When I interviewed real estate investors and asked them about their origin story, a shocking percentage of them answered, “I became interested in real estate after reading the ‘little purple bible’ Rich Dad, Poor Dad.”
Robert Kiyosaki has always loved real assets and distrusted fiat currency. He famously endorses leverage as well: the use of other people’s money or time to build your wealth.
But for people unfamiliar with them, the notion of “real assets” raises plenty of questions.
What Does Kiyosaki Mean by Real Assets?
While the Rich Dad author doesn’t hate stocks, he has always cautioned against putting too much of your net worth in the stock market. He remains wary of stocks’ volatility, the lack of investor control, and the modest cash flow, even among stocks with decent dividend yields.
Instead, he prefers what he calls real assets, which are largely tangible and protect against inflation. Kiyosaki starts with a simple definition, “Real assets put money into your pocket every month; they feed you. Fake assets need you to feed them.”
Consider a few of Kiyosaki’s favorite real assets.
Real Estate
Surprising no one, Robert Kiyosaki starts with real estate when he explains real assets.
You can measure an income property’s revenue and collect cash flow from it every month. It appreciates in value over time. Owners enjoy significant tax benefits, including depreciation. Properties protect investors from inflation, as owners can simply raise rents to reflect the current value of the currency.
And he loves that you can leverage other people’s money to buy properties and other people’s time to manage them for you. Mortgage debt remains locked in yesterday’s dollars, so inflation actually works to your advantage as a property owner.
Precious Metals
Inflation remains a core concern for Kiyosaki. He distrusts governments not to fuel inflation to diminish the value of their debts.
To help protect against both inflation and unforeseen crises and market shocks, he also likes precious metals like gold and silver. I’ve heard him repeatedly express his love of silver, given its lower price point, thinning natural reserves, and industrial usefulness.
Governments can manipulate the value of their currencies, but the market determines the value of precious metals.
Tangible Businesses
Robert Kiyosaki has always championed an entrepreneurial spirit. He has not only launched plenty of businesses himself but invested in countless others.
In particular, he likes tangible businesses like wagyu cattle. You can touch the assets (the ranch land, the cattle themselves). You can calculate their intrinsic value.
Check out his interview with Michelle Makori at Kitco News for a deeper dive into his love for wagyu cattle and tangible businesses more broadly.
Cryptocurrencies
As an inflation hawk, it is no surprise that Kiyosaki trusts cryptocurrencies over fiat currencies. It has become a cornerstone of his Rich Dad empire, selling memberships and teaching about crypto investing.
Inflation carries a real risk to investors, but cryptocurrencies carry plenty of their own risk. And at times, they’ve lost value far faster than the US dollar ever has.
Decentralized finance or DeFi may rise in popularity and practicality in the coming years. Kiyosaki believes in diversification, as do most investing experts, but be careful not to put too much of your portfolio in speculative assets.
Final Thoughts
A core principle of Rich Dad, Poor Dad is that the rich put their money to work for them, while the poor and middle classes work for money.
The corollary lesson: the rich invest in assets that generate cash flow and added value each month, rather than buying liabilities that cost you money each month. As you explore adding more real assets to your portfolio, keep an eye on its ability to generate real cash flow.
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