In Second Chance: For Your Money, Your Life and Our World (2015), Robert T Kiyosaki of Rich Dad, Poor Dad (1997) fame takes a look at how the world has changed after the 2008 crisis.
Kiyosaki reiterates what he has consistently stated in all of his other books: the rich do not work for money, they work to build assets that yield cash flows that endure whether they continue to work or not. In Rich Dad, Poor Dad , Kiyosaki had made some controversial claims: "Your house is not an asset" and "Savers are losers". These claims got validated when the housing market collapsed in the US in the Great Recession and the Fed responded by slashing interest rates to zero.
This led to a class of millionaires losing a substantial portion of their wealth, the so-called millionaires-next-door (after Thomas J Stanley and William D Danko's The Millionaire Next Door (1996)) who had become rich as a result of the rising values on their homes and retirement portfolios. As Kiyosaki states: "In 2007, when the subprime-mortgage bubble burst, many millionaires-next-door became the foreclosure-next-door".
In Second Chance, Kiyosaki not only pays tribute to his Rich Dad (actually his friend Mike's dad who put him on the path to being rich) but also the visionary Buckminster Fuller. Fuller wrote the posthumously published Grunch of Giants (1983) that showed the pitfalls of trusting the government supported monetary system. GRUNCH stands for Gross Universal Cash Heist. As Kiyosaki states: "A saver's wealth is heisted via a banking mechanism known as the Fractional Reserve System. The concept of fractional reserve system is thousands of years old. Why it isn't taught in schools is no mystery to me. It's the way banks make money. And it's not pretty."
Kiyosaki goes on to describe how banks through the fractional reserve system promote inflation and devalue the value of our savings. He also talks about other ways in which the system heists our wealth through taxes, bailouts, fiat money etc.
In 2002, Kiyosaki had written a book called Rich Dad's Prophecy which predicted a crash in 2016 preceded by a smaller crash somewhere in between. In Second Chance, Kiyosaki says that his Rich Dad's prediction of the smaller crash had come true with the Great Recession of 2008 and, like it or not, we are going to see an even greater crash. How to survive this crash?
People who lost their jobs in the 2008 crash settled for low paying jobs or went back to school to update their skills to get a better job. Kiyosaki says that the best way to survive the crash would be to do the opposite of conventional wisdom: "Go to school; get good grades; get a good job; get out of debt; save money; live below your means, etc". With the governments worldwide printing billions of dollars, this is outdated advice. There are many more opportunities opening up and Kiyosaki asks us to explore them.
For instance, take the logic: "Get out of debt; live debt free." Kiyosaki says this is not smart advice. Kiyosaki differentiates between good debt and bad debt. "Simply put, good debt makes you richer and bad debt make you poorer. Without financial education, it isn't surprising that millions of people (and the United States government) are buried under mountains of bad debt."
Kiyosaki encourages people to use good debt to finance a business and become a "cash flow" millionaire. This would seem risky to many, including me, but Kiyosaki says that he now owns thousands of properties purchased using good debt which yield a cash flow that has made him financially independent.
Regarding investing, Kiyosaki says that investing is risky only to those who don't know how to invest. Learning to invest is like learning to drive a car. With proper guidance the risk drops drastically. The first thing is to learn the language of money that rich people use to make their deals. As Kiyosaki's Rich Dad said, "Words have the power to make you rich or poor. If you want to be rich, learn the words that will make you rich. The best news is ... words are free."
While not everyone will have the temperament to take Kiyosaki's advice, you have to hand it to him for the consistency of his utterances for the last twenty years. The next few years may show the worth of all that he has said in this book.
Kiyosaki reiterates what he has consistently stated in all of his other books: the rich do not work for money, they work to build assets that yield cash flows that endure whether they continue to work or not. In Rich Dad, Poor Dad , Kiyosaki had made some controversial claims: "Your house is not an asset" and "Savers are losers". These claims got validated when the housing market collapsed in the US in the Great Recession and the Fed responded by slashing interest rates to zero.
This led to a class of millionaires losing a substantial portion of their wealth, the so-called millionaires-next-door (after Thomas J Stanley and William D Danko's The Millionaire Next Door (1996)) who had become rich as a result of the rising values on their homes and retirement portfolios. As Kiyosaki states: "In 2007, when the subprime-mortgage bubble burst, many millionaires-next-door became the foreclosure-next-door".
In Second Chance, Kiyosaki not only pays tribute to his Rich Dad (actually his friend Mike's dad who put him on the path to being rich) but also the visionary Buckminster Fuller. Fuller wrote the posthumously published Grunch of Giants (1983) that showed the pitfalls of trusting the government supported monetary system. GRUNCH stands for Gross Universal Cash Heist. As Kiyosaki states: "A saver's wealth is heisted via a banking mechanism known as the Fractional Reserve System. The concept of fractional reserve system is thousands of years old. Why it isn't taught in schools is no mystery to me. It's the way banks make money. And it's not pretty."
Kiyosaki goes on to describe how banks through the fractional reserve system promote inflation and devalue the value of our savings. He also talks about other ways in which the system heists our wealth through taxes, bailouts, fiat money etc.
In 2002, Kiyosaki had written a book called Rich Dad's Prophecy which predicted a crash in 2016 preceded by a smaller crash somewhere in between. In Second Chance, Kiyosaki says that his Rich Dad's prediction of the smaller crash had come true with the Great Recession of 2008 and, like it or not, we are going to see an even greater crash. How to survive this crash?
People who lost their jobs in the 2008 crash settled for low paying jobs or went back to school to update their skills to get a better job. Kiyosaki says that the best way to survive the crash would be to do the opposite of conventional wisdom: "Go to school; get good grades; get a good job; get out of debt; save money; live below your means, etc". With the governments worldwide printing billions of dollars, this is outdated advice. There are many more opportunities opening up and Kiyosaki asks us to explore them.
For instance, take the logic: "Get out of debt; live debt free." Kiyosaki says this is not smart advice. Kiyosaki differentiates between good debt and bad debt. "Simply put, good debt makes you richer and bad debt make you poorer. Without financial education, it isn't surprising that millions of people (and the United States government) are buried under mountains of bad debt."
Kiyosaki encourages people to use good debt to finance a business and become a "cash flow" millionaire. This would seem risky to many, including me, but Kiyosaki says that he now owns thousands of properties purchased using good debt which yield a cash flow that has made him financially independent.
Regarding investing, Kiyosaki says that investing is risky only to those who don't know how to invest. Learning to invest is like learning to drive a car. With proper guidance the risk drops drastically. The first thing is to learn the language of money that rich people use to make their deals. As Kiyosaki's Rich Dad said, "Words have the power to make you rich or poor. If you want to be rich, learn the words that will make you rich. The best news is ... words are free."
While not everyone will have the temperament to take Kiyosaki's advice, you have to hand it to him for the consistency of his utterances for the last twenty years. The next few years may show the worth of all that he has said in this book.
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