Robert Kiyosaki opens the show with an energetic introduction, reminding us that the Rich Dad Radio Show is here to deliver both good and bad news about money. This episode specifically focuses on taxes and real estate, revealing the secret sauce that allows the wealthy to increase their income and reduce their tax obligations.
Kiyosaki shares a memorable moment from the 2016 presidential debate between Donald Trump and Hillary Clinton. When accused of not paying taxes, Trump retorted, "That means I'm smart." While this comment angered many, Kiyosaki points out that Trump’s approach is one of financial intelligence. Unlike career politicians, entrepreneurs like Trump and Kiyosaki leverage the tax code to their advantage.
The Importance of Asset Classes
Kim Kiyosaki underscores the significance of choosing the right asset class, highlighting the four basic types:
- Business
- Real Estate
- Paper Assets (stocks, bonds, mutual funds)
- Commodities (gold, silver, Bitcoin, oil, gas)
Kim emphasizes that understanding how taxes affect each asset class can lead to smarter investment decisions. This episode features two expert advisors, Tom Wheelwright and Ken McElroy, who provide invaluable insights into real estate and its tax benefits.
Meet the Experts
Ken McElroy:
Ken is a seasoned real estate investor and author of several books in the Rich Dad series. He manages a vast portfolio, including multifamily units, self-storage facilities, office spaces, and land developments, primarily in Texas and Arizona. Ken illustrates how borrowing money for real estate can result in minimal tax liabilities while generating substantial returns.
Tom Wheelwright:
Tom, a tax advisor, deconstructs the tax advantages of investing in real estate. He explains how the tax code incentivizes debt and depreciation, allowing investors to legally offset their taxable income and defer taxes.
Real Estate: The Ultimate Tax Shelter
Robert and Kim discuss their strategy of acquiring real estate to offset their business income. They explain that cash is a liability due to inflation and taxes. By converting cash into debt and investing it in real estate, they not only generate tax-free income but also benefit from property appreciation.
Ken McElroy elaborates on this point by sharing a real-life example of turning a financially distressed property into a profitable investment. He explains that the key to success lies in excellent property management and strategic renovation.
Misconceptions about Diversification
Kim and Robert address the common financial advice of diversification. They argue that owning different paper assets like stocks, bonds, and mutual funds does not truly diversify your risk. Real diversification involves investing in tangible assets like real estate, commodities, and businesses.
The Role of Teamwork
The Kiyosakis stress the importance of having a knowledgeable team. Real estate investments require a skilled team for management, legal guidance, and strategic planning. They narrate their own journey from managing properties themselves to partnering with experts like Ken and Tom, who have significantly amplified their investment success.
Conclusion
In summary, the rich don't avoid taxes through illicit means; they use sophisticated strategies enabled by the tax code. By leveraging debt and investing in real estate, they convert liabilities into assets and enjoy legal tax benefits. This episode of the Rich Dad Radio Show offers a masterclass in financial literacy, showing that with the right knowledge and team, anyone can improve their financial standing.
For those looking to delve deeper into these strategies, the Kiyosakis recommend reading Tom Wheelwright's book "Tax-Free Wealth" and Ken McElroy's books on real estate investing and property management.
Thank you for joining us on this comprehensive look at how the rich make more money and pay fewer taxes. Stay tuned for more episodes and insights from the Rich Dad Radio Show!
Disclaimer:
The information provided in this video is for educational and informational purposes only. It should not be considered as financial advice or a recommendation to buy or sell any financial instrument or engage in any financial activity.
The content presented here is based on the speaker’s personal opinions and research, which may not always be accurate or up-to-date. Financial markets and investments carry inherent risks, and individuals should conduct their own research and seek professional advice before making any financial decisions.