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Popular financial educator Robert Kiyosaki, author of the famous Rich Dad, Poor Dad, has repeated his 2014 prediction made in Rich Dad’s Prophecy about a great stock market crash is on the way. This collapse, he believes, could have an especially devastating impact on the financial security of millions, especially baby boomers, who have so much of their wealth wrapped up in vulnerable assets, including 401(k)s and IRAs. Despite the warning, Kiyosaki believes the majority of people are still not prepared owing to financial illiteracy and encourages them to protect their wealth via assets in the form of gold, silver, and bitcoin.
Why Modern Retirement Plans Are So Dangerous
Kiyosaki evidences how so-called retirement plans, defined contribution (DC) plans (401(k), IRA, etc.), differ markedly from the defined benefit (DB) plans of our grandparents’ generation. During a market crash, he notes, it leaves defined benefit (DB) plans on the hook to meet their payout promises to investors.
Unlike DB plans that provide a fixed benefit, DC plans are only required to return the investor’s contributions, which could be materially reduced or entirely lost after a market downturn. He believes this structural vulnerability is a product of insufficient financial education so that people have no choice but to depend on a financial system he describes as a “corrupt and criminal monetary Ponzi scheme.”
How to Invest in Real Assets Like Gold, Silver or Bitcoin
In light of these systemic failures, Kiyosaki promotes the ownership of real things. He recommends “taking physical delivery of gold, silver, and bitcoin,” making the case for securing these assets directly rather than through other held constructs. He advises his clients not to invest in exchange-traded funds (ETFs) associated with these goods, describing them as “as fake as the US dollar and US bonds.
Why You Should Not Rely on ETFs
Kiyosaki believes that Bitcoin ETFs are just extensions of the same old financial system he does not trust. These ETFs, he contends, are run by the same Wall Street firms that he says prey on retail investors. Kiyosaki also calls out the trend of individuals pouring their cash into ETFs as a way to avoid taking financial ownership of actual assets, and this disassociation with real assets makes their financial position more fragile.
Why Endorse Bitcoin in Troubled Economic Times?
His stance on Bitcoin has remained the same even in the face of recent market turbulence. He has slammed Bitcoiners who sold their coins during dips as “LOSERS.” His view on Bitcoin has grown more bullish, considering that political figures like former President Donald Trump have proposed crypto initiatives. Such developments are signs that Bitcoin is becoming more legitimate and potentially a unison against economic turmoil, according to Kiyosaki.
Predicting a Big Market Crash
Kiyosaki has long warned of economic turmoil, recently predicting a market crash he believes will be the worst in U.S. history and that investors should focus on Bitcoin, gold, and silver. He advises that these types of crashes are actually opportunities to acquire assets at lower prices—this can be a way to create larger wealth for those who are prepared.
The Importance of Financial Education
At the heart of Kiyosaki’s philosophy is the idea that financial education is the key to empowering individuals. He contends that the traditional educational system does not provide individuals with the skills needed to deal with increasingly complicated financial situations and the people behind them. Through his promotion of physical assets and a better understanding of financial principles, Kiyosaki seeks to encourage financial independence and resiliency among investors.
Final Thoughts on Weathering Financial Storms with Hard Assets
It’s a lesson in the strengths and weaknesses of current financial systems, including retirement plans, for today’s future investors. This belief in direct ownership is consistent with his general view of maintaining financial independence and skepticism of traditional assets. With economic instability on the horizon, Kiyosaki’s insights serve as a reminder of the importance of being financially literate and the potential benefits of diversification in one’s portfolio with physical assets.
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Frequently Asked Questions
1. Why does Robert Kiyosaki refer to ETFs as “fake”?
Kiyosaki argues that ETFs are not true asset ownership. Investors own paper assets (not metals) and are therefore vulnerable to systemic financial risk.
2. What Kiyosaki assets provide financial security?
He says to invest in physical gold, silver, and Bitcoin. According to him, these assets offer protection from inflation, currency devaluation, and market instability.
3. What does a market crash mean for 401(k) and IRA savings?
401(k)s and IRAs value drops in crashes, putting retirees at risk Defined Contribution plans do not guarantee a payout like pensions; it only guarantee contributions.
4. But Kiyosaki thinks Bitcoin is an early time bomb!
Yes. Bitcoin remains digital gold, according to Kiyosaki, protecting against government printing money and other economic uncertainties through wealth preservation amid volatility.
Glossary of key terms
1. ETFs (Exchange-Traded Funds): A collection of investments (such as stocks or bonds) that you may trade on a stock exchange, by the same principles that you may get a bag of assorted snacks rather than one.
2. Bitcoin: A kind of digital currency that’s not governed by any bank or government. Think of it as internet cash that human beings can transmit to anyone, anywhere, at any time.
3. Gold (Physical Gold): A shiny, precious metal that humans have used to store wealth for thousands of years. It’s usually held as coins or bars to hedge against money losing value.
4. Silver (Physical Silver): Cheaper than another precious metal gold. People purchase silver coins or bars to save money in a manner that they consider to be more secure than cash.
5. 401(k): A retirement savings account provided by many jobs in the United States. You put a section of your salary into it and hope that over time it will grow—like planting a tree and waiting for it to produce fruit later.
6. Defined Benefit (DB) Plan: A retirement plan in which your employer agrees to pay you a fixed amount each month after you retire. It’s like receiving a regular salary even if you are no longer working.
7. DC = Defined Contribution (DC) Plan: A retirement account, such as a 401(k), into which you deposit money with hope it will grow. There’s no roof saying how much you will end up with—it’s up to how well the investments do.
8. Ponzi Scheme: A scheme that uses money from those who invest later to pay those who invested earlier, pretending to be profit. It’s like robbing Peter to pay Paul—it all collapses on itself.
