Why Some People Are Richer Than Others

By: Robert Kiyosaki

I was speaking on financial intelligence a while back to a group of university professors in Singapore. At the end of the talk, one of the professors asked me:

"Where did you learn about business and why do some people make more money than others?"

Responding to the first half of his question, I referred to my book Rich Dad Poor Dad and explained to him that I had a father who was just like him, a respected and highly intelligent career educator.

My other dad, my best friend's father, who also spent many years raising me, was a school dropout, but was a natural financial genius. My business education came from him.

Thinking Rationally vs. Thinking Emotionally
To the second half of this question I replied: "The best business school I attended was Vietnam. In Vietnam I learned what I believe to be my most important life skill."

"And what is that?" the professor asked.

"To know if I am thinking rationally or emotionally," I replied. "While in combat, l learned to be a master of my emotions and to think clearly, even under extreme pressure."

I went on to tell him of a day in 1972 when the engine of my helicopter gun ship suddenly quit. There was a loud bang and then deathly silence followed by the most horrible of sinking feelings. We were falling out of the sky like a huge rock.

Every part of me was screaming, "Pull back on the stick and add power." But my three years of pilot training had taught me to think rationally and override my emotions.

Instead of pulling the nose of the aircraft up, I pushed the nose of the aircraft down and dove the aircraft straight for the ocean below me. To this day, my mind is burned with the vision of the deep green ocean coming up at me at blinding speed.

As we faced what appeared to be our certain death. If I had done what I felt like doing, which was pull the nose up, I would have died that day, taking four other people with me.

Most People Live in Fear of Losing Money
"And how has being the master of your emotions been important to your success?" the professor inquired with even greater curiosity.

Wanting to stay in his world, I replied using his frame of reality, "Have you ever had very smart students with great grades go out into the world and not do well financially or professionally?"

The professor nodded.

"When it comes to money," I replied, "it is the emotion of fear that keeps most people poor. Most people live in fear of losing money or risking money so they say things like 'play it safe’ or 'don't take risks.'"

The professor immediately interjected, "Are you saying be careless? Live dangerously?"

"No," I replied. "all I am saying is that you need to know when you are thinking emotionally and when you are thinking rationally. When you are emotional, thinking rationally is often the hardest thing to do.

"Money, sex, religion, and politics are emotional subjects. So when it comes to those subjects, most people are not thinking rationally. When it comes to money most people are so afraid of losing that they wind up losing. That is not too intelligent."

The professor was beginning to nod his head.

I continued on, "Another example of emotional thinking versus rational thinking is when someone says, 'I don't feel like doing it.' Many people are not successful because they let their feelings do the thinking for them.

"For example, every morning I get up and say, ’I it feel like going to the gym,’ but hopefully my rational mind overrides my emotional mind and sags. 'Come on, one hour, and it’s over.' If my rational mind wins I ride my bicycle to the gym, and if my emotional mind wins, I snuggle up in bed for another hour."

How You Respond to Fear Makes The Difference
"And to you, that is the primary difference between successful people and unsuccessful people?" asked the professor.

I nodded my head. "When it comes to money, I am often going in when most people are getting out. Or I take risks, while the masses are playing it safe.

"I feel the same fears they do, I just use my mind differently. That ability to do what is necessary, in spite of my feelings screaming at me to do otherwise, is the single most important life skill I have learned."

"But aren't you afraid?" asked the professor.

"Yes." I replied strongly. "I have the same fear as everyone else. It’s how we respond to that fear that makes the difference. As I said, most people would have pulled back on the stick when the engine died, and l was trained to push the nose forward.

"The same thing happens financially. People pull back, play it safe, terrified of making a mistake, while life’s opportunities pass them by."

The professor seemed to be understanding so I kept going. "There is another aspect of fear that also causes people to lose money, and that is the fear of ostracism, reportedly the number one fear of most humans."

"Why the fear of ostracism?" asked the professor.

"Ostracism is the fear of being different, or standing alone, or being ridiculed by peers. That fear causes people to conform rather than risk being different. In Australia it’s called the 'Tall Poppy Syndrome.' In investor language, the fear of ostracism leads to the 'thundering herd' mentality.

"The fear of being different causes people to band together, so they wait for social proof that what they are doing is right. It is also called the 'madness of the crowd.'

"So they enter markets late, buy what their friends are buying, and get slaughtered. After an experience like that, they spend the rest of their lives living in perpetual fear, continuing to go along with the rest of the crowd that is not going anywhere financially."

"So how does that affect financial intelligence?" asked the professor.

"Financial intelligence is a 50/50 proposition." I began to summarize slowly. "50% of financial intelligence is what you learn in business school, or in my case what I learned from my rich dad. It is the so-called technical knowledge about money, accounting, finance, investing, and business.

"The other 50% of financial intelligence is knowing when you are thinking rationally and when you are thinking emotionally. To simply say, ’play it safe’ is not a rational thought because it is a thought that is generated out of emotion. To say, ’play it smart’ is a thought coming from the rational brain.

It is that 50/50 relationship that is the basis of financial intelligence, and to answer your original question, why some people make more money than others."

10 Essential Tips to Becoming a Millionaire!

This is a great article written by Chris Record, a very successful entrepreneur, real estate investor, and social networking coach. Read it and apply it!

Copy this link into your browser:

http://chrisrecord.com/10-millionaire-tips/

How You Can Retire With An IRA Worth $1,000,000

By Ron LaGrand

I know this sounds like another one of those glorified headlines to get your attention without containing a lot of truth. Well, I know it's a very strong statement and it sounds too good to be true. But what if it is true? What if you could have a cool million dollars in your IRA within a few years so you'd never have to worry about retirement income? What if you could do this without writing another check to your IRA?

I have some good news and some bad news . . . The good news is: You can! The bad news is: It requires work! Is it too much to ask for you to do some work for a few years so you can retire rich? You've got to work at something anyway, you might as well get rich while doing it. The information you're about to read is unknown to most of the world. Most people think the way to grow your IRA is to make annual contributions and let the manager of the IRA invest it in stocks and mutual funds. Then, over a period of 20 to 40 years, it grows into a large sum of money for your retirement. That's the thinking of conventional wisdom.

Let me tell you how I feel about conventional wisdom. It's almost always wrong! Let's take a look at a better way. Check it out for yourself and see if you agree. I speak to groups of people all over the country and sometimes I ask how many in the room have an IRA. I have never had more than a third of the class answer yes. So, why don't more people invest in an IRA? Here's what they tell me: They can't turn loose of the $2,000 or $4,000 maximum contribution. Having the money at hand for immediate usage is a lot more important than retirement. They never thought about it. They feel they can invest in other investments that can produce more income. They know they should but never seem to get around to it. If you're one of these people, it's probably time for you to wake up and take action before it's too late. You see, an IRA is about all we have left that our "Uncle" will allow us to use to grow filthy rich without paying taxes along the way. I don't have to tell you money grows a whole lot faster if the IRS isn't taking its 25 to 40% share as fast as you can make it. Every dollar you send to the government is money that can't earn you anything until the day you die. Every dollar you can stash away that's tax-deferred or tax-free can compound throughout the rest of your life.

For example, let's say you kept an extra $10,000 out of the IRS's hands this year and invested it at 15%, (which you easily can), and it compounded for 20 years before you started using it. How much do you think it would grow to? How about . . . $197,155. That's about two hundred grand you could have available for retirement by wising up and keeping the ten grand you're now giving away. This is assuming you don't have to pay taxes as you go, and you don't in your IRA. "But Ron, my accountant tells me I can't contribute more than $2,000 for me and $2,000 for my spouse each year. Where did you come up with this $10,000 figure?" Your accountant may be right. There is a limit to how much you can contribute. But wait! Go back and ask your accountant if there is any limit on how much your IRA can make in a year from its investments. He'll scratch his head and tell you no. . . There Is No Cap On How Much Income Your IRA Can Produce! Incidentally, if you have the nerve, ask him/her what their net worth is. Go ahead, I dare you! You probably won't like the answer. I want you to remember, this is the person from whom you're seeking financial advice.

Also Remember: The Broke Can't Teach You How To Be Rich . . . They're Not Qualified
"OK Ron, so tell me how I can make my IRA wealthy without making any contributions." Keep your shirt on, I'm getting there. If you're a real estate entrepreneur, you're making money from buying and selling or keeping houses. If I've trained you, you're doing this by using little or none of your own money. The objective is to create cash and cash flow by leveraging your brain, not your wallet or credit.

Your IRA Can Do The Same Thing
That's right. Your IRA can buy houses, the same way you do. You have to do the work, but your IRA gets the money, tax-deferred or tax-free. Here's a real life example in progress. A student called me with a house in Atlanta that's worth $575,000 in a gorgeous area. The seller owed $492,000 with a $4,200 per month payment. She was $13,000 in arrears. After some back and forth she agreed to deed us the house if we made up the $13,000 in back payments. We did our due diligence, verifying the facts and value with an appraiser. We've closed on the house and currently own it. But, instead of taking title in a trust with me as beneficiary, I took title in a trust with my IRA as beneficiary. I had my IRA administrator send the check to the closing attorney for the back payments, as well as instructions on how I wanted to take title. He created the trust, I didn't even have to appear at the closing.

Now in this case, my IRA did have to come up with $13,000 to make this deal work but normally when I get a deed, it's free or pretty close to it. Keep this in mind and don't get hung up on the down payment. Let's look at the results: We received $83,000 in equity for $13,000. We've obtained a beautiful home in the same area several Atlanta Braves have homes as well as Whitney Houston. We've purchased with no liability and can sell the same way. We simply took over the mortgage "subject to." So, what's our exit? It's simple. Sell the same way we bought it. Get as much down as possible, preferably $80,000 and deed it to someone else. Worst case scenario we get $40,000 or $50,000 down and take back a second. Or, take something in trade. Easy in, easy out.

Let's review: If we get $80,000 and subtract $13,000 before a payment comes due, we'll net about $65,000. That's $32,500 for my partner and $32,500 for me. Whoops, that's not true, that's $32,500 for my IRA! Tax deferred. What if I did three or four of these a year? That's a hundred grand I helped my IRA earn, tax deferred. And we're only talking about this year. What if I did this every year until I didn't want to anymore because my IRA had more money than I could spend?

You Can Do 5 Or 6 Deals In Your IRA On An Annual Basis Without It Being Called A Business
At least, this is what I've been told by the people who administer IRA's. Of course, there are a few rules and more questions. I strongly suggest you do not do this without good, competent advice and participation. I must warn you that Uncle Sam frowns on buying a house in an IRA with the intent of flipping it quickly. They may tax you on the profit. Perhaps you may want to hold it in the IRA awhile before you flip it. Perhaps you'll only do one or two a year. I can't answer these questions for you and frankly, many accountants can't either. Seek the best advice you can find and do what you feel is best for you. Your IRA must be self-directed.

They'll understand what you're looking for and they taught me how to do this. Call them ask for a Self Directed IRA package. They will put your money in a money market account until you tell them what to do with it. When you find a use for the funds they'll write the check according to your directions and mail it to the address you give them. It takes less time to carry it out than it's taken me to tell you about it. Next, you must learn and understand the meaning of self-dealing/directing. It can be deadly to your wealth. You cannot sell your houses to your IRA. You shouldn't get your IRA involved in any deal you or your entity was previously involved in. If your IRA buys a house, it should go directly from the seller to the IRA and not pass through you. Don't take back notes on houses and give or sell to your IRA. Keep it clean. Enough said about that. Do your homework. Mid Ohio has an entire book answering all of your questions. I only have a newsletter article to get you started in the right direction.

Now, you may be thinking I'm advocating you using your IRA money to buy houses. Not hardly. The last thing I want you to do with your IRA cash is to buy real estate. Why?:

Because You Don't Need Money To Buy Real Estate . . . And Neither Does Your IRA
Put some deals in your IRA that don't require cash. Next, take that cash when they sell and buy all kinds of neat stuff to increase the yield on cash. Stuff like discounted paper, defaulted paper, mutual funds, hot stocks, etc. Here's the point. As long as your money is tied up in real estate it can't be getting a high return on semi-passive investments. It can only grow as fast as the real estate will allow. So, let's get the best of both worlds. Create cash by actively buying and selling houses with little or none of your IRA's money. Next, let's take those profits and make them grow by at least 15% per annum outside of real estate.

Tax Deferred Or Tax Free If You Have A Roth IRA
Make certain you ask about a Roth IRA and take time to learn its potential. You're never taxed, you can use it for a first time home or education for your children and you never have to take it out. Of course, there are exceptions and rules. So, take the time to learn about the ROTH and use it. If you qualify I promise you it will be a huge return on your time investment. I know! About now you're saying: "Well Ron, you just told me not to use my IRA's money to buy a house and yet you did exactly that with your own IRA." Guilty as charged! In fact, I'm quite often guilty of actually doing the stuff I tell you about. I guess that makes me a bit weird, doesn't it? I actually practice what I preach! But you interrupted me before I finished. I said don't use your IRA to invest in real estate but what I meant was, not for long term. If my IRA writes a check for $13,000 to buy a house with the expectation of getting back my $13,000 plus $32,500 within 60 days, is that OK? I don't need a spreadsheet on this one.

That's Exactly A 1500% Annual Return On Investment
I bet that's better than any money market or CD you currently have. I'll bet that's even better than your stock portfolio's performance last year. Is It A Great Deal? yes. Is It The Best You Can Do? no!

The Best Return On Your Money Is Called: Infinity
You see, if you don't invest money you can't measure the return. That's my kind of deal. But hey! If you've got the cash you've got to do something with it. So, can I be excused because I didn't get an infinity yield this time? Try to tell your accountant or banker you can get a 1500% yield on your money. Watch their eyes glaze over. Remember, all it takes to get a tax deferred infinite yield on your IRA is for it to control or buy real estate without using its money. Can you option a property without money? Yes! Can you wholesale a house without money? Yes! Can you take a house "subject to" without money? Yes! Can you lease/option a house without money? Yes! Can you send Ron a check for all this priceless advice to make you rich? Yes! (Whoops, forget that one, I got a little carried away).

Wait, here's more! Did you know you could do 4 or 5 of these deals per year in your IRA without it being called a business and paying taxes? Did you know your child or grandchild can have an IRA you can start without their knowledge, that can become their own when they come of age? What a way for you to provide for your child's educational future. Without Writing A Check! Without Borrowing A Dime! Incidentally, if you open up an IRA for your child or grandchild, if I were you, I wouldn't tell them. Can you guess why?

So, let's play with some numbers. Suppose you can set aside enough time away from your J.O.B. to do 3 or 4 deals a year netting a total of $50,000. You decided you were going to do the same thing for the next five years and then quit. You know you can get a 15% return in your sleep, which you can. What was your total contribution?: ZERO!

Your IRA Made Money, You Didn't Contribute It.

What is it worth in:

• 5 Years? $387,548



• 10 Years? $779,498



• 15 Years? $1,567,849

OK, let's now suppose you get a little ambitious and do better deals making $100,000 each year in your IRA.

What's it worth in:

• 5 Years? $775,096



• 10 Years? $1,558,996



• 15 Years? $3,135,698

Remember, I'll put $32,500 in my IRA on this little deal. If you're an active real estate entrepreneur it's no big thing to let your IRA have a few of your deals. Most people spend more time buying a car, planning a vacation or taking in a football game than planning for retirement. So, what about you? Is this going to be another scanned over article to be quickly cast aside because your favorite TV show is about to air? Or, could this be a valuable piece of information that will have a major impact on your future because you decided to take action? Hey! I'm only the messenger boy. My job is done. Yours is next.

When you check into the nursing home. . . may you own it, free and clear.

10 Frequently Asked Short Sale Questions

by: D.C. Fowler

Here are 10 frequently asked short sale questions that are very helpful especially if you are just getting started or considering short sales as a means to acquiring pre-foreclosures.

1. What happens to the seller's credit rating when they allow an investor to short sell their property?

What typically happens is the loan will show up as "paid" on their credit report; however there will be a notation that says "settled for less than originally owed" or something along these lines. It is more favorable for a homeowner to short sell than to have a foreclosure on their credit report.

2. Where do you find investors for short sales?

Depending on where you live, you may see investors who advertise with bandit signs or in your local newspaper. Call the investors directly and ask them if they are experienced in doing short sales and if they would be interested in working with you. Another good place is your local real estate investors club meeting.

3. Define a short sale?

A short sale is really a form of pre-foreclosure sale and occurs when the mortgagee agrees to accept less than the loan amount to avoid foreclosure. A negotiated short sale results in a discounted purchase price for the buyer. The buyer would finance the acquisition much the same as in any conventional realty acquisition... but without the luxury of time.

4. Can an owner profit from a short sale?

The seller cannot profit (monetarily) from a pre-foreclosure short sale.. But there are always exceptions to the rule.

5. How do bankruptcies affect the possibility of doing a short sale?

Most mortgagees won't consider a short sale if the homeowner is in bankruptcy...why? Because negotiating a short sale payoff is considered a collection activity. Collection activities are prohibited in bankruptcy.

6. Can somebody tell me what documents do I have to include in a short sale package?

Documents depend on the lender. Each lender has different requirements. It is typical to require hardship letter, purchase and sales contract, ECOR, settlement statement (HUD 1), net sheet, pay stubs, bank statements, personal financial sheet (monthly budget), amongst other things.

7. What percentage of mortgage companies send someone out for an appraisal on a possible short sale?

All lenders order a BPO or full appraisal of the property before making their decision to accept or reject the short sale offer. This is there only way of assessing the value of the property.

8. How late in the pre-foreclosure process can you start a short sale?

Try to allow a window of at least 90 days to effectuate a mortgagee approved, pre-foreclosure Short Sale.

9. What is a Due on Sale clause?

"Due on Sale" Clause (DOS) Provision in a mortgage or deed of trust calling for the total payoff of the loan balance in the event of a sale or transfer of title to the secured real property. A contract provision which authorizes the lender, at its option, to declare immediately due and payable sums secured by the lender's security instrument upon a sale of all or any part of the real property securing the loan without the lender's prior written consent.

For purposes of this definition, a sale or transfer means the conveyance of real property of any right, title or interest therein, whether legal or equitable, whether voluntary or involuntary, by for deed, leasehold interest with a term greater than three years, lease-option contract or any other method of conveyance of real property interests. Standard language which states that the loan must be paid when a house is sold.

10. Will banks allow a short sale when the owner has some or a good amount of equity?

If a property has what the lender would consider a substantial amount of equity, chances are they would consider allowing the property to foreclose and then reselling it closer to the retail value. Focus on homes that do not have much equity. Your job will be to create the equity in the home by negotiating a successful short sale.

---
D.C. Fowler has been a real estate investor for 15 years specializing in the area of pre-foreclosure/short sale investing. He has bought and sold over 200 homes in Georgia, Florida, Louisiana, and Tennessee using the same short sale techniques that he teaches in his course, Making Money with Short Sales: The Complete Guide to Acquiring Property Pre-Foreclosure. Mr. Fowler resides in Atlanta Georgia. He also spends many hours per month teaching his creative real estate investing techniques to other aspiring investors.

Avoid "Negative Thinkers" Like The Plague!

"You might as well realize that the time for opportunity is past. There's no longer any use trying to save for investing. The best you can hope for is to keep a steady job and stay off welfare. Nobody will ever again be able to build an estate big enough to produce an independent income." These are the words of an economics professor from a prestigious California university. In a moment I'll tell you the rest of the story. But first, let me emphasize how important it is to choose very carefully who you listen to. You will always learn your most valuable lessons from positive thinkers.

Beware of "Negative Thinkers"
The world is full of "Chicken Littles" who are always telling anyone who will listen the sky will surely fall by a particular date. I've been around for more years than I care to brag about and I've yet to see even a small piece of blue sky lying on the ground. I've even quit wearing my hard hat, except for those rare occasions when I visit my tenant to deliver a rent increase notice.

Certainly the California economy did slip down. There were many discouraging things to talk about. Housing prices dropped 30 percent, rents went down, military bases began closing and a whole train load of business folks simply packed up and left California looking for greener pastures. And that was the good news. The worst part was no one ever knew exactly when the down cycle would end.

Still, looking for a steady job to keep off welfare seems like pretty harsh advice from an economics professor.

Several years ago I decided that with all the properties I owned I might just have enough. I made a conscientious effort to reduce my holdings. I sold several proper ties and began collecting mortgage payments instead of rents. When the economy stalled out and some super bargains started showing up again, the temptation was more than I could bear-I got back in the hunt again. But, I am being extra picky. Many good deals are out there and it's easy to smell the profits. When the economy turns sour, it's definitely much easier to find cash flow properties almost everywhere.

Professor Prophet of Gloom
About the economics professor and his gloomy forecast, let me just say that he's the kind of an educator who can keep an entire graduating class working their buns off at Burger King. However, his advice has been proven wrong for a long time now. You see, he was offering his advice to the graduating class at Fresno State College in 1931. William Nickerson was in that class. Obviously he was not too impressed by the professor's advice. Bill recalls the speech in his best-selling book "How l Turned $1000 into Five-Million in Real Estate", Simon and Schuster (Rev. Edition) 1980.

Change Creates Opportunity
Real estate cycles, both up and down, are nothing new to savvy investors. Real estate cycles create winners and losers alike. The secret to survival is learning how to stay in business.

Have you ever watched surfers from the beach? If you have, you can't help but notice how they roll with the waves. Good surfers are not toppled over by even the biggest and most treacherous waves.

Real estate investors can prepare themselves for treacherous times too. They do this with each new experience and by continuing their education. When you are knowledgeable about what you're doing and develop the confidence that comes with that knowledge, doom and gloom prophecies will have very little effect on your investment success. You'll be able to ride out the rough waters until they are calm again.

Full Speed Ahead - Damn the Torpedoes
In the 1970s I was fixing up four run down houses. Two of them were hooked to a collapsed septic tank and with every flush, bright yellow water came up around my roses. The tenants called the health department and it scared me half to death. I thought the my newly acquired rentals would be condemned. As it turned out I fixed the tank and my roses grew even taller. More important, my rents kept on coming in. The lesson I learned is that most problems are not nearly as bad as they often appear.

One of the secrets to survival in this business is to properly assess a potential problem, get good help with the things you don't know about or understand. Above all, don't panic. Selling houses at a loss is much less desirable than creating notes to use up the equity. You can then trade the notes or use them for down payments on better properties. With this technique you can give your problem properties away without losing serious money.

By the way, when the boom-times finally rolled around for Bill Nickerson after World War II, his old economics professor said: "It's too late for opportunity now. Success in business depends on having started in the depression."

Jay P. DeCima, known to many as "Fixer Jay" is a seasoned real estate investor with more than 40 years of hands on experience; nearly half that time has been devoted to Jay's specialty - fixing-up rundown houses and adding value. Fifteen years ago, Jay Decima began teaching others about his money-making strategies at seminars and at his popular house fixer camps in Redding, California.

Security vs. Freedom...It's Your Choice

Most of us would like to believe we can have both security and freedom. But in Rich Dad® terms, these are two opposing values. My rich dad said, "Freedom and security are not the same ideals. In fact, in many ways, freedom and security are exact opposites. The people who have the most security are people in prison. Prisoners have the least freedom and the highest security. People in prison do not need to provide housing, food, recreation, health care, or education for themselves. They have a lot of security but at the price of their freedom."

One advantage of living in a free society is the freedom to make choices. There are two big choices according to my rich dad: the choice of freedom and the choice of security. Both choices have appeal, both have strengths and weaknesses, and both come with a price. If you choose freedom, the price is paid up front, at the beginning of your life. If you choose security, you pay a huge price in the form of excessive taxes and interest payments. Often the price is paid later in your life.

Look at the bankruptcy debacle of Enron, one of the world's largest corporations. The price the loyal, hard-working, security-seeking employees paid is very high: they lost their jobs and their retirement plans. Unfortunately, many are paying this price at the end of their working years, just when their options diminish because of age or health.

Security vs. Freedom: It's Your Choice
Today, many employees are learning their jobs are not secure and neither are their retirement plans. In the coming years, 75 million baby-boomers may discover that their stocks and mutual funds were not as secure as they thought, forcing them to retire to a lower standard of living that their parents enjoyed. With the prospects of downsizing looming over their heads, some have taken the initiative to start their own businesses. Should you be one of them?

My rich dad said, "Somewhere along the way, people become more desirous of security and have paid the price by selling their freedom. You may have noticed that schools today focus primarily on job security rather than financial freedom. The problem is most people do not know that the cost of that security is their freedom." He continued to say, "If you choose security, someone is always telling you what hours to work, how much you make, and even when you can eat your lunch. That is the price of security."

Freedom means having more choices, not security. You have a choice to be poor, middle class, or rich. If you choose to be rich, then you need to learn a whole new game. But it requires a different mindset and financial intelligence. You will be free to work or not to work. Your knowledge will bring you freedom from work because you will learn how to make your money work for you. The choice is yours.


Robert Kiyosaki is an investor, businessman and best-selling author. His book, Rich Dad Poor Dad, reveals what the rich teach their kids about money that the poor and middle class do not.

Retiring at the age of 47, Robert continued with his love of investing. It was during his "retirement", he wrote Rich Dad Poor Dad, the #1 New York Times bestseller. Robert followed with Rich Dad's CASHFLOW Quadrant and Rich Dad's Guide to Investing - all 3 books have been on the top 10 best-seller lists simultaneously on The Wall Street Journal, USA Today and The New York Times. In January 2001 Robert Kiyosaki launched Rich Kid Smart Kid.

Do you have the Rich Dad mentality?

This is the second in a series of articles based on the groundbreaking best-seller "Rich Dad, Poor Dad" written by Robert Kiyosaki. As stated in the first article, the book compares the mindset of Kiyosaki's father-who held several degrees and an important position in the government, but struggled financially--, with the mindset of his best friend's father-who never even finished high school but left his son a financial empire. In his book, Kiyosaki explains that the mindset held by each of these two men, his "poor dad" and his "rich dad", was largely responsible for each man's financial destiny.

The following quote by T. Harv Eker, author of "Secrets of the Millionaire Mind", refers to the concept of a rich person's mindset: "Rich people have a way of thinking that is different from poor and middle class people. They think differently about money, wealth, themselves, other people, and life." Kiyosaki expounds this same principle in "Rich Dad, Poor Dad".

Below you will find seven mayor differences between the "poor dad" and the "rich dad" mentality:

1. The "poor dad" mentality states that your wealth depends on your family of origin. That is, to be rich you have to be born rich. "Rich dad" espoused the view that being rich or poor is something that you learn. You can learn to think in ways that will support you, and you can raise your financial IQ by reading books on finance, talking to financially successful people, and attending seminars and lectures. When you have the right belief system and the necessary knowledge on how to create, build, and protect wealth, you will become rich even if you were not born into a wealthy family.

2. "Rich dad" taught Kiyosaki that he should get a job to learn and to acquire the necessary skills so that he could go on to start his own business. "Poor dad" saw his job as his source of income for life. While "rich dad" taught Kiyosaki to strive to become financially independent, "poor dad" taught him to depend on his employer for his financial well being.

3. When faced with an opportunity, "rich dad" would ask himself: "How can I afford this?" This forced his mind to think and to come up with creative solutions to be able to take advantage of the opportunity that had presented itself. Instead, when presented with an opportunity, "poor dad" would dismiss it by saying: "It's too bad I can't afford this."

4. While "poor dad" stressed scholastic education, "rich dad" always stressed financial education.

5. For "rich dad" the main cause of poverty or financial struggle was self-inflicted fear and ignorance. "Poor dad" blamed the economy and the job market. That is, "rich dad" always took responsibility for himself and felt that he created his circumstances, while "poor dad" often felt like a victim of the outside world.

6. As for risk taking, "rich dad" taught Kiyosaki to learn to manage risk. "Poor dad" taught him that when it came to money, risk was something that should be avoided and to always play it safe.

7. "Rich dad" taught Kiyosaki that failing was simply part of the process and that he should learn from his mistakes and move on. "Poor dad" attached great stigma to failure and was therefore afraid of making mistakes.

Study the seven examples above in order to begin to develop a clear concept of the difference between a rich and a poor mindset. You can find out more on how rich people think by reading books such as those found in the "Rich Dad, Poor Dad" series and by talking to people who have succeeded financially.

Written by Marelisa Fábrega who blogs at http://abundance-blog.marelisa-online.com Article Source: http://EzineArticles.com/?expert=Marelisa_Fabrega

"Take advantage of the once in a life time foreclosure market conditions.

Learn from the experts, when every other market was spiraling downwards they made millions with foreclosed houses!

Why are all the real estate guru’s recommending foreclosed investing...?" -Junk House Riches

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Is $1 Million Enough to Retire?

by Emily Brandon

Thursday, June 18, 2009

Whether it is five or 25 years away, many of us share the same nagging question about retirement. How much money will I really need? Geri Pell, a senior financial adviser for Ameriprise, says the answer depends on where you live and what type of retirement lifestyle you hope to have. U.S. News asked Pell for some strategies to help figure out your retirement needs. Excerpts:

How do you know if you're saving enough for retirement?

Most people don't know. The only way you can know is by figuring out what kind of retirement you want and how much money you will need. Many people are feeling very out of control and people have more doubts and more fears. Sitting down and making decisions and developing a plan takes so much stress away from people.

What needs to be factored into your calculation?

One of the things that is very useful to do is figure out what you are going to spend in retirement. Consider what kind of lifestyle you want in retirement, inflation, what your risk tolerance will be now and in retirement, what rate of return you might assume on your assets, and how long you will work. Also, do you have a pension? How much will you get from Social Security? Will you take on a second job or do some consulting?

How do you figure out what your risk tolerance is?

The big overall question about risk tolerance is, for you personally; would you rather sleep comfortably every night and at the end of 20 years have a 5 percent rate of return or have some bumps in the road and possibly get an 8 percent rate of return that is not guaranteed? People will answer that question differently depending on what cycle the market is in. It's almost like a doctor diagnosing what your real health condition is. If we get it right you will be a good investor. There is an enormous amount of psychology involved. We've all come to understand how wide the market swings can be. If you know that an 80/20 mix can go down 40 percent and you can't live with that, maybe you have to switch to a different mix. And then you need to understand that you are limiting the up side as well.

What span of time should you estimate you will live?

I usually start off using 95. You get a lot of different reactions from people, but life spans are expanding. If you plan for 80 and live until 87 you can't come back to me and say I ran out of money. You need to plan for longer than you think you will live.

What percentage of your salary should you aim to save?

If you have children in college or in private school you might aim to save 10 percent of your income. But in the time when the kids are out of the house and before you retire you may want to bump that up to between 20 and 25 percent. It really depends on your situation. You should always save in your 401(k) at least up to the company match. You certainly need to be saving enough money to have a cash reserve for emergencies.

Is $1 million enough to retire comfortably?

For a modest retirement in most places in the country that may be enough money, but it probably would not be enough money in San Francisco or Los Angeles or New York City. For example, $1 million could produce about $40,000 a year. And then if you get $20,000 from Social Security that would be $60,000 without any other income. There are people in retirement who spend only $3,000 a month because they don't have a mortgage, they have a low cost of living, and they go to the early bird specials. If before you retire you are earning $200,000, then you might have to downsize a little bit.

How can you keep your nest egg safe after you retire?

The most important thing is to get your emotions under control and not make decisions based on emotions. When the market is going up people can't wait to throw money in and when it's down people pull their money out. In life there are things we can influence and things we can't do anything about. What I tell clients is that there are only four things you can control about your financial picture: how much you spend, how much you earn to an extent, your emotions, and what you do with the money that you have. You can't control the market, but you can control the decisions you make about the money that you have.

What should a baby boomer who wants to retire soon do to get back on track?

You have to think about what is more important, retiring soon or retiring well. It may not be realistic for you to retire at 58 with the lifestyle that you want and make it to 95. Now you have less money than you thought and maybe not even much job security. Some of us baby boomers all grew up with really unrealistic expectations of when we were going to retire, and we planned in a way that didn't bear fruit. But what if I told you, you could still go to Hawaii, but you can't stay at a luxury hotel? Most people say, "I can do that." You have to adjust your expectations. Or you may have to work until 62 even though we planned for 57. Let's reframe what we are going to do. Everyone around you is also going to be spending less money. The day of the $14 cosmopolitan is over. And who felt comfortable doing that anyway?

Copyrighted, U.S.News & World Report, L.P. All rights reserved.

Invest in Real Estate with a Self-Directed IRA

Published on: Thursday, August 07, 2008

Written by: David Nilssen

How To Invest In Real Estate With Your IRA

It’s a little-known fact that you can invest your tax-deferred or tax-free retirement funds in real estate. In fact, you can invest your retirement funds into nearly anything. The internal revenue code specifies only what an IRA cannot invest in, and those things are life insurance and collectibles. This leaves your investment choices nearly endless.

Increasing numbers of people are discovering the many benefits of investing in real estate with their retirement funds. Like returns from securities investments, the returns from an IRA real estate investment are realized tax-deferred in the retirement account, but unlike stocks and bonds, real estate is a tangible investment which the investor can see and have a direct hand in appreciating its value.

Set up a self-directed IRA account

To invest in real estate with your IRA, you must first create an account that supports investments in non-traditional assets. These types of accounts are commonly known as self-directed IRAs. There are two ways to create a self-directed IRA.

Self-directed IRAs with a self-directed custodian

These companies act very similarly to your existing IRA custodian, but they allow non-traditional investments. Self-directed custodians hold your IRA funds in their accounts and direct those funds on your behalf when you wish to make an investment.

For example, if you decide to purchase real estate with your self-directed IRA, you will apply for an investment through the custodian. Approval for this investment can take a matter of days or weeks, depending on the custodian with which you work. Once the investment is approved, the custodian issues a check directly to the seller for the purchase of the property.

Fees for self-directed custodial accounts are generally based on the value of the assets in the account (typically 0.5 percent of the total value), plus transaction fees which range from $5 to $200 per transaction, depending on how fast the funds are needed and the method of delivery.

Self-directed IRAs through a self-directed IRA/LLC

These accounts start out similarly to self-directed custodial accounts, but go one step further. Companies that offer self-directed IRA/LLC services will transfer your funds to a self-directed custodial account with a preferred partner, typically at a dramatic annual-fee discount. They will then prepare a customized limited liability company (LLC) on your behalf. The self-directed IRA/LLC company will then direct your retirement funds into the LLC. You can then readily access these funds through the LLC bank account.

Most self-directed IRA/LLC companies will instruct you to open a checking account for the LLC, which will enable you to make investments instantaneously. This means that once you have decided which property you wish to purchase as an IRA investment, you will simply purchase the property in the name of the LLC and will write a check directly to the seller from the LLC bank account.

Fees for self-directed IRA/LLC clients typically include a one-time setup fee, based on the complexity of the setup (multiple parties or multiple accounts can invest in the same LLC or different LLCs), plus a flat annual fee, usually around $150. There are no transaction fees or asset-based fees with these accounts.

Buying real estate as an IRA investment

Whichever account you establish, the process to purchase a piece of real estate as an IRA investment is fairly simple. You must make the purchase in the name of your IRA or in the name of the LLC, and you must pay for the property with IRA funds.

Avoiding prohibited transactions

When investing in real estate with an IRA, one should be careful to avoid prohibited transactions. Although IRS Code only bars your IRA from investing in life insurance and collectibles, it has additional provisions in place to keep you from gaining any personal benefit from your IRA investments before you reach the age when the government says you can start taking penalty-free distributions (age 59 1/2).

One such prohibited transaction is that the IRS mandates that you cannot invest with any "disqualified parties." Disqualified parties include yourself, any direct ascendants or descendants (i.e., parents and children), your spouse, spouses of your descendants, and people with a fiduciary responsibility to your account (i.e., accountants and financial advisors).

Because of these restrictions, you could not buy a home with your IRA that you would live in or that would be rented out to your grandparents. The IRS has put these codes in place to make sure that your IRA money is used for investment purposes only. Luckily, even with these restrictions in place, there are limitless opportunities for arms-length transactions that will help grow your IRA.

For more information on disqualified parties and other prohibited transactions, visit Guidant Financial Group’s FAQs.

David Nilssen is the president, CEO of Guidant Financial Group, Inc. Guidant Financial creates retirement accounts that allow investments in both traditional (stocks, bonds, mutual funds) and non-traditional (real estate, tax liens, personal loans, small businesses, etc.) investments.