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Rich Dad Education Scam #6: You Can Become a Successful Investor by Pursuing a “Do-It-Yourself” Path

Rich Dad Education Scam Do-it-Yourself Investing

Rich Dad Education Scam #6:

You Can Become a Successful Investor by Pursuing a “Do-It-Yourself” Path

In the 80s and 90s, many of the VCRs manufactured had a clock feature that could be set by the owner. However, it was extremely common to walk into someone’s home and find the default time at “12:00” blinking over and over again. The clock could be set by using a combination of buttons provided on the VCR in a specific sequence, and there were instructions in the VCR manual that described the process. Most VCR users found the process complicated and hence the time remained blinking 12:00 in millions of homes.

A tech savvy generation may scoff and poke fun at a previous generation’s attempt to program a VCR, but one must remember the context in which that generation found themselves in. Even simple technology was new to most people and very few people had any experience performing even simple technological tasks. Even with user manuals to help guide them, these individuals found themselves in situations where they had to do-it-themselves if they wanted those blasted numbers to stop blinking.

This generation of VCR users illustrates an important point: learning how to do something for yourself, especially when you have no training or prior experience, can be a very frustrating process. Mistakes are bound to be made, frustration will ensue, and the end result often is that the person gives up on the endeavor.  This is unfortunate as even with a touch of guidance and proper training, the chances of success dramatically increase. It is likely that those who had neighbors who took the time to show them how to program their VCR greatly increased their chances of avoiding the blinking lights.

Do-it-Yourself Investing

One should never underestimate the human will to accomplish goals. Undoubtedly, the rare individual who seeks to learn how to become a successful investor may accomplish this goal on their own.  However, on their eventual path to success many of the pitfalls and roadblocks that they encountered might have been avoided if someone that had traveled the same path passed along their experience and knowledge. The time it took them to reach their level of success might have been dramatically cut with such guidance.

In today’s day and age, individuals who choose to go the do-it-yourself route usually attempt to seek out some level of basic guidance to help them achieve success in their chosen field. This guidance often comes in the form of a book or two, or searching the internet for expertise in the area of their choosing. They may even belittle the idea of formal training due to pride or the stubborn desire to succeed on their own. After gathering knowledge through the written word they roll up their sleeves and go to work as they attempt to put into practice what they have learned.

There is nothing wrong with attempting to gain knowledge through the written word.  Robert Kiyosaki has long been an advocate for individuals to expand their financial knowledge and likely will be writing books until his dying day. Both Robert and Kim Kiyosaki are constantly reading and writing new material as they continue their own education. They read, study, learn and pass along their expanding knowledge to countless followers each year. 

While the written word can be extremely valuable, those that only rely on this singular source for information and guidance are creating self-imposed limitations on their growth. Robert Kiyosaki formed Rich Dad Education because he knows most people need help in putting the lessons they may read in a book into a concrete action plan. Robert himself had help in building his success. Besides his famous “rich dad” and his wife, Kim, Robert has used and continues to seek the advice and training of experts across all fields of investment. If a man like Robert feels he needs to continue to expand his education and training, shouldn’t you?

The Value of Formal Training

Robert formed Rich Dad Education because he knows the importance of helping people create a concrete action plan that will allow them to put their knowledge to work for them. The value of formal training cannot be understated as it can give students a tremendous advantage over those who simply rely on the written word as their guide. The advantages of this training come in many forms:

  1. Turn of the century educationist Edgar Dale developed the Cone of Learning which states that after two weeks we only remember 10 percent of what we read but 90 percent of what we do. Rich Dad Education has long recognized the importance of preparing students to immediately put into practice the knowledge that students gain from Rich Dad Education trainings. Students are not only supplied with the proper knowledge, but also given a practical plan that puts them in a position to succeed upon completion of the training.
  2. Rich Dad Education’s elite trainings and educational offerings are structured in a manner that allow students to learn what they need to know through a step-by-step educational process. Rich Dad Education’s learning techniques allow students to quickly grasp important concepts and then build on each of these concepts in a dynamic learning atmosphere. Students always know what they need to do next.
  3. Rich Dad Education trainings are interactive. While written material is supplied, an enhanced learning atmosphere is created through interactive exercises and real life examples to help illustrate key learning points.
  4. Rich Dad Education instructors pass along insight from their real-world experiences. These world-class instructors have been down the road students are attempting to travel and can help their students avoid many of the pitfalls that they are likely to encounter.

On one hand, we can admire the tenacity of an individual with the do-it-yourself mentality. On the other hand, one should recognize the incredible advantages that a formal training can provide. Not only can the path to success be made clear, but proper training can help increase the chances that an individual stays on that route.

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Rich Dad Education Scam #5: You’re Smart to Leave Investing Decisions to Financial Advisors and Fund Managers

Rich Dad Education Scam Advisors

Rich Dad Education Scam #5:

You’re Smart to Leave Investing Decisions to Financial Advisors and Fund Managers

Lusha was asked to attempt to outperform Russian investment bankers by selecting stocks for her own portfolio. She was given 30 companies to choose from and selected eight of them to invest in. After one year she produced outstanding results and outperformed 94 percent of the country’s investment funds. This is an astonishing result from an amateur investor with no formal training. It becomes even more astonishing once you realize that Lusha is a chimpanzee.

That’s right, a chimpanzee.

One might scoff and tout that American financial advisors are far more knowledgeable than their cold-war counterparts. Unfortunately, a recent study by Cass Business School researchers found that monkey’s selecting stocks at random would have easily outperformed the US stock market over the last 40 years.  Their study based on data from 1968 to 2011 found that the random monkey results weighted by chance delivered vastly superior returns to the market cap approach.  They ran their virtual simulation 10 million times for each of the 43 years which was designed to simulate the stock-picking abilities of a monkey.

Mutual fund managers once again may attempt to find fault with the study, attempting to feverishly justify their existence, yet it is not hard to find even more damning evidence.

  • In 2012, Over 60% of fund managers did NOT outperform the S&P 500 in 2012. That means you could have done better simply putting your money into the S&P – and also saving yourself the hefty fee the fund manager charges you even when they lose you money.
  • According to S&P Indices in 2011, four out of five managers failed to beat the market. Actively managed US stock funds lost an average of 2.6 percent versus the broader market gains of nearly 1.8 percent.
  • Over time they do not do well either. A study that looked at more than 24,000 mutual funds available to US investors for a 10-year period ending on December 31, 2012 found that only 24% of active mutual fund managers outperform the market.

If a monkey was being paid to run an actual mutual fund, people would cry from the rooftops that it was a scam. If thousands of mutual funds were using computers to randomly pick stocks, there would be a congressional hearing. Politicians would be lining up in front of cameras to lament one of the greatest scams ever to befall on the American people. When financial advisors and mutual fund managers collect enormous fees yet constantly fail to beat the market, there are no cries of outrage. There is seldom even a shrug of the shoulders despite the fact that trillions of dollars are invested through these individuals.

Mutual Funds – What They Don’t Want You to Know

Perhaps we are trained in society to seek out specialists. After all, when one is sick there is no question that you should seek out a doctor. If you need legal advice, you call a lawyer and if your basement is flooding, you call a plumber.  It shouldn’t be surprising then that when a person wants to invest their money, they seek out a specialist that can help them.

When a person seeks out a specialist, they assume that the person is working to achieve their goals. For example, when a person goes to a lawyer, they assume that the lawyer will do everything they can do to protect their interest. While one might be wary of being over-billed, they seldom think that the lawyer will do anything less than actively work toward winning their case. Anything less would be seen as a severe act of negligence, a scam of the highest order.

However, with a mutual fund advisor, you cannot ensure that they truly are working for you and striving to meet your goals. Many advisors are not really working for you. They are working for the firms that create the financial instruments they sell. Therefore, they have a vested interest in moving you into investments on which they make the biggest commission – not the investments that may be best for you and your financial goals.

In addition, mutual fund managers rarely go over many of the hidden details of your investment. Mutual fund managers rarely discuss their own personal incentives, and how they are compensated.  Financial planners and mutual fund managers do not point out that you are putting up 100% of the money, taking 100% of the risk, yet after fees and commissions only get 20% of the profit. If someone on the street approached you with such an offer, you would probably think they were pulling a scam.

Post Financial Crisis

Since the financial crisis occurred in 2008, it has become apparent to many that the traditional means of investment is not for them. These individuals have sought to be less reliant on traditional financial services and more reliant on their own ability to make proper financial decisions. Robert Kiysosaki has pointed out that knowledge is the foundation for individuals to achieve this financial self-reliance.

“Money does not make us rich. Knowledge does. This is the power of real-life financial education and why knowledge is an unfair advantage.”

Rich Dad Education has made its mission a bold one. Rich Dad Education strives to increase the financial intelligence of mankind and provide students the knowledge that will enable them to control their financial destiny. For those that work for Rich Dad Education, financial freedom is not an abstract concept, but a goal that each individual can achieve.

One does not need to be reliant on the traditional financial vehicles that society has deemed acceptable to use. Empower yourself by acquiring knowledge of how to guide your destiny. After all, if a monkey can consistently beat financial planners, then you have got to like your chances!

Rich Dad Education Scam #4: Watching Financially Oriented Cable Networks Will Increase Your Financial Knowledge

Rich Dad Education Scam Finance TV

Rich Dad Education Scam #4:

Watching Financially Oriented Cable Networks Will Increase Your Financial Knowledge

Jon Stewart, a noted comedian, devoted an entire segment of his popular program The Daily Show in 2009 to expose just how bad the advice of financial cable networks were in the run up to the crash of 2008. He simply reran footage of these so-called “experts” and what they were telling you weeks and even days before the crash. After showing several notably bad calls made by these experts, Stewart joked that had he only followed their advice he “would have a million dollars today… provided I started with 100 million dollars.”

Financially oriented cable network programs can be extremely entertaining. Seinfeld also was very entertaining. While you would not trust George Costanza to manage your finances, numerous individuals make financial decisions based on the information they hear on these programs. To make matters worse, these individuals will often proudly go to the proverbial water cooler at work and pass off their “financial knowledge” to others based on a 15-20 second sound bite they heard the day before. They think they have become financially savvy because they can regurgitate the opinion of a talking head on TV.

Investors and traders are constantly seeking information that can assist them in their decision-making process. Unfortunately, they seldom take the time to develop their own financial acumen and instead look for easy answers in the form of someone else telling them what they should do. Unwilling to take the time to develop the skills necessary to make their own financial decisions, they put their trust in what they perceive as experts. After all, if a person is on television, they must know what they are talking about, right? These naive investors are similar to gamblers who are taken advantage of by the sports betting pick industry, one of the biggest scams in America.

Gambling and the Selling of Picks

Desperate gamblers often fall prey to the pick-selling scam. So desperate for a winning bet, they fall prey to this scam after hearing that a certain individual is a Vegas Insider who has a mortal lock for an upcoming game. This insider “lock” is guaranteed and will make the gambler a small fortune if they are willing to pay the insider a small fee. The gambler falls victim to this scam due, in no small part, to the willingness of the individual to assign a level of expertise to the Vegas Insider. After all, they are a Vegas Insider so they must know what they are talking about, right?

The process of a gambler’s willingness to hand over their decision making powers to another individual is eerily similar to that of an investor at home who bases their decision from someone on TV:

  1. They assign a level of expertise to another individual, whether it is a Vegas Insider or a Financial Expert.
  2. The often suspend their own logic or analytical ability to determine their course of action. They may claim that they came to their own conclusion, but this is usually just a flimsy rationale to support the “expert’s” advice.
  3. They then demonstrate a level of trust in the expert, by acting upon the advice, whether through placing the bet or the purchase of stock shares.

When someone calls the sports-pick industry a scam industry, you will find numerous nodding heads. After all, they are profiting from the gullible and desperate. If someone had the audacity to point out the similar nature of financially oriented cable network programs, then you might have a fight on your hands! After all, they wear suits and ties and have impressive statistical arguments to back their cause. Vegas Insiders have numerous stats to backs up their claims as well.

Financial Television Programs Have No Interest in Teaching You Anything

Financial television programs have one overriding interest – achieving the highest ratings possible. They are created to entertain the public and their success is gauged by ratings and not by the accuracy of any claims that are made. The individuals that make claims are often chosen simply because they look good on TV or because they are entertaining. When you analyze their core motive – the achievement of higher ratings – you might conclude that they actually have a vested interest in keeping their viewers ignorant. If the viewer actually became financially intelligent, able and willing to make their own informed decisions, then they might not need to tune in anymore.

Rich Dad Education goes to great lengths to teach their students how to invest and trade. Simply telling a student that they should buy company XYZ or place a certain trade does the student no favors. Such a process would keep the student ignorant, making them unable to develop the skills necessary to make their own investment decisions. Rich Dad Education strives to teach students the process of evaluating stock charts, how to identify trends, determining where key levels of support and resistance are, identifying the proper entry and exit points are for a trade, and managing an investment once it is made. In essence, the goal of Rich Dad Education is to provide a student the knowledge and training so that one day the student is self-sufficient and Rich Dad Education is no longer needed.

Trust Yourself

Whether or not you decide to acquire an education from Rich Dad Education, you should strive to increase your financial awareness. Put trust in your own ability and be wary of placing your trust in those who simply tell you what to do, instead of teaching you how to do it.  If you want to be entertained, go to a movie. If you want to become a successful investor, then take the time to invest in yourself.

Rich Dad Education Scam #3: Financial Gurus Can Show You How to Get Rich Quick

Rich Dad Education Scam Financial Gurus

Rich Dad Education Scam #3:

Financial Gurus Can Show You How to Get Rich Quick

“If you believe that, I have a bridge to sell you.”

This popular expression is often used by individuals to express the belief that a person might be gullible.  While this saying has now been incorporated into popular culture, the origins of the saying are rooted in the actions of one of the most infamous scam artists in American history, George C. Parker.

George C. Parker made his living scamming unsuspecting tourists in New York City. His favorite scam was selling the Brooklyn Bridge to tourists telling them they could make a fortune by controlling access to the roadway. He remarkably perpetuated this scam, if the legend is correct, twice a week over a period of years. The Brooklyn Bridge was not his only scam, as he also successfully sold Madison Square Garden, Grant’s Tomb, and even the Statue of Liberty.

Unfortunately, Parker has been far from an isolated case of an individual preying on the human desire to get rich quickly. During the same time period Parker lived, Victor Lustig successfully sold the Eiffel Tower… twice. In the early 19th century, with the promise of riches and abundant natural resources, Gregor MacGregor collected money from investors and hundreds of colonists for a stake in the South American country of Poyais. Unfortunately for these individuals, the country of Poyais did not exist. If you examine any period in human history, you are likely to find someone running a scam exploiting the human desire to get rich quickly.

Get Rich Quick

You do not need to conduct a Gallup poll to determine that individuals who want to be rich would rather get rich today rather than some point down the road. While not on the level of the historic scams perpetuated by Parker, Lustig, and MacGregor, many financial gurus today prey on human emotion by their own promises of being able to make you rich in a short amount of time.  These gurus often use words and phrases such as:

  • Fast
  • Easy
  • No-brainer
  • Quickly
  • Now
  • Immediate success

The use of these words, coupled with imagery of a luxurious lifestyle, convey that all of a person’s hopes and dreams can come true in an extremely short amount of time. Naturally, according to these gurus, the process will also be easy to do and success is nearly guaranteed. Scam may be too harsh of a word, but these financial gurus definitely have some version of a bridge that they are trying to sell you.

The Problem with Trying to Become Rich Quickly

If someone ever tries and tell you that they have a way for you to become rich quickly, then just picture yourself in front of a man in the 1920s trying to sell you the Eiffel Tower or the Brooklyn Bridge. The process of becoming wealthy simply does not occur very often through such instantaneous means. These fast, easy, and no-brainer methods of obtaining wealth simply do not reflect reality. If they did, then everyone reading this would be doing so on their yacht or in the den of their mansion.

Unfortunately, time and time again people fall prey to the “get rich quick” scam. They fall prey to this scam, because this message is far more tantalizing than a message telling them the actual steps needed to obtain financial freedom. Rich Dad Education stresses the actual steps a person needs to perform in order to obtain financial freedom. If an individual acquires the proper knowledge, education, and is willing to act on that knowledge, then financial freedom is possible. This message that Rich Dad Education promotes is not nearly as glamorous as the one promoted by financial gurus promoting get rich fast methods, but it speaks to the actual path a person needs to take if they desire to acquire financial freedom.

Knowledge, Action, and Financial Freedom Versus Quick, Easy, and Rich

Knowledge is power and there is nothing wrong with seeking sources that can help supply you with the intelligence needed to reach your financial goals. When considering your educational source, take the time to examine the message they are conveying. When Rich Dad Education tells you that you need to acquire the proper knowledge and a financial guru tells you they have a quick way to riches, what does this tell you? When Rich Dad Education tells you that you need to be prepared to take action and put the necessary work in, and another tells you they have an easy path, what do these two messages convey? When Rich Dad Education tells you that you can obtain financial freedom and a financial guru tells you that they will make you rich, which one is laying forth a path and which one is trying to play on your senses? Use logic and analyze which message strikes you as true and which one might be the latest scam.

Is the Person a Financial Guru or a Financial Educator?

It is easy to tag a successful person who talks about money as a financial guru. It is a phrase that is often thrown around as a derogatory term to describe just about anyone who talks about obtaining wealth or making money. When analyzing your source of knowledge, remember the Chinese proverb:

“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”

While sometimes applied to him, Robert Kiyosaki has never liked the term “financial guru.” He has made it his mission is to raise the financial intelligence of others – so that people can take control of their own financial future and make their own financial decisions.  Robert Kiyosaki’s book Increase Your Financial IQ is a classic example of this.  In Increase Your Financial IQ, Robert centers his message not on how to get rich, but how one should increase their financial knowledge. Similar to teaching a man to fish, once a person acquires the proper financial IQ then they will know how to “fish” from there.

Undoubtedly, you want to achieve financial freedom for you and your family. In your pursuit of that freedom, be careful and wise in the choices you make. Take the time to increase your Financial IQ, obtain the proper education, and be willing to put in the work to accomplish your goals. If you try and find the quick and easy path to wealth, then surely you will find someone willing to sell you their version of the Brooklyn Bridge.

Rich Dad Education Scam #2: Postgraduate Education Automatically Leads to Higher Income

Rich Dad Education College Scam

Rich Dad Education Scam #2:

Postgraduate Education Automatically Leads to Higher Income

There are three kinds of lies: lies, damned lies, and statistics.” – Saying popularized by Mark Twain

Many years ago there were different variations of a television ad promoting Trident Sugarless gum. While the actors and scenery changed from commercial to commercial, the main catch phrase remained the same:

Four out of five dentists surveyed recommend sugarless gum for their patients who chew gum.

Statistics can be powerful forces in shaping people’s opinions. Those casually watching the commercial might quickly conclude that dentists approve of Trident gum. Naturally, this is the message that Trident wants to convey, and most people will simply see a statistic and give validity to it without regarding the source of the statistic or questioning how the statistic was collected or measured. Even fewer people will attempt to analyze and interpret statistics on any more than a surface level.

After all, four out of five dentists were surveyed, but how many total dentists were actually questioned? Was it only five or was it 500? How were these dentists chosen? Were they all the personal dentists of Trident executives? And hey, what’s that for their patients who chew gum part all about? Are we to infer and read between the lines that dentists actually prefer that you don’t chew gum at all? I guess 5 out of 5 dentists recommend that you shouldn’t chew gum wouldn’t make a very effective slogan.

Statistics on Post-Graduate Education Income

While the conspiracy of the 4 out of 5 dentists may never be solved, it doesn’t change the fact that when most people see a statistic they give it instant credibility. This fact increases 215% when the statistic they see is aligned with their own preconceived beliefs.  Four out of five people surveyed for this article agree with this particular point.

So when people see a statistic supporting their preconceived beliefs regarding the sacred belief of education, they immediately point to them as proof to support their beliefs. These are the people who confidently claim, “To get a good job, you need a good education.” If there was a bumper sticker with a more clever slogan they would proudly put it next to their “My kid is an honor roll student” bumper sticker. Robert Kiyosaki’s bumper sticker might even read, “Your honor roll student is working for my C student.”

Statistics supporting the general premise that post-graduate education automatically leads to higher income are non-existent. They are non-existent because the word automatically infers that a guarantee is placed upon obtaining a masters or doctoral degree ensures a higher income. No matter how fervently someone might argue to the contrary, such an assurance can never be given.

However, statistics in the aggregate supporting the notion that those with a post-graduate education have a higher level of income can be found. These are the statistics that individuals often point to when they want to justify the importance of higher education.  For example, you will occasionally read statistics that state that those with post-graduate degrees will make more money over the course of their lifetime. Those stressing the importance of education will wag their finger at you and say, “See, education is important!” Unfortunately, these statistics can be terribly misleading when a person is attempting to apply them to their own circumstances. For example, let’s take a look at a few recently released statistics from the Bureau of Labor Statistics for individuals over 25.

Salaries of College Graduates

Here are a few points to consider when looking at these stats:

  • Can you really lump all people with a Master’s degree in the same category? Undoubtedly some degrees are going to be more in demand than others, and individuals with those degrees will make more money. By lumping all degrees together, it hides the Master’s degrees that actually make less or equal to those with Bachelor’s degrees. Those with Master’s degrees in philosophy or the fine arts probably take little solace in the fact that their degree counterparts make more money in the aggregate.
  • In this Bureau of Labor poll, all individuals over 25 are put into the same category. Those that obtain Master’s degrees are a very diverse group of individuals. Many are in their 30s, 40s, and 50s and are often paid by their employer to obtain their degree. This fact can potentially skew the results and, at a minimum, clouds the picture to whether there is much of a salary boost to students who obtain Master’s degrees early in life.
  • Unemployment rates are not reflective of specific majors. For example, a recent study demonstrated that the unemployment rate for recently graduated architecture majors is 12.8%.

The Real Debate

In essence this debate could really be rephrased as a debate on whether or not postgraduate degrees provide more security or not. Colleges at all levels simply focus on preparing their students to become employees and fail at teaching crucial financial skills that are necessary to thrive and prosper in the new economy. Whether you are in undergraduate or graduate school, this fact remains the same. Thinking that more school will somehow fix the problem is like saying that the cure for world hunger is more Calculus courses.

Those that are passionate about specific subjects should pursue those passions. Those that want to continue the process of learning to think critically should consider continuing their formal education. However, those that wish to pursue a path of financial freedom have to look outside the halls of academia to find assistance.

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