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Fake by Robert Kiyosaki

Rating: 7/10

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High Level Thoughts

Some great insights in this book. I found the book formatting a bit odd though – lots of repetition and didn’t really have much flow. Basic premise of the book is, don’t trust fake money, don’t trust fake teachers and don’t trust fake assets.

Instead, replace fake money with real money – gold. Learn from real teachers – those who do, not those who teach. Invest in real assets – real estate.

Summary Notes

At the beginning of the book Robert writes an introduction as to how this book came about.

It was due to be released much earlier than it was, but due to Robert coming across a Time magazine article called ‘How My Generation Broke America’ it was delayed.

The idea for this book came about when Robert read a book called Grunch of Giants, written by Dr. R. Buckminster Fuller.

What this Book is About

Fake Money: Fake money makes the rich richer and the poor poorer.

Fake Teachers: We are not taught about money in Schools, yet we should be. The teachers of today don’t have any real experience in the real world. They are fake.

Fake Assets: A lot of what we call assets are actually liabilities. What are real assets?

On Investing

“Don’t purchase numismatic coins – rare coins. Unless you are an expert on the subject, stick with ordinary gold and silver coins:

  • U.S Eages
  • Canadian Maple Leaves
  • Chinese Pandas
  • Australian Kangaroos
  • South African Krugerrands”

“How to find a reputable gold and silver dealer. Ask these questions:

  1. How long have you been selling gold and silver?
  2. Why do you deal in gold and silver?
  3. May I speak with one or two of your customers?
  4. Do you recommend rare coins for beginners?
  5. Where should I store my coins?
  6. What is the difference between 999 gold and 9999 gold?”

“Most people are taught, “Do what you love.” Rich dad taough his son and me, “Invest in what you love.””

Paper assets are a form of derivatives. They are not real assets, they are fake assets.

A 401k is a fake asset because it keeps money flowing out of your pocket, for years. An IRA is a fake asset because it takes money out of your pocket, for years.

Fewer than 5% of fund managers beat the market, yet they still win, even if you lose, because they can charge fees.

When a banker tells you your house is an asset, he’s not lying. He’s just not telling you whose asset it is. It’s actually the banks asset.

Robert offsets debt with gold and silver. That is his “hedge”, his insurance policy protecting himself from the stupidity of the government and his own.

Advice from Jim Rickards is to keep your day job and 401(k), buy gold and sliver coins and keep them in a safe outside the banks.

On Making Money Without Money

“There is no money in your card. You don’t need money in the bank. Money is created out of thin air the moment you charge something on your credit card.”

Robert Kiyosaki

“Because people have never learnt to use debt properly, they it to buy cars, houses and other liabilities, NOT to build assets. As a result they work harder, and become poorer.”

“You need to learn how to use debt as money.”

“Real estate will always be the basis of wealth. Real estate is like gold and silver”

The above quote refers to real estate for investment purposes, NOT the house you live in.

By learning to use debt as money to buy real estate, you build a financial intelligence that can enable you to become rich. If you decide to use debt to buy liabilities like millions of others, you will spend your life working for others, making fake money to pay off that debt.

The Cashflow of the Rich

Infinite Returns

“Let’s say I purchase 100 shares for a stock for $1 per share. I have invested $100. The price of stock rises to $10 per share. My $100 shares are now worth $1,000. I sell 10 shares at $10 and receive my original $100. My 90 remaining shares are free once I have recouped my initial investment.”

In real life, debt makes the rich richer

People in the B and I quadrants use debt to become richer.

The goal of the B and I quadrants is to achieve an infinite return on every investment.

“A person who knows how to turn debt into equity can solve very large financial problems. On the flip side, a person who turns equity into debt can cause very large financial problems.”

“The primary reason I tool a Certified Financial Planner course was not to become a certified financial planner. My primary reason for taking the CFP course was to find out how to retire as young as possible.”

Robert Kiyosaki

Rich Dad taught his son and me that there are four basic asset classes. They are:

  1. Business
  2. Real Estate
  3. Paper Assets
  4. Commodities

Look for where cash flows, does it flow to you? Or away from you?

On Learning

“I wanted real estate courses because I wanted to learn to use debt as money.”

Assignment

Find 100 potential investment properties over 90 days. Write up a one page analysis on each of the properties, then decide which of the 100 properties is the best investment. Once you find a good investment, you will find the money to buy it, even if you don’t have it.

“Because 46 percent of Americans have less than $400 in savings, their financial IQ is less than $400.”

The six foundational words to real financial education are:

  1. Income
  2. Expense
  3. Asset
  4. Liability
  5. Cash
  6. Flow

“The moment you operate from the concept of “right and wrong”, your intelligence is cut in half. This is why standing on the edge of a coin – seeing both sides rather than taking sides – increases your intelligence.”

“Whatever humans have learned had to be learned as a consequence only of trial and error experience. Humans have learned only through mistakes.”

Buckminster Fuller

Real teachers teach from the top, they teach from experience.

If a person practiced four hours a day, it would take nearly seven years of practice to become world class.

Real teachers practice what the teach. Fake teachers do not.

“Mistakes are not failure. Each failure – although painful – is a lesson in humility, for only through genuine humility, does a person learn.”

“One notable entrepreneurial business is Khan Academy, a company that makes academic education available to millions of students throughout the world. Students do not need to take out student loans to learn from Khan Academy.”

“In 1974, I made a vow I would retire young. Not because I wanted to retire, but because I wanted to challenge myself to retire young. If I failed to retire young, I still had years to keep working on my goal of retiring young. I did not want to be 65 years old and find out that my retirement had been wiped out in a market crash or that I did not have enough money to carry me through retirement.

As I’ve stated in previous chapters, I have failed many times in my life. It took me till age 47 to find my personal formula and be able to reture without and job or pension. My purpose for being willing to fail and learn was that failing and learning from my mistakes was how I’d learn to be an entrepreneur and, eventually, a person who would never need a job, a steady paycheck, or a pension.

It took me 20 years to retire. If I had stayed in the Marine Corps, “doing my 20″ as my poor dad wanted me to, I would not have been smarter or richer after 20 years in the military.”

On Living a Good Life

“You do not have personal freedom until you have financial freedom.”

Robert Kiyosaki

“The prosperity of the past has made people soft, weak and lazy. Every child gets a trophy and everyone is entitled. Unfortunately we can no longer rely on the prosperity of the past for our prosperity of the future.”

On What Keeps Us Poor

“People in the E (Employee) and S (Small Business Owner or Specialist) use debt to become poorer.”

“The words ‘I can’t afford it, keep people poor and keep thinking small. Think rather, “How can I afford it?” You are then engaging your brain to think ideas, solutions, and opportunities.”

Robert Kiyosaki

“My banker always said: “Your house is an asset.” But whose asset is it…really?”

“Our education system…is a system without a soul. Everyone uses money. Every day. Why not teach money in school?”

On Building a Business

“On that day, I had three employees who needed job security, a steady paycheck, medical and dental benefits, paid vacations, and a pension plan. They earned more than I did.”

“It took Kim and me 10 years to achieve financial freedom. In 1994, Kim and I retired, financially free. Kim was 37, and I was 47.”

Robert Kiyosaki

“Success is not just about how creative or smart or driven you are, but how well you are able to connect with, contribute to, and benefit from the ecosystem of people around you.”

The Rich Dad company is in the business of Real Estate. If the Rich Dad company earns $1 million, they borrow $4 million. They step up their passive income and are now able to deprecate $5 million in passive losses.

Further Resources

Books

Podcasts

YouTube


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