Robert Kiyosaki Reveals the Costly Mistakes That Changed How He Invests

Vancouver: The Startup Hub for Resources [00:00:47]

• Vancouver is identified as a key location for resource startups, particularly in mining, analogous to Silicon Valley for tech.
• The speaker shares personal experience of taking his first company public through Vancouver, highlighting it as a place for entrepreneurs.

  "So if you're a startup guy, that's why I love Vancouver because I was out there. I had no idea what I was doing. I took my first company public."

The Appeal of Junior Mining Companies [00:01:24]

• The Vancouver Resource Investment Conference (VRIC) is favored for its focus on junior mining companies, which are essentially startups.
• These companies are often exploring for resources in remote locations, representing high-risk, high-reward opportunities.

  "Most of those, most of the mines, most of the people there talking to your juniors. I mean, they're just startups, they're young guys."

Commodities as Precursors to Technology [00:02:36]

• The commodity sector is seen as foundational to technology development, as raw materials are needed to build tech products.
• In an era of de-globalization, the value of commodities is expected to rise due to increased scarcity.

  "So I'm, I invest in tech as well. Startups specifically, I like investing in entrepreneurs, as you mentioned, and, you know, prior to tech development, you need the raw materials that build out tech products."

The High-Risk Nature of Early-Stage Investing [00:03:13]

• Investing in early-stage companies, especially in the commodity sector, is extremely risky and not recommended for beginner investors.
• The focus is on giving early-stage companies a platform to promote themselves to investors and for investors to get in on the ground floor.

  "Now, as you mentioned, it's a super high risk market. It's absolutely not somewhere that I recommend beginner investors go ever because stock picking on itself is risky."

Learning from Experience and Mentorship [00:04:32]

• The speaker emphasizes the value of learning from experienced money managers and entrepreneurs who have a track record of success.
• Personal success, including becoming a multimillionaire, is attributed to the knowledge gained from time spent in Vancouver learning about startup mining.

  "I'll let you know that because I spent so much time in Vancouver, Canada, I'm a multi, multi-millionaire today. That's what I learned there."

The 'Rich Dad' Philosophy: Income Statement vs. Cash Flow [00:07:11]

• The core 'Rich Dad' teaching contrasts the 'poor dad' approach (money comes in, money goes out) with the 'rich dad' approach (assets put money into your pocket).
• The middle class is described as increasingly poorer, often mistaking liabilities for assets, leading to cash outflow.

  "This here is my poor dad. Money comes in and money goes out and that's why people are poor. So you can have a PhD, but the money comes in and money goes out. You'll never be rich."

The Cashflow Quadrant and Tax Implications [00:08:30]

• The 'Cashflow Quadrant' (E, S, B, I) is introduced, with a focus on the tax disadvantages for employees (E) and self-employed individuals (S).
• Accountants, doctors, and attorneys (often 'A' students) are highlighted as paying high taxes, while entrepreneurs (B) and investors (I) have more favorable tax treatment.

  "He did. He said, you're all going to be in, if you don't get out of the E and the S side of the quadrant, you're going to be paying the most taxes and a lot, because he is the A student."

The Power of Team and Mentorship [00:09:59]

• Surrounding oneself with the right team members and mentors is crucial for success.
• The importance of having mentors for various aspects of business and investment is stressed, as is the need for increasingly smarter people as ventures grow.

  "You know, we talk a lot about who you surround yourself with and you got to surround yourself with people that are going to be great team members for whatever it is you want to do."

Good Debt vs. Bad Debt and Starting Small [00:11:44]

• The concept of 'good debt' is introduced, contrasting with the common fear of debt, particularly for beginners.
• Starting small with real estate investments, even using credit cards, is encouraged as a way to learn and gain experience without catastrophic losses.

  "So Dave Ramsey, eat your heart out. You know, Dave always says live debt free. I mean, Kim and I are up to our eyeballs in debt, because that's what Tom Wheelwright teaches debt and taxes make the rich richer."

Learning from Mistakes: The China Gold Mine Fiasco [00:14:19]

• A significant mistake involved a billion-dollar loss from a gold mine venture in China, where the government seized the assets after gold was struck.
• This failure, however, led to the discovery of a much richer gold mine in Utah, illustrating how mistakes can lead to unexpected opportunities.

  "But our mistake was a billion dollar mistake because we started a gold mine in China. And we raised 27 million on the Toronto Stock Exchange. And as soon as we struck gold, the Chinese government said, thank you."

The BI Triangle: Team, Mission, Leadership, and Systems [00:17:43]

• The 'BI Triangle' (Business I) model is presented, emphasizing the importance of Team, Mission, Leadership, Product, Systems, Sales & Marketing, and Cash Flow.
• The outer triangle (Team, Mission, Leadership) is considered more critical for assessing potential partners or employees than their internal skills.

  "When I'm analyzing a business, I'm looking at the team, the mission, the leadership, the product, this systems, how good are the communications, and how strong is our cash flow."

Financial Education as a Daily Practice [00:19:00]

• Financial education and personal development are likened to breakfast – a daily necessity, not a one-time event.
• The Rich Dad World teachings are presented as a continuous practice, encouraging listeners to return for ongoing learning.

  "Personal development teaching, there's not one solution that we teach, then people understand it, it's a practice."

The Devaluation of Fiat Currency and Rise of Real Assets [00:19:50]

• The dollar's detachment from gold in 1971 is discussed, with 'fake money' (fiat currency) being contrasted with 'real money' (gold and silver).
• Savers of fiat currency are positioned as losers, while holders of real assets are seen as protected during economic downturns.

  "Since 1971, the dollar has not been backed by gold. Robert calls it fake money. And savers of fake money are losers."

Outsourcing Thinking and Financial Advisors [00:21:13]

• Many people outsource their financial thinking to experts and advisors, rather than building their own education.
• Financial advisors may provide intellectually dishonest advice, such as 'time in the market' over 'timing the market,' and are often salespeople for specific products.

  "Today, everybody trusts the experts, right? Rather than rely on information that they could build themselves."

The Sinister Nature of Financial Repression [00:23:18]

• A sovereign debt crisis is underway, leading governments to resort to financial repression.
• This involves keeping bond yields lower than inflation, printing money, and directing pensions and retirement accounts into desired assets, effectively stealing wealth from savers.

  "The IMF put out a paper in 2015 explaining how financial repression works. And what they do is to Robert's point, they take over the pensions, they take over all these retirement accounts, and they put them into the assets they want them to be in."

The Stock Market vs. Real Assets and AI [00:25:56]

• The stock market is described as a 'financial casino' where individuals trade against artificial intelligence and algorithms, having no prayer of winning.
• Real assets, like businesses and real estate that put money in your pocket, are presented as the alternative to playing in the stock market.

  "But you're trading against an algorithm, artificial intelligence. You don't have a prayer against those guys."

Historical Precedents: Gold Seizure and Devaluation [00:27:25]

• Executive Order 6102 in 1933, which seized private gold holdings, is cited as an example of government action against real assets.
• The government seized gold and then revalued it at a higher price, instantly devaluing the paper claims given to citizens.

  "When the government took all the gold and seized it and made it illegal to own it, they said, don't worry, don't worry, though, we're going to give you your 20 bucks per ounce."

The Importance of Not Being a Forced Seller [00:29:55]

• A key lesson learned from the 2008 crisis is the danger of becoming a forced seller due to an inability to carry properties.
• Making money when buying and ensuring assets generate cash flow are crucial for holding assets long-term and avoiding market whims.

  "And so one of the big lessons that I've learned, and I always try to relate to other people, is never become a forced seller."

Strategy Over Timing and Building Education [00:31:38]

• There is no such thing as good or bad timing, only good or bad strategies.
• Building personal education through experience, starting small, and taking control of one's investments is more valuable than outsourcing to advisors or gurus.

  "And if you just give your money to your financial advisor, and let them do whatever they want, you're not learning anything."