What Are You Investing For? Cash Flow or Capital Gains? – Robert Kiyosaki

(energetic rock music)
– But this is investing 101, I mean,
there’s fundamental and
technical, you know?
Cashflow 101 is fundamental,
Cashflow 202 is technical investing, okay?
So, there’s two basic investments.
One is cashflow.
And as Kenny already said,
this is the hardest.
It is the hardest to find
because cashflow then
affects return on investment.
So if I put in $10 and
I get one dollar back,
that’s a 10% ROI, okay?
I mean, it’s just simple.
I mean, I was taught this
as a kid playing Monopoly.
You know, you got one house, you get $18,
you get two houses, you got $36,
I mean it’s not,
you don’t have to go to college.
It is not that hard.
Monopoly is a cashflow game, right?
And that’s it.
– Yeah, and the problem is,
is that the people that you’re
seeing in the paper today,
their philosophy is not
based on this, period.
– No.
– It isn’t.
– But they don’t, I mean,
this is as simple as it gets.
Technical, fundamental,
cashflow versus capital gains.
I mean, you know,
if you play Monopoly,
you’ll understand this game.
This is all there is,
so when you look at cashflow 101,
this is called fundamental,
and this is called technical.
And the reason it’s technical
’cause it’s all emotion.
It’s up or down, up or down, up or down,
as Kenny says, what’s your net worth?
What’s your equity?
It depends upon the emotions of that time.
So, I mean, these morons
haven’t got their lesson yet,
they’re going in to buy a foreclosure
that was here to go on the same
thing, I got one more time.
– Well yeah, and here’s the ironic thing
is that all these people
that’re losing everything,
they’re gonna blame it on
the real estate market.
– [Robert] Yep.
– They’re not gonna take
ownership of the issue.
They are gonna blame it on the market.
And at this time, I’m
making so much more money
than I was two years ago.
– Lemme ask you this,
you just built your house, right?
– [Kenny] Yeah.
– ‘Kay, and Kenny has owned multi,
multi, multimillion dollar properties,
but only after he was a rich
man did he build a house.
And what poor people do
is they buy the big house
on emotion, technical,
and then they never buy on cashflow.
That is a, you know,
oh, I have the house of my dreams!
What a frickin’ loser, are you!
How stupid can you be?
Kim and I live in a tiny little
house on 16th Street here.
We paid $117,000 for it,
monthly payments were $300 a month,
including homeowners’ association,
who were rippin’ us off.
(audience laughing)
Oh no, they were the, homeowners
are the biggest crooks
I’ve ever met in my life.
Homeowner means crooks.
That’s what it means,
they’re the biggest crooks
I’ve ever met in my whole life.
Nice, honest people, you know?
Like, frick it!
As they come, they are ripping you,
stealing from you, and all this stuff.
But we sat there and we bought cashflow
and our little house just sat there
and it sat there and it sat there,
one of those dinky little house.
One day, we popped up and
we had a lot of money.
Then we bought a big house.
The same as Kenny.
If you can understand
what we’re saying to you,
it’s just fundamental of rich people.
And poor people want the big house,
the BMW, the nice cars and all this stuff,
but they don’t have the
cashflow to support this.
Do I make sense to you guys here?
That’s the difference.
– One other thing I wanted to add is
I happened to be in Calgary two weeks ago.
And Calgary just as a city
appreciated 50% last year,
so when the–
– Wait,
why is Calgary appreciating right now?
– Anybody?
– Oil.
– Oil.
– Why do we just buy in Oklahoma?
– Yeah, oil.
– Oil.
I mean, wherever there’s
jobs, you buy real estate.
Why am I not buying in Michigan?
General Motors.
(audience laughing)
No oil!
– Yeah, in Japan.
– Yeah, Japan.
– But, what’s interesting is,
is that whenever I do a talk,
I always like to start
out and ask, you know,
how many flippers are in a room
and there’s probably 200.
And I said, okay, I go–
You know, I said, how
many people are flippers?
And 200 people raised
their hand and I said,
how many people wish they
wouldn’t have flipped a year ago?
200 people raised their hand.
So, the point is,
it doesn’t matter if the market’s going up
or the market’s going down.
It’s a bad strategy because they,
those people, those 200 people,
would have had another 50% in
value based on appreciation
If they would’ve not flipped.
So, it doesn’t matter
if the market’s going up
or the market’s going down.
You might be able to time a
quick buck here and there,
no question, but the truth is,
people that flipped in Phoenix
in ’03 lost 70, 80% in value.
If they still would’ve owned the home,
they would’ve owned it for a lot less
and it would be cashflow now,
’cause now what’s happening
is rents are screamin’.
Rents are going up dramatically.
– And populations, you know,
Phoenix is still the number
one or number two growth,
Arizona’s number one or two
growth state in the nation.
As the Baby Boomers retire
and the hurricanes hit Florida,
more come here, you know?
And it’s just fundamentals.
This is called demographics,
and that’s why I show you this here.
A nation of 300 million in 10,
15 years will be 350 million.
They gotta live somewhere.
And the dollar’s gonna keep dropping,
the price of oil will keep going up,
gold will keep going up,
silver will keep going up,
and replacement costs will keep goin’ up.
So these flippers got f’d.
It is really stupid, these guys here,
you know, so for Kim and I,
our strategy wasn’t to own one big house.
Our strategy was to own 20 houses,
then we live in a little house.
And then we went to 500,
then we bought a big house.
That is the difference between
rich people and poor people.
Poor people wanna look rich,
and rich people wanna be rich, right?
– Yeah, I mean, it’s the same thing.
Any money that I had, I put
into real estate investment.
And because that’s what I do,
so I obviously could have
put that into my home or,
you know, or cars and all
those kinds of things.
I could have brought all those things.
In the cashflow game,
those are called doodads.
But I didn’t.
You know, I continued to pour all money,
and we always joke around
’cause we’re literally always broke
because if we have money–
(audience laughing)
– [Robert] What, wait,
I want you to know–
– It’s the truth.
– How true,
Kim and I right now are cash strapped.
We have no cash.
I mean, we are so tapped out,
the reason is is because we’re
investing like wild people.
Do you know what I mean?
I don’t have savings, I don’t have jack.
We have a lot of assets,
a lot of cashflow,
but that money just keeps going back out.
It doesn’t stay with us.
Your first investment, was
it cashflow or capital gains?
Here, you’re fine.
– Okay, my first investment was cashflow.
– Why?
– Because I wanted that money coming in,
my biggest concern is I
was gonna put money out
and not have anything coming back in.
– And how much was your first cashflow?
– $25 a month.
(audience awws)
But it was a start!
But it was a start, and I learned so much
on that one property, but it did cashflow.
– And how much cashflow
do you have a month now?
– Oh, about $120,000 a month.
(audience applauding)
– That’s not Donald
Trump’s money, you know,
that’s not Warren Buffett’s
money and all this,
but $120,000 a month is more
than most people make a year.
And she doesn’t have to work for it,
and that’s not all the
rest of her investments.
That’s not from her oil, gas,
and businesses and stuff like this.
– Well, but that’s what we talk about,
I mean, that’s freedom, is you know,
and when you don’t have to work anymore
because you got that money
comin’ in every month.
We talk about when we
first retired was ’94,
we only had $10,000 a month
coming in every month.
That was it.
But we only had $3,000 a month goin’ out.
So we were free, so it’s
not that dollar amount,
it’s can you cover your
expenses and be free,
because after that, then we were able
to get on with what it is
we really wanted to do.
– Right.
– When most people are still busy
working for that paycheck and, you know,
just surviving everyday as we were,
that they don’t have time
to really think about
what is it I really wanna do?
(inspirational piano music)


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