cntrepreneur and author of Rich Dad Poor Dad
The Simple Investment Edge of Robert Kiyosaki
Robert Kiyosaki is best known as the author of the No. 1 personal finance book of all time, Rich Dad Poor Dad. He has challenged and changed the way tens of millions of people around the world think about money.
With perspectives on money and investing that often contradict conventional wisdom, Robert has earned an international reputation for straight talk, irreverence, and courage… and has become a passionate and outspoken advocate for financial education.
Robert’s most recent books – Why the Rich Are Getting Richer and More Important Than Money – were published in the spring of this year to mark the 20th anniversary of the 1997 release of Rich Dad Poor Dad. That book and its messages, viewed around the world as a classic in the personal-finance arena, have stood the test of time.
In this interview, edited for space and clarity, he shares his thoughts on why America’s richest 1% just seem to be getting richer… why he volunteered to fight in Vietnam… and the one Rich Dad edge he uses for investing in real estate that can produce “infinite returns.”
Q: One thing that really stuck out to me when I was digging into your background in preparation for this interview was the fact that you volunteered for Vietnam and you served as a gunship pilot. I don’t know if that’s something that you ever discuss. But would you tell us why you decided to do that and what you learned there?
Robert Kiyosaki: Well, that was 1969 and I had a high-paying job with Standard Oil of California. I was a tanker officer. And the Vietnam War was raging on and I was draft-exempt because if you’re in the oil industry you don’t have to fight. But my conscience got to me, so I volunteered with the U.S. Marine Corps and they sent me to Pensacola, Florida.
I was in the C-130 program, the four-engine transports. But the war was winding down so I went to my monitor, guy who schedules you, and said, “What’s the fastest way to go to Vietnam?” And he says “Gunships.” I said, “Why?” He says, “Because they’re dying, idiot.” So I volunteered. And they sent me to Pendleton and straight to Vietnam.
Q: And why did you do that? Why did you intentionally volunteer for what was absolutely the highest-casualty-rate part of the Marine Corps in Vietnam?
Robert Kiyosaki: Well, Marines aren’t the most intelligent guys, as you know. I just wanted to go. That was it. I didn’t want to miss it. I had seven uncles go to World War II. And I’m Japanese. And so they had a lot to prove, if you know what I mean. So they fought in Italy and Germany. And I had two uncles that were captured by the Japanese in the Philippines. They were tortured. So it’s kind of in the family tradition.
The saddest part was: As a pilot, you sit there and you wait for your friends to come back and they don’t come back. They just disappear. That’s hard. Oh my God.
Q: I absolutely can’t imagine that. Haven’t experienced anything like that in my life, fortunately.
The next thing I wanted to get to – again, this is not quite where readers probably thought the interview would go, but I grew up in Central Florida and I had the good fortune to spend a lot of time at the beach… And I probably bought a dozen different nylon surfer wallets between 1982 and 1986. And I’m sure at least several of them you’re responsible for.
And I still see those wallets today in my surfer friends’ hands. Someone’s still making them and selling them. But you were part of an enormous wave of surfer fashion. And when you started making those, did you know that surfers would buy them? Or is that just what happened once you started making them?
Robert Kiyosaki: Right. I started that business around 1978, and as any entrepreneur, we struggled for a while and then all of a sudden it just took off.
The story goes: I went to the U.S. Merchant Marine Academy in Kings Point, New York. You know, I had a choice between Naval Academy and Kings Point. And I took Kings Point. And we’re always on the water. And our leather wallets rotted after a while. So we started sewing old sails to make nylon wallets to carry our money and things in. And so that was the genesis of it.
So, a number of years later after my return from Vietnam, there’s guys saying, “Well, what products should we make?” And I said, “Well, I used to make this little goofy wallet.” And that’s how it started.
Q: And I know in your backstory that you also had a transformative experience at a seminar. And this seminar was called EST, I believe, if that’s correct, Robert. And can you tell us what that experience meant to you and how that led to your success as an entrepreneur?
Robert Kiyosaki: That’s a great question. Because the story of Rich Dad Poor Dad – my poor dad was a PhD from Stanford, University of Chicago, and Northwestern. And when I started going to seminars, he says, “What’s wrong with you?” Whereas my rich dad was a guy who went to Dale Carnegie seminars.
And so when I came back from Vietnam in ‘73, I got into the MBA program. And I was just bored stiff. I couldn’t listen to the guy. And my rich dad saw that I was keeping my poor dad happy because I’m getting my MBA. And then my rich dad was my best friend’s father. He says, “Look, you have to take a real estate seminar.” And ever since then, kind of like Warren Buffett – you know, Warren Buffett holds his Dale Carnegie certificate on his wall, not his college degree.
I think seminars are the better way to go because you’re not there for the PhD or the MBA and all that stuff. You’re just there to learn from real teachers.
And for entrepreneurs, I think seminars are the better way to go because you’re not there for the PhD or the MBA and all that stuff. You’re just there to learn from real teachers, if you know what I mean. When I was in the MBA program, my accounting teacher wasn’t an accountant. He was a Master’s of Accountancy but he didn’t know anything about accounting. I was going nuts.
I’ve hired MBAs and it’s the most expensive waste of time they’ve ever gone through.
Q: I also know that you have a brilliant model for allowing someone to learn. Can you talk about how important that is to your success as a person and to the people who follow your investment ideas?
Robert Kiyosaki: The way human beings were designed to learn is by making mistakes. Then you go to school and they tell you not to make mistakes. Which is ridiculous. Whereas my rich dad taught me to be an investor using Monopoly.
After I worked for him – I had to work for him for free starting at the age of nine. And then he would break out his Monopoly board and his son and me would just play Monopoly. And as we were playing, he would coach me through the moves. “What’re you thinking here? What’re you thinking there?” Because as you know, in the real world, there’s no answers. There’s just: You take this kind of an educated guess. And if you’re wrong, you better correct quickly and change direction. You know?
The way human beings were designed to learn is by making mistakes. Then you go to school and they tell you not to make mistakes. Which is ridiculous.
So that’s how I learned. And I said, “Why are we playing Monopoly?” And he says, “Because you want to make your mistakes with play money, not real money.”
You want to make as many mistakes as possible so you have an idea of how you respond to different situations.
Q: I know you have strong views about whether people should be in stocks or should be in real estate. And I wanted to just talk with you about that for a second. Why is it that you prefer, for average people, real estate over investing in common stocks?
Robert Kiyosaki: I tell people I like real estate. And the primary reason for real estate is: I can use debt – I use 100% debt financing and I pay no taxes. So Trump and I are very similar. He pays zero tax and he uses 100% debt. So that’s kind of my game. And I’ve taken a lot of, should I say, paper courses like stocks and options and all that, and my brain just doesn’t function on paper. I’m one of those guys that has to go see, touch, and feel it. Then I understand it. So I don’t recommend real estate over stocks. I’m saying invest in what you love and what you want to get good at.
If you don’t want to get good at it, don’t invest in it.
Q: There’s a lot of people, Robert, that buy real estate the way that you do. It’s not a secret how to do what you do. But you’ve been particularly successful at it. What is your edge?
Robert Kiyosaki: I use 100% debt. So my returns are always infinite. And then I offset with a depreciation amortization and appreciation. So I pay no taxes. So that gives me the edge there.
Q: That’s a pretty good edge. And what do you do when there’s any kind of a downturn? Because that debt of course can be a double-edged sword.
Robert Kiyosaki: Correct. But you handle that when you buy. I only buy properties where there’s jobs. If there’s no jobs, I don’t care about the property at all.
And then I went to Kings Point, the Merchant Marine Academy. I’m a tanker officer. So I own a lot of oil wells. And, coincidentally, my apartment houses are next to the oil wells.
So that’s kind of my little formula. And I just kind of stay in that range. I’m much happier there, because I understand it.
Q: I’ve got one last question for you, Robert. I want to know what you think about the controversy about your ideas…
You say things like, “You shouldn’t go to college.” People who are religious are threatened by the ideas that’re in this EST conference stuff. You tell people that just because they have a big education, that doesn’t mean that they’re smart. And you’re not shy about your desire to be rich and your desire for your followers to become rich. And all of that stuff is threatening and off-putting to a huge segment of the population that has been conditioned to believe they should go to school, they should be a wage slave, and that they could never break free of any of those molds.
How do you handle that? How do you handle the constant personal attacks just because you have a different idea about what life’s about?
Robert Kiyosaki: That is a million-dollar question. You know, when you tell me about your investment formula, I listen to it. It doesn’t mean it’s good or bad. I have an open mind. I want to listen to it. And some people are threatened by ideas that don’t fit their little box. That’s horrifying. I don’t want to be around those people. So I’d rather just go and blast away and have a good time.
You know, it’s like going to Vietnam. I got spit on when I came back. So what do you do? Give in to those cowards?
Robert Kiyosaki will be appearing along with giants in the field like Jim Grant, Dennis Gartman, and Steve Forbes at the 2018 Stansberry Conference at the Bellagio in Las Vegas, October 1 and 2. Or, if you’d prefer not to travel, you can watch it all live on your computer, phone, or tablet from the comfort of your home. Click here for more details on how to get your ticket.
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