money in the deal from one $45,000 house with $40 a month in cash flow to millions of dollars a year in passive income. Not because she got lucky, not because she had money to start with. Because she understood one principle that almost nobody teaches. Rich dad said it this way. One of the most important things a real investor needs to say is, I want my money back and I want to keep my investment. Get your money back, keep the asset. Repeat. Kim started with one $45,000 house. She built a machine that produces millions of dollars a year in passive income. But here's a question I haven't answered yet. How do you know the difference between a real investment and a gamble? Most people who call themselves investors, they're gambling and they don't even know it. Coming up, I'm going to show you the exact line between the two and which side you are on. Don't go anywhere.
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Welcome back. Before the break, Kim's story. One $45,000 house, a machine that produces millions. Now, I want to answer the most important question. In investing, what. What is the difference between an investor and a gambler? Because most people, and I mean most, have never been taught this. There are only two reasons to buy an asset. The first is cash flow. Income the asset produces right now, every month, regardless of what the market does, regardless of what the economy does, regardless of who is in the White House. The second reason is capital gains. The hope that someone will pay you more for it later than you paid today. That first one, that's investing. The second one, that's gambling. I know people get angry when I say that. But Robert, my financial planner, says the stock market goes up 8% a year on average. And people get angry when I say this. Your financial planner is teaching you to gamble because average doesn't protect you. When the market drops 50% and it has dropped 50%, I watched it happen. Rich dad drilled this into me when I was a boy. He'd sit me down with a Monopoly board. Not to play the game, just to teach. He'd hold up a deed card and ask, how much do you collect for one green house? The answer was on the card. Certain, immediate. Not dependent on a trend, not dependent on a forecast, not dependent on a prayer. Don't ever forget that. He said, invest for cash flow and you'll never worry about money. Invest for cash flow and you will not be wiped out. In boom and bust markets. I watched this play out in 2008 in real time. The flippers, the people who bought properties with no positive cash flow, counting on prices to keep rising, they got wiped out when the bubble burst. They didn't just lose their profits, they lost everything. Kim and I didn't lose a dollar. Not because we were lucky, because our properties were producing cash flow. When the crash hit, tenants still needed a roof over their heads. The rent still came in. The mortgage still got paid. By them, not by us. That is the difference between cash flow and capital gains under pressure. 90% of amateur investors invest primarily for capital gains. They are gambling. They just don't know the name for it. Now here's the objection I hear every single time. Robert, that's great for you, but I don't have the money. I understand it. I was broke. Kim and I were homeless for a period. We built everything from nothing. No inheritance, no trust fund, no one handing us deals. But here's what poor dad taught me to say. Four words that kept me poor for years. I can't afford it. Rich dad forbade those words. He said the words, I can't afford it. Shut down your brain. It doesn't have to think anymore. He was right. I can't afford it is a statement. It closes the door. How can I afford it is a question. It opens one. And here's what that question unlocks. First, you don't need as much as you think. Kim's first property required $5,000 down. That's not nothing. But it is not the barrier most people imagine. The barrier is almost never the capital. The barrier is the belief. Second, the whole point of good debt is that you are not the one paying for it. Rich dad said it plainly. The bank gives you the loan. Your tenant pays it off. You get the asset at the end. That is not a loophole. That is the design. The bank puts up 80 to 90% of the money. Your tenant services the debt every month. You collect the cash flow, you receive the appreciation. You keep the tax benefits, all three while your tenant writes the check. Bad debt is debt you pay with your own sweat. Good debt is debt someone else pays for you. Most people never learn that distinction. And it is the difference between staying broken, building a machine. Now, some of you, that first deal still feels out of reach. The $5,000 isn't there yet. The cash flow isn't there yet. And I have an answer for that. The same answer Rich dad gave me when I was a young man with nothing. If you can't buy yet, build a business is the most powerful asset you can own. If you build it correctly. Not because of the income it pays you directly. Because of what it enables. Rich Dad's sequence was deliberate. Start a business first, then invest the cash flow from the business into real estate. Then move excess cash flow into commodities and paper assets. Most people want to skip the first step. They want to go straight to the real estate. And I understand it. Real estate is where the magic is. But a business gives you something real estate cannot give you from a standing start. It gives you capital. It gives you cash flow before you own a single unit. It gives you tax advantages that employees will never have the ability to spend pre tax dollars to acquire more assets. Rich dad said it to me simply when I was broke and standing on a piece of land I couldn't afford. I can't afford to buy this either, but my business can. That sentence reframed everything. I wasn't asking the wrong question. I was asking from the wrong position. Employees trade time for money at a ratio of 1 to 1. Business owners, leverage, systems, people and capital. The leverage ratio is unlimited. Build the engine, then use the engine to buy. Let me bring this back to where we started. Three words. Savers are losers. I know most of you were told the opposite. Save. Be responsible. Contribute to your 401k. Trust the market. Wait for someday. That advice isn't wrong because it's immoral. It's wrong because the rules changed in 1971 and the advice never changed with them. Every year you wait, the assets get more expensive. Every year you save, the currency gets cheaper, and the people who started buying 10 years ago get further ahead. The wealthy don't wait. They build. They buy. And then they buy again. Not recklessly, not without financial education. But once you understand the difference between an asset and a liability, between cash flow and gambling, between good debt and the kind that grinds you down, stop saving and start buying. Buy the first property that produces $200 a month. It looks small. Buy it anyway. Get your money back. Buy the next one. That is the game. Four green houses, then a red hotel. Rich dad played that game in real life his whole life. Thank you for your time. Thank you for caring about your future. Thank you for understanding that you are the only one who cares about taking care of you. Take care, Sam. This podcast is a presentation of Rich Dad Media Network.