Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

fortune.com

Post reply on HN
Print view View original

51–60 of 92 posts

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#51

Post by treffer »

I think he is right. This is basically modern portfolio theory. You should hold an optimal mix of assets, but you can hold negative quantities.

If money is a bad way of keeping value (bad banks! Inflation! Money printing!....) then holding a negative amount (debt) and putting it into other parts of your portfolio is a good idea.

A really a basic idea, with a solid mathematical foundation. I can highly recommend the first week of financial markets on coursera if you want to see a not so controversial introduction to this concept.

The only problem is that it adds risk (swings could become larger than your net worth, which can mean bankruptcy)

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#53

Post by throw0101d »

ixaxaar wrote: post #24

How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities.

> How is this guy wrong in hedging against the declining dollar and rising price of commodities?

This guy has a track record for being wrong:

* https://awealthofcommonsense.com/2023/12/rich-author-poor-re...

No normal person should be doing any kind of hedging. If you want to save 'successfully' (e.g., for retirement) follow Buffett's advice and just buy index funds on a monthly basis (DCA) with a company match (in a 401(k) for US readers).

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#54

Post by HenryBemis »

dvh wrote: post #36
rmbyrro wrote: post #20

Earlier quoted context omitted.

His debt doesn't fund consumption, it funds real estate, which he rents or sells for a profit. He's not advocating to go into debt for a lush Bahamas vacation. The value of long-term debt to fund real assets is that inflation corrodes the debt value, while boosting the asset value. Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower…

Stupid me. I was using money to buy food the whole time.

Good sarcasm :)

I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around.

I follow a mix of "7 accounts.." (https://www.youtube.com/watch?v=auzLhKvsxnQ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save more than I should (I 'live less').

This is a principle you can do irrespective of the amount (as long as it's over €$1000). I don't mind changing phones every 3 years, and put those $200 to work for me instead of the other way round.

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#55

Post by HenryBemis »

is_true wrote: post #48
mrkeen wrote: post #8

Earlier quoted context omitted.

I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?

I used to think like you, but then I learned about market makers. If you would need to sell something in a time there aren't many buyers and you needed the money, that kind of people can help you liquidate your asset. A lot of the times this happens because people make bad investments, but I'm not sure it's his fault.

Dave Ramsey keeps saying that he never buys on 'fair price'. He always buys low/cheap.

Being super patient is also a key attribute for financial success.

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#57

Post by mrkeen »

itsoktocry wrote: post #45
mrkeen wrote: post #8

Earlier quoted context omitted.

I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?

> and uses other people's money to do so? Other people who entrust him with their money, and expect a return. It's not like he's stealing it, and I'd argue he's the one doing the most work in that transaction.

He sounds like you should not entrust money to him:

> “If I go bust, the bank goes bust,” he added. “Not my problem.”

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#58

Post by Novosell »

HenryBemis wrote: post #54
dvh wrote: post #36

Earlier quoted context omitted.

Stupid me. I was using money to buy food the whole time.

Good sarcasm :) I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around. I follow a mix of "7 accounts.." ( https://www.youtube.com/watch?v=auzLhKvsxnQ ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save…

You say every 3 years like that's a long time. Is this more sarcasm?

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#59

Post by FooBarBizBazz »

zpeti wrote: post #6

I thought this was actually going to be an interesting article, about how he over leveraged himself and is now bankrupt, but no. It's a high profile person who is using debt to build a business. This is basically every business person in the USA, except Kiyosaki hit some magic number at $1bn. This is completely meaningless without knowing what his assets are worth. Probably more than $1bn. Yet again, it's proved to m…

Exactly. You can't just add up the "debts" or "liabilities" side of the ledger and say, "guy is $1B in debt". You also have to include the assets side of the ledger. If his debts are balanced by assets, then he isn't (net) in debt at all; he's levered.

Granted, leverage can be dangerous -- if the assets evaporate, then you can be in trouble.

But I wonder even about that in this case. Does he personally have $1B in loans? Or does he control companies with $1B in debts? If the latter, then if push comes to shove, those companies can go bankrupt, and he's probably still fine, I imagine.

(Hm. I guess a highly levered company has a very "convex" return profile, like a call option.)

So I agree. If somebody is going to do a story on how Robert Kiyosaki uses debt, they should do this accounting and figure out how much he is personally liable for. And how the assets balance the liabilities.

Not that I'm particularly a fan of the guy, to want to defend him. I've listened to him speak and he says nothing.

As for his assets -- he's talking about physical silver and oil wells? This sounds like cranky goldbug stuff. But what do I know.

Re: 'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

#60

Post by jacknews »

Does he actually produce anything of value, or just arbitrage various financial trends, eg cheap debt paired with steep asset price rises, especially property?

To me, how you get it, and how you spend it, are essential in judging the worth of wealth.

eg, how does he spend what he 'earns'?

Post reply on HN