Why the author of ‘Rich Dad, Poor Dad’ thinks savers are ‘losers’

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Kiyosaki touts the value of goods over money, but both have their place.


Key points

  • Robert Kiyosaki says savers lose out because the rate of inflation is higher than the interest paid on savings accounts.
  • Instead, Kiyosaki suggests putting money into gold, silver, or Bitcoin, but these commodities also come with risks.
  • Keeping three to six months of living expenses in a savings account could help you if you lose your job or face another financial emergency.

Robert Kiyosaki, the outspoken author of rich dad, poor dad, does not like to leave his money in the bank. Indeed, the expression “the savers are the losers” is one of the many slogans of the writer. Right now, inflation is around 8%, and even the best savings accounts only pay an APY of 2% or 3%. The result? Money in the bank may earn a little interest, but the rising cost of living means it won’t go as far as it used to.

Why Kiyosaki Says Savers Are Losers

Some people think that the terms “saving” and “investing” mean roughly the same thing. But when Kiyosaki talks about savers, he’s referring to people who leave their money in the bank, not those who invest their money.

Where a savings account can generate an APY of a few percent at most, historically, money invested in the stock market can generate much higher returns. The caveat is that there are no guarantees when it comes to investments, which can go down as well as up.

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Kiyosaki recently tweeted, “SAVERS ARE LOSERS. 25 years ago in RICH DAD PAPER DAD I declared that savers were losers. . Savers will be the biggest losers. Invest in REAL MONEY. Gold, silver and bitcoin.”

Let’s look at some of these ideas in more detail.

1. Real inflation vs official inflation

Various factors have combined to drive prices up this year, so much so that inflation may well end up being one of the defining words of 2022. But did you know that there are different ways to measure inflation? Not only do people’s shopping habits vary wildly, but the quality of products can change. It is therefore difficult to compare like with like and to know how prices change. As a result, some economists measure price increases differently and argue that inflation is even higher. This is why Kiyosaki claims that “real inflation” is actually 16%.

2. US debt and the Fed rate hike

The US national debt has just passed $31 trillion for the first time. This presents a number of long-term risks for everyday savers. One of the dangers is that more taxpayers’ money will be earmarked to service the national debt, which could lower people’s standard of living.

At the same time, the Federal Reserve is trying to control inflation, and one of the tools at its disposal is to raise interest rates. The problem is that it is a blunt instrument – ​​not only does it make the national debt more expensive, but it could also trigger a recession.

3. Cash for Gold, Silver or Bitcoin (BTC)

Part of the thinking behind Kiyosaki’s comment is that the government can print more money, but it cannot generate more gold, silver, or Bitcoin. The risk of creating more money is that it could devalue the dollar. On the other hand, the commodities mentioned by the author carry their own risks, especially Bitcoin, which is extremely volatile. If you’re looking for a safe place to put your savings, it’s important to understand how each asset works.

Should you leave your money in the bank?

Kiyosaki is right to point out the disparity between the interest you’ll earn on a savings account and the rate of inflation. Investing in assets can beat inflation over time. However, even if savings rates don’t keep up with the cost of living, dollars are still useful. The trick is to hold the right amount of money and invest the rest.

It’s unclear what will happen to the economy in the next year or two. This uncertainty is one of the reasons for keeping money in the bank. Many financial experts advise putting three to six months of living expenses in an emergency savings account. Some advise building up emergency reserves for a year in case of a severe recession. The idea is to have accessible cash on hand to tide you over if you lose your job or face another financial crisis.

Cash might not go as far as it used to, but you’ll still need it to pay your bills and keep a roof over your head. Last time I checked, it wasn’t easy to pay a landlord or building society using bitcoins or gold. Money in a bank account is also FDIC insured, so if your bank fails, you’ll be covered for up to $250,000.

Bitcoin, gold, and the stock market are all investments — assets that you hope will increase in value over time. The ideal scenario is to build up your emergency savings first, then look to invest some money and build yourself wealth for the longer term. This way, you can wait for price drops and hopefully profit from them over time. If you don’t have money in the bank, you may have to sell your assets at a loss to cover living expenses.

At the end of the line

Don’t let inflation and national debt warnings tempt you into making rash decisions. Before investing money, build an emergency fund in an accessible savings account. Make a plan outlining what assets you want to buy, how you will build a diversified portfolio, and how you will manage it. Keeping all your money in cash could mean you lose some of it to inflation, but putting it in Bitcoin could mean you lose it completely. Like many things in life, it’s about finding the right balance for your situation.

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