Robert Kiyosaki: 3 Best Investing Tips for Beginners
Robert Kiyosaki is the popular founder of the “Rich Dad, Poor Dad” series of books. He also runs a YouTube channel, the Rich Dad Channel, with over 3.3 million subscribers. While Kiyosaki has stirred up a little controversy in the investment world, his most basic financial tips offer solid advice, particularly for beginning investors.
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Here’s some of the best advice that Kiyosaki offers, along with a look at how you can implement it into your financial life.
Educate Yourself Financially
One of Kiyosaki’s most important pieces of advice is that you have to educate yourself financially, especially as a beginning investor. Kiyosaki says that schools don’t teach financial education, so you need to take it on yourself. This is particularly true if you plan to use debt to generate wealth, as Kiyosaki says that he and other wealthy investors do. If you don’t understand how to use debt, it will consume you and keep you poor. Education also allows you to truly understand what you’re investing in. Otherwise, Kiyosaki says anything you invest in will simply be a speculation.
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Invest for Cash Flow
Kiyosaki’s favored way to invest is for cash flow. There are many ways to do this. One of the most obvious is to invest in rental real estate. If you buy the right property at the right price, you can earn enough rental income to not only cover your costs but also provide you with positive cash flow. From there, over time, you can use that excess cash flow to buy additional assets that boost your income even more.
Another way to invest for cash flow is through building your own business. One of Kiyosaki’s principles is that you should never work a job to make others rich, you should only work to make yourself rich. So if you are an hourly worker trading your time for money, you’re not likely to get rich, in Kiyosaki’s view. But if you run your own business, others will work to generate profits for you.
A final way to invest for cash flow is through stock dividends. While investing in stocks can have some risk on the capital gains side, Kiyosaki says dividends actually put money in your pocket every quarter. Over time, those dividends also tend to rise, if you pick quality companies. As you become a bit more advanced with your financial education, Kiyosaki suggests considering a covered call options strategy.
This is a way to generate regular income using your stock portfolio as collateral. If the stock stays the same price or falls in value, you get to keep both the stock and the income you generate from the call option. If the stock rises in value, you’ll still get the price determined by the option, which should generally be higher than the price you paid for it. While this is a more advanced strategy with lots of moving parts, it’s a way to generate even higher income from a stock portfolio.
Start Today
Perhaps Kiyosaki’s best piece of advice is that you should start today when it comes to your financial future. In this, Kiyosaki echoes the ideas of many other financial commentators and advisors, even though his take is a bit different. Kiyosaki believes that you should educate yourself about finance, gain experience about how businesses work and fail, and then pour all of your excess cash and effort into a business or other asset that can keep growing until it generates enough cash flow to support your whole life, including retirement.
While other advisors might suggest instead that you start investing in the stock market and/or your 401(k) as early as possible, the general principle remains the same: the earlier you can start learning about and actually dipping your toe into the investment world, the more likely you are to have long-term success.
Caveats About Kiyosaki’s Advice
In the decades since Kiyosaki’s first “Rich Dad, Poor Dad” book was published, some of his critics say that his job is now to sell books and promote his empire, rather than dispensing sound financial advice. It’s also notable that Kiyosaki currently admits to being $1.2 billion in debt and filed for bankruptcy back in 2012. But while not all of Kiyosaki’s advice and strategies may be suitable for all investors, the basic concepts he outlines above are sound ones that have been endorsed by numerous successful investors as well.
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This article originally appeared on GOBankingRates.com: Robert Kiyosaki: 3 Best Investing Tips for Beginners
