Write on investing

Friday 1st June 2001

Robert Kiyosaki is a money publishing machine. His first book, Rich Dad, Poor Dad, sold more than 130,000 copies in New Zealand. In town to promote his latest iteration on the theme, Rich Kid, Smart Kid, he caught up with Zoë Baird.

Unlimited: We try like hell to generate interest in investing. Your books fly off the shelves. What's the secret?

Kiyosaki: A lot of people talk about the plight of the poor when it comes to money, and there's a lot of advice about money for the middle class - work hard and save money and that stuff. But that's not what the rich do. The rich do almost everything the opposite of what the middle class does. So I took what the rich do and made it simple enough for the average person to understand.

The gap now is between the rich and the middle class, and people are more aware of that gap. I think it's particularly true of those aged 30 and under. They're looking for new answers. I'm not trying to tell them "here's my get rich quick formula", because I don't have one.

Unlimited: Do investment brokers have a vested interest in not getting your message out there?

Kiyosaki: That's a tough question! In America I think they're giving a lot of bad advice. But they have to give out that advice. If a person doesn't have much sophistication, you can't give them too sophisticated a strategy. Buy and hold, invest for the long term, buy the dips, dollar-cost average, diversify your account - very bad strategies from my perspective as a professional investor. But for the average investor it's good advice. It's all relative.

The sophisticated investor knows that markets run in three different directions. So a sophisticated investor has three different strategies, depending upon the market trends. The average investor only has one strategy. The average investor has a bull market strategy. So when the market trend reverses and starts going down, "buy and hold" turns to "buy and lose". Now that the market's down 50%, the average guy is hoping it goes back up. But it probably won't go up for seven to 10 years. They're not going to get their money back. And most people will just sit there because they don't want to admit they made a mistake.

Unlimited: Why would a businessperson read your books?

Kiyosaki: How long does it take to save a million dollars? It takes most people a lifetime. How long does it take to borrow a million dollars? About 20 minutes. If you know what good debt and bad debt is, you can use that debt to make you rich.

Unlimited: Borrowing sounds, I dunno, kind of naughty.

Kiyosaki: It depends upon your sophistication. Let me ask you this question: Which requires more skill - borrowing or saving?

Unlimited: Borrowing, I guess.

Kiyosaki: Yeah. So that's why if you're going to borrow, you've got to have some very good skills. Saving money doesn't take much skill. The basic financial skill is to build and read a financial statement. Your financials are like a report card. They give you feedback as to the relativity of your financial IQ. If you're an idiot, the bank's not going to give you any money. But if you're smart, the banker wants to lend you as much as possible.

Unlimited: Can we learn this stuff?

Kiyosaki: I had to learn it. They say nine out of 10 businesses will fail. I failed twice in business. It was a good experience. It built character. But I don't recommend it!

Unlimited: Why don't we teach people about money in schools?

Kiyosaki: Your education system's the same as ours. A bureaucrat determines what's important. New Zealand has home schooling coming on pretty strong, right? The people are revolting against the bureaucracy.

Zoe Baird
zoe.baird@unlimited.net.nz

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