As we just heard, Rich Dad’s Robert Kiyosaki was on the Neil Cuvuto show explaining his prediction, we’re diving into some wisdom from Robert Kiyosaki, the brain behind the famous “Rich Dad Poor Dad” philosophy. If you’ve ever wondered about the impact of inflation on your wallet and how to protect your hard-earned money, you’re in the right place!
Why Invest in Assets?
Robert Kiyosaki has long championed the idea of investing in assets that don’t lose their sparkle over time. Think of gold, silver, and the digital gold of our era – Bitcoin. These assets are like financial superheroes, battling the villain known as inflation to protect the value of your investments.
Bitcoin: The New Kid on the Block
Bitcoin is a bit like the new, cool kid in town. It’s scarce, which means there aren’t endless amounts of it floating around. This scarcity is a big deal because, unlike traditional money that can lose value as more is printed, Bitcoin is designed to do the opposite. Its value can actually go up over time, making it a fascinating option for growing your purchasing power.
The Tale of Two Economies
Kiyosaki points out a worrying divide in our society: those who can afford to invest in these shiny assets and those who can’t. With inflation on the rise, this divide only gets wider. It’s like being on two different boats – one is a yacht, and the other is barely staying afloat.
The Fed’s Inflation Confession
Recently, the Federal Reserve admitted something Kiyosaki has been cautioning us about: inflation isn’t just a guest; it’s moved in to stay.
- Federal Reserve Interest Rate Cuts – Federal Reserve Chair Jerome Powell reiterated that while the Fed expects to cut interest rates this year, it requires “more good inflation readings” and confidence that annual price increases are aligning with its 2% target before proceeding.
- Inflation and Economic Growth – Despite aggressive interest rate hikes starting in March 2022 to combat inflation, the U.S. economy continued to grow, with a strong job market and hopes for a “soft landing” without triggering a recession. Powell highlighted the economy’s resilience and the need for cautious rate adjustments.
- Powell’s Stance on Declaring Victory Over Inflation – During a discussion, Powell expressed reluctance to declare victory over inflation, citing superstition and the unpredictable nature of economic trends.
This acknowledgment is a big deal because it confirms that the cost of living could keep climbing, making it harder for many people to keep up.
Before You Jump Into Bitcoin…
If Bitcoin has caught your eye, Kiyosaki says, “Hold up! Do your homework first.” Bitcoin is exciting, but it’s also a whole new world of investment. Understanding what you’re getting into is key to making smart financial decisions.
Just to name a few:
- Legitimacy and Technical Details – Advisors should review the cryptocurrency’s white paper, development team, blockchain specifications, and consensus protocol. Vetting the utility, security, and capabilities of the platform is essential.
- Market Dynamics and Liquidity – Evaluate real-world adoption metrics, trading volume, volatility, market capitalization, use cases, and historical returns. Assess liquidity risk and the potential influence that changes in liquidity can have on crypto values.
- Exchanges, Platforms, and Custody – Vet any crypto exchanges, wallets, custodial services, or trading platforms for security practices, insurance coverage, segregated asset storage, and regulatory compliance.
- Volatility, Allocation, and Risk Modeling – Use risk analysis frameworks like value at risk or modern portfolio theory to model crypto asset volatility and how these relate to other parts of the client’s portfolio. Construct an appropriate allocation of crypto based on the client’s risk tolerance.
- Regulatory Landscape – Research legal classification, taxation policies, reporting requirements, investor protections, and other regulations applicable to the crypto asset in the relevant jurisdictions, then monitor for ongoing changes. Confirm that the platform is licensed or registered within its jurisdiction and that it is subject to real and frequent third-party financial audits.
- Transparency – More credible platforms are upfront about all fees, ensuring that there are no surprises for your client. A platform should maintain open communication, especially during market upheavals or technical challenges.
- Skepticism Towards Promises – Approach projects promising sky-high returns with great caution. If the promoters of the crypto are promising excessively favorable returns, it warrants skepticism. A crypto’s promoters need not be fraudulent but can be taken away with their rhetoric and hopes. Many projects are nothing more than replicants of existing cryptocurrencies and blockchains with different names and terms – at the stage the industry is in, it is very rare for something new (and legitimate) to be introduced.
Wrapping Up
Robert Kiyosaki’s insights remind us of the importance of being smart with our investments, especially in times of economic uncertainty. Whether it’s gold, silver, or Bitcoin, diversifying your investments can be a wise strategy to protect your financial future.
Feeling inspired to learn more about protecting your finances from inflation? Start by educating yourself on different types of investments and consider how you can diversify your portfolio. Remember, knowledge is power, especially when it comes to your money!
Until next time, keep exploring and stay financially savvy!
