Manage episode 297842444 series 1537109
My special guest for today’s show is Robert Kiyosaki of Rich Dad Poor Dad fame.
I spoke with Robert on my podcast last year at the beginning of Covid when he warned Australians about the challenges for our economy ahead and the opportunities that he felt would come at the other side of the downturn.
Now I didn’t agree with everything he said, but I respect that he has taught not only me, but millions and millions of people about the basics of financial literacy, so I was keen to hear his opinions.
Fortunately, Robert’s dire predictions didn’t come to pass, so I was pleased when he reached out to me again recently to be on my podcast so I could ask him what the biggest surprise was for him over the last 12 months.
You’ll hear how Robert’s teachings challenge conventional thinking about money and he suggests that you should be doing what the 99% are not doing.
You’ll hear Robert speak positively about Australia’s opportunities, but you may be shocked by some of his predictions of what will happen before these opportunities arise.
As I said, I don’t agree with all of Robert’s thoughts, his ideas about real estate, and his forecasts for what’s ahead for the economy, but rather than debating him, I gave him the airtime he deserved, and then after our chat, I’ll share my views.
So don’t panic if you hear some of Robert’s extreme thoughts, but please listen to the whole show including my thoughts, and then you’ll have both sides of the discussion argument to make your decisions on.
My Chat with Robert Kiyosaki
For many years Robert Kiyosaki has been one of the most respected voices in the world on growing wealth.
He is best known as the author of Rich Dad Poor Dad which is the #1 personal finance book of all time and Robert has challenged the way tens of millions of people around the world think about money.
Some of the topics Robert and I discuss:
- Robert’s background and credentials
- What surprised Robert over the past 12 months
- He believes the United States is desperate and dumping money straight into the economy, rather than through the banking system
- Why real estate is Robert’s preferred investment vehicle
- He likes being able to use debt to buy real estate and lower tax obligations
- He believes that his concepts are applicable to Australia as well as the US because he’s made money in Australia using his concepts
- Robert’s investment philosophy hinges on self-education rather than trusting the government
- Robert’s explanation of his Cash Flow Quadrant
- The Quadrant uses the letters are “E”, “S”, “B” and “I”. “E” stands for Employee. “S” stands for Self- employed or Small business. “B” stands for Big Business and “I” stands for Investors.
- Why Robert believes that the world’s biggest financial crash is on the horizon
- He believes that we’re in a bubble because the US has been printing money instead of fixing mistakes
- He does not believe the bubble is likely to deflate slowly
- Robert believes that it’s difficult to know what will cause the bubble to burst, but that it will probably be something small added on to a pile-up of things
- He believes that Australians should not be complacent about their susceptibility to a bubble
- Robert also believes that a home is not an asset
- This is because he believes that assets bring in cash, while liabilities cost money, and a home costs money
- Robert will be doing a live event with Harry Dent while he will explain more about what he believes will happen and what opportunities will arise from it.
My response to Robert’s thoughts
In the show I give you an alternative view on 2 of Roberts assertions:
- What’s in store for our economy and
- His concept of what makes a good property investment.
Robert clearly knows a lot about United States Real Estate – where the rules are very different, the tax regime is very different, the markets are very different and the way to invest is very different to Australia.
In fact, if I think about it the way I would invest in real estate in New Zealand is very different from how I would invest in Australia even though our countries and economies are more similar than Australia and the USA.
Our property markets are underpinned by the fact the 10.6 million properties around Australia are in general owned by homeowners – in fact, 70% are owned by homeowners and half of these homeowners don’t have a mortgage against that property.
And for the other half that do you have a mortgage, many of them are ahead in their payments while others are using the mortgage to support the purchases of investment properties.
There is not a real property debt problem in Australia.
How I see it is that the way you get income from your investment properties is in 4 ways.
- Capital Growth
- Rental returns
- tax benefits
- Accelerated/ manufactured growth.
Unfortunately, too many people look for cash flow from their residential real estate investments in Australia and that’s just not how it works.
When I spoke with Robert last year, he was concerned that Australia would fall into recession as with most countries around the world. And that prediction came true, but the recessions weren’t as deep voice disastrous as he expected because our governments have learned they can buy their way out of a recession by spending money.
Australians perform better than most advanced economies and of course, we are still susceptible to coronavirus-induced problems and I won’t even discuss the potential geopolitical problems with China, but I see a number of reasons to be optimistic about the future.
- Global economic growth is recovering rapidly
- Australian consumers are going to keep spending.
- Fiscal stimulus will continue
- Monetary policy remains ultra-easy
- New migrants will flood into Australia when the borders open
Your home as a stepping-stone
In this new age of property investment, when interest rates are accommodatingly low and mortgages so cheap, present-day homeowners are actually sitting on a potential goldmine.
Far from being a drain on the household coffers, many of us are taking the opportunity to reduce our mortgages faster, contributing extra to our continually shrinking monthly repayments.
In turn, some property owners are building up equity at a considerable rate, with the help of the long-term appreciation of well-located property.
Take select pockets of the Melbourne, Sydney, and Brisbane property markets for instance, where homeowners have enjoyed significant growth on their principal place of residence over the last few years without lifting a finger.
Some of them are leveraging the hundreds of thousands of dollars worth of equity they’re literally sitting on (or in) to invest in further high growth assets, while others are cashing in on a rapidly moving rental market and erecting granny flats in the backyard to create quick (and lucrative) accommodation.
Now more than ever, your home can and should be an integral part of your investment game plan.
Robert Kiyosaki’s Australian Virtual Event – www.robertandharry.com
Shownotes plus more here: An eye-opening interview with Robert Kiyosaki – the economic shock ahead in 2021
Some of our favourite quotes from the show:
“I think it’s important to not go forward with blinkers on, to listen to people with various opinions, especially from people who’ve got a track record.” – Michael Yardney
“Our property markets are underpinned by the fact the 10.6 million properties around Australia are in general owned by homeowners.” – Michael Yardney
“First of all, it’s not just Australia – global economic growth is recovering rapidly.” – Michael Yardney
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