# richdad cashflow 101



## adrian (28 Aug 2003)

Has any one played the Cashflow 101 game by the Robert Kiyosaki, author of 'Rich Dad Poor Dad' books?

If so what was your experience and would you recommend the game? I'm curious, but it's expensive to buy just to try.


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## househunter1 (28 Aug 2003)

*cashflow 101*

This is an excellent tool for learning the concepts of cashflow, investing etc. Definitely worth the $200, IF you have friends who are interested in this also who will play it with you. Like anything else, its not much good if it does'nt get used.


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## rinawade (28 Aug 2003)

*"Rich Dad, Poor Dad" book*

Can't comment on the game, but recently finished his book.

The advice relating to stocks in Kiyosaki's RDPD book is at variants to the advice in the AAM guide in the sense that he believes in research, tracking and investing in specific stocks over the short term. He shuns the long-term balanced portfolio. 

There are several glaring inconsistencies in his book. Having said that it is easy to criticise and anyway the guy is definitely more successful than yours truly.


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## daltonr (28 Aug 2003)

*Re: "Rich Dad, Poor Dad" book*



> Having said that it is easy to criticise and anyway the guy is definitely more successful than yours truly.



Unfortunately It's debatable whether any of that success was achieved in the ways described in his books.

I like the central idea in Rich Dad Poor Dad, i.e. Buy Assets not Liabilities.  Buy Things that generate cash not consume it.

But you could get all that in a brochure, or on a piece of card.  Somehow he has managed to write a couple of books saying exactly the same thing.

And most of the other advice he gives is very dodgy indeed.

Don't pay €200 for his game.  It won't teach you much that you can't get from the Book.

-Rd


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## adrian (28 Aug 2003)

*Cashflow 101*

Guys,

Thanks for the replies.

DaltonR, yes I've come across that link that you posted. I've just read one of the richdad books, and while I'm not one to champion RK's ideas and advice, I'm just keeping an open mind and trying to learn. You don't mention that you've actually played the Cashflow 101 game, yet you seem to be quick to give it the thumbs down? I thought that using a game might be an interesting approach to learning.


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## Tommy (28 Aug 2003)

*Re: Cashflow 101*

Dunno anything about the game, but $200 would buy you a lot of quality educational books on investment.


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## ninsaga (28 Aug 2003)

*Re: Cashflow 101*

$200 looks excessive. 

Whether You agree with Kiyosaki or not & maybe You have suspiscions with regard to how he really generated his wealth (which I believe are primarily from his books rather than his investments).....the books are thought provoking & do lead to a new way of thinking about financial matters........

There are hugh similarities between RDPD & The cash flow Quadrant anyway so his secret looks to be getting new income by putting a dif spin on teh same story - fair dues to him!

ninsaga


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## househunter1 (29 Aug 2003)

*cashflow101*

$200 is excessive. By selling a monopoly style board game, a few tapes and a video, RK could probably sell this for $50 and still make a profit. It is definitely excessive if you buy it and end up not making/saving money out of it.  However we've learned alot from playing this game. Getting an ordinary person in the habit of recording their income and expenses  and assets / liabilities regularly is a priceless lesson I believe. No-one ever showed me how to do that before. Its also very easy!

I also agree that the things he teaches could easily be summed up on 1 page, nevermind a few books. However I believe the main point is a change in context, or a different way of thinking, so you can harness these ideas. This may take years. RK says it took him years. I can see why an MBA would be philisophically opposed to this type of thinking. 

BTW RK admits he does have mutual funds and a 401k (retirement) plan as a plan to be safe and secure in retirement, not to be rich. That involves another plan. 

What advice specifically give that is dodgy? I'm more interested in the content of his advice rather than researching his own financial records. It would be interesting to debate this.


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## ClubMan (29 Aug 2003)

*Re: cashflow101*

That site link posted by _daltonr_ above is very interesting - just working my way through the critique of _"Rich dad - poor dad"_ now which mentions plenty of flaws and potential dodginess.


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## daltonr (29 Aug 2003)

*Re: cashflow101*



> You don't mention that you've actually played the Cashflow 101 game, yet you seem to be quick to give it the thumbs down?



Yep.  I decided instead of buying the game I'd read as much as I could about it to see what it teaches.  

If you want to be rich.  Be Frugal.  Cut your spending, increase your income.  Know your income and expenditure intimately. Eliminate debt BEFORE you even consider investing. Remember that you can't spend the same Euro twice.  If you drive that new car for 4 or 5 years after it's paid off, you could probably save enough to buy the next one for cash.

I know people who disagree with this, they reckon they can afford to live with debt.  That's fine, each to their own, but the majority of the truly wealthy people hate debt, and a lot of people with middle class debt struggle through never quite getting clear, and are always vunerable.  You gotta choose for yourself.

-Rd


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## piggy (29 Aug 2003)

*Re: cashflow101*

Hi Daltonr,

Being rich and managing your finances well are two different things although I suppose this is subjective and could be argued. 
In terms of being rich...which is what RD advocates, being frugal is not going to get you there. Investment and building successful businesses will. 

One interesting point, and I'm not saying either you or he is right, RD says quite the opposite. he seems to believe that rich people do have debt, just different types of debt.

In terms of living with debt, I think the type of debt you have is important. If you owe EUR 18,000 on your new car, that's bad debt. If you owe 95,000 on your new investment property...well, maybe that's good debt. 

Piggy.


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## daltonr (29 Aug 2003)

*Re: cashflow101*

Hi Piggy,

Sorry for the confusion, I thought I covered that on a previous post.  Investing in things that generate cash is good so a mortgage on an investment property is ok.  RK describes it as having a loan that someone else pays for.

With regard to your point about being rich and managing your finances well, they might be more closely related than you think.  One defintition of rich or wealthy (as I've posted before) is:

How long can you survive if you can't work.  You lose your job, retire, or are injured or whatever.

You don't have to have a Ferrari in the driveway and a big house to be Rich by this standard.  A person who has saved consistently, kept debt low or non-existant, and has perhaps invested in some income generating assets, could be very rich, being able to last for months, years, or indefinitely.
While a person with a flash car a boat and a big house might not last a month.



> being frugal is not going to get you there. Investment and building successful businesses will.



When I say frugal I'm not talking about making the kids eat cornflakes without milk.  I'm talk about about minimising unnecessary spending.  E.g. A new car before the old one is fully paid off, or immediately after it's paid off.

You can only invest money you have, and you only have the money you don't spend.  That's what I meant by that.
You can only get rich by reducing spending, and/or increasing income.  Preferably both.

I do like RK's idea of maximising passive income, income you don't work for.  It's a good idea each year to figure out how your passive income compares with your active income, from work.

One criticism I have of him is that he focuses too much on income earning investments.  For a young person a focus on growth might be more appropriate, e.g. Microsoft doesn't pay a dividend, but it's been a good share to hold up until the past few years.  Investing for income is often associated with older people who can't afford the risks of growth investing.

-Rd


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## ClubMan (29 Aug 2003)

*Re: cashflow101*

*e.g. Microsoft doesn't pay a dividend*

Actually they do now!


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## daltonr (29 Aug 2003)

*Re: cashflow101*

Well I'll be damned.
I must look at their price again, it's been a while.  They must have put in some seriously bad numbers if a dividend was needed.

I suppose you can only get so big and still claim to be a growing firm.  

-Rd


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## piggy (29 Aug 2003)

*Re: cashflow101*

*Quote:
"When I say frugal I'm not talking about making the kids eat cornflakes without milk"*

:lol  Must try that one when I have kids all the same. The price of milk these days!!!

I totally agree with you about unnecessary spending by the way, and couldn't disagree with anything you said. All good sound advice, but I still draw the distinction between rich and managing finances well, although they are tightly connected. Anyone who owns a Ferrari and has a big fancy house and couldn't survive a month after being laid off isn't really rich in the first place...just stupid. 
He defines rich as being anyone who is worth over a million (I think). Not saying he's right, but it's a fair assumption I think.

Piggy.


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## daltonr (29 Aug 2003)

*Re: cashflow101*



> Anyone who owns a Ferrari and has a big fancy house and couldn't survive a month after being laid off isn't really rich in the first place...just stupid.



That's the point I'm making.  Rich or Wealthy is a measure of how long you can last which is determined by how you manage your money.

I think this is RKs definition too.  I've seen it in a number of places.  As far as I know average "Wealth" in the US is 2.5 weeks.

Putting a definite figure like 1,000,000 doesn't make sense to me.  You could say that with that kind of money you should be able to get a passive income of 30,000 to 60,000.  Which comes back to the original point, of measuring how long you could last.  

But there are some people who could live forever on a net worth of 500,000 while others have such high expenses that even 5,000,000 wouldn't be enough.

I guess the answer is you are as rich as you feel not as rich as you appear.  People seem to have a habit of getting this the wrong way around.

-Rd


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## ClubMan (29 Aug 2003)

*Re: cashflow101*

*They must have put in some seriously bad numbers if a dividend was needed.*

A little more information about this on Google news.


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## LiamG (1 Sep 2003)

*Re: cashflow101*

I have played the game myself and found it interesting if expensive for what you get. However, if it helps to develop a new way of thinking then it is worth the money.
RK has actually come out with a new "electronic" version which is cheaper. But I find that the discussions AFTER the game are better than what you learn during the game.

With regards to the link from Daltonr, I found this most interesting. Mr Reed seems to have done a lot of background checking on RK. The RK phenomenon in Ireland is growing daily - has anyone been to Hodges Figges recently - there is a whole table devoted to his (and his advisors) writings. While I did purchase several books I will not be doing so in future - all he does is rehash the original with a little bit of new spin.


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## IanL (1 Sep 2003)

*Cashflow101 Games Organised*

Hi Folks,
Just to let you know that myself and 2 others arrange game sessions on a frequent basis.  Mainly in Dublin due to the demand but we have also done them around the country.  We usually hire a hotel meeting room and split the cost of the room between the participants.

We also have Cashflow 202 which we are now introducing to people who have played 101 a few times.

More details in the "Upcomming Events" of the "DONT ASKABOUTMONEY SECTION" of this board.

Slán,
Ian


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## adrian (1 Sep 2003)

*Re: cashflow101*

"all he does is rehash the original with a little bit of new spin"

Agree with you there, LiamG - I think reading one of his books is probably enough.

"if it helps to develop a new way of thinking then it is worth the money"

Interesting that most people who've played the game (and who've read his books) seem to say the same thing, i.e. helps you develop a new way of thinking... I suppose without playing the game myself it's hard to see exactly what you mean, but can you give any examples? Because I thought the game was supposed to teach you accounting, finance and investing.

This is how the game is promoted on richdad.com

"CASHFLOW® 101 is an educational program that teaches accounting, finance, and investing at the same time and makes learning fun. Learn how to get out of the rat race and onto the fast track where your money works for you instead of you working hard for your money. The educational program, CASHFLOW® 101, includes three audiocassettes which reveal distinctions on CASHFLOW® 101 as well as valuable investment information and a video titled "The Secrets of the Rich". CASHFLOW® 101 is recommended for adults and children age 10 and older."

So does it actually teach accounting, financing and investing, or just get you to think in a different way about those three things?


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## ClubMan (1 Sep 2003)

*Re: cashflow101*

From what I've read around the subject (and not the books themselves admittedly) it seems that rather than teaching a "new way of thinking" RK, and many others who pitch their own "systems", most likely simple spurs people into thinking for themselves about their finances (notwithstanding the whole "system" and "cult" allegations levelled at him). In personal finance there is no magic bullet. Whatever precipitates it analysing one's finances and making appropriate plans is no bad thing. On the other hand, believing that there is some sort of get rich quick/easily plan out there *is* a bad thing in my opinion.


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## LiamG (1 Sep 2003)

*Re: cashflow101*

Hi adrian

Basically RK is preaching about the value of investing rather than consuming. The game illustrates that point by one going around the "rat race" continuously until one takes a punt and decides to invest. Unless a player invests they cannot get out.

I think it would be a bit much to say that it teaches you about accounting, finance and investing; it baiscally get you thinking about a new way of doing things rather than drawing a cheque each month from a job (i.e. start up your own business, buy investment property or shares). It gives a little insite into accounting (P&L and Balance sheet) but you certainly would not be an accountant at the end of it!!


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## adrian (1 Sep 2003)

*Re: cashflow101*

Thanks for the reply, LiamG

"On the other hand, believing that there is some sort of get rich quick/easily plan out there is a bad thing in my opinion."

Agree with this Clubman, however I also think that if you believe you'll never be able to get rich, then you won't. If you believe you'll never be able to understand real estate, the stock market or starting your own business, then you won't do any of these things. If you start to believe that it's possible, then at least it's a start.

I think that not believing at all is as bad (if not worse) than believing that there's an easy path to riches.


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## ClubMan (2 Sep 2003)

*Re: cashflow101*

*I think that not believing at all is as bad (if not worse) than believing that there's an easy path to riches.*

No offence but this cult like appeal to a sort of quasi-religious sense of faith is what bothers me about these sorts of systems. This sort of nebulous/touch-feely stuff has no place in any reasonable assessment of one's personal financial situation and making objective plans as a result. That is the basis for a large part of _John T. Reed's_ criticism above and I have to agree with him on that front.


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## LiamG (2 Sep 2003)

*Re: cashflow101*

I know where you are coming from Clubman. I found the first RDPD very motivational - the rest I bought were much of a muchness.
However, i would point out that in none of RK's books is there any specifics - only general points like invest, purchase income generating assets etc. It is general ideas he tries to get across. The lack of specifics is a negative from my point of view but probably helps with regard to its wide appeal (i.e. it doesn't get too technical so the reader keeps reading)
I do see the cultishness of the whole thing however.
May I ask if you have read any of the books? If so what were your opinions following reading & how they changed after reading Mr Reed (I know mine did!)


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## ClubMan (2 Sep 2003)

*Re: cashflow101*

*May I ask if you have read any of the books?*

As I mentioned above I haven't read any of the books - just skimmed some interviews and critical appraisals.


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## adrian (2 Sep 2003)

*Cashflow 101*

My comment was meant to read 

"I think that not having belief in anything is as bad as believing you're going to get rich quick and easy" - I certainly don't think believe there's an easy way to get rich. 

"no place in any reasonable assessment of one's personal financial situation and making objective plans as a result. "

In "Retire Young, Retire Rich" RK recommeds that you hire a personal accountant, get to know a good lawyer etc.

Immediately after reading one of RK's books I searched the internet for critics of him, as I had serious doubts about the guy. I came across that page by Mr Reed which confirmed my doubts. 

However you should read one of his books, try "Retire young, retire rich". It is an interesting read, if only just to confirm your suspicions. Everything from discussing how real estate is the best investment to building businesses and leveraging people to make money for you. He writes about Bill Gates explaining that he is so rich because he created a corporation of thousands of people to develop his products, all working for him. Yes, stating the obvious how he became rich. But most people will have the mindset of being good employees serving their companies, and climbing the corporate ladder. Made me think of Michael O'Leary here, he was working in an office as an accountant or something until he went out on his own and built Ryanair. Used to think he was a pratt until I read RK's book, and now I admire him.

There is some good content in the book between the "nebulous/touch-feely stuff" and the "quasi-religious sense of faith" ;-)


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## rainyday (2 Sep 2003)

*Re: Cashflow 101*



> he was working in an office as an accountant or something until he went out on his own and built Ryanair.


Actually, he was working as an accountant while running a newsagent shop in Walkinstown in the evenings...


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## househunter1 (2 Sep 2003)

*cashflow 101*

Here's some criticism's I had about Mr. Reeds 'criticisms'

He says RK gives no real advice, nothing specific. - Correct RK sells financial education books not specific financial advice. He has opened up a new market. Most authors give specific advice on what to invest in.

He gives a number of quotes and then says 'wrong' - This world is not black and white. A sucessfull incestor once told me there are no 'right' and 'wrong' ways to invest. There are many excellent ways to invest.

His analysis is totally one sided and unobjective. This guy has a bee in his bonnett.

RK most probably holds his wealth in a Nevada type corporation, meaning not even the tax man has access to details of his wealth. He does'nt have any. It is all held in an anonymous and perfectly legal corporation.

However fair play to him for kick starting a very interesting and educational debate!


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## Tommy (2 Sep 2003)

*Re: cashflow 101*



> RK sells financial education books not specific financial advice. He has opened up a new market. Most authors give specific advice on what to invest in.



I don't think this is correct. Any decent bookshop stocks a good variety of "financial education" books, the majority of which don't tip any particular shares or investment strategy. I think its a bit much to claim that Kiyosaki (spell??) invented this genre.


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## piggy (2 Sep 2003)

*Re: cashflow 101*

I've read a couple of Kiyosaki's books..._Retire Young, Retire Rich_ and _Rich dad's Guide to Investing_. He is guilty of rehashing the same stuff in his books. For this reason I'd never buy another one. But he is a motivator and his books are interesting. Someone else here already mentioned that he strongly and regularly informs his readers to surround themselves witha  team of people, lawyers, accountants etc...so I don't think he necessarily gives bad advice.
I've also read some of his criticisms, including those that he made up the whole rich dad, poor dad scenario. I was a bit disappointed when I read this, but on reflection, it doesn't really matter. 
Ultimately, I think Kiyosaki is offering inspiration for those in society who strive to go from mediocre to filthy rich.

Piggy


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## LiamG (2 Sep 2003)

*Re: cashflow 101*

With due respect Clubman, if you have not read his books and then just read a critique by Mr Reed, how can you judge RK's books?
Personally (aside from the afore mentioned cultish side of them) I found them quite motivational - and am trying to get off my backside to do a few things than perhaps I would not have done had I not read them.


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## ClubMan (2 Sep 2003)

*Re: cashflow 101*

*With due respect Clubman, if you have not read his books and then just read a critique by Mr Reed, how can you judge RK's books?*

I wasn't judging his books - I was making observations about some aspects of his "system" which he also promotes through high profile interviews in the media.


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## LiamG (2 Sep 2003)

*Re: cashflow 101*

To be fair Clubman, I don't think that anyone would go off and use RK's "system" based on a "high profile media interview" - at most it would lead them to buy a book.


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## daltonr (2 Sep 2003)

*Re: cashflow 101*

Some people have said that RK doesn't give any bad advice, or specific advice.  But he does:  

He promotes the idea that investing through a company allows you to write off all sorts of things like Porches (Business Expense) and Trips to the Bahamas (Board Meetings)

He quite rightly suggests that people need to become financially literate and take control of their finances, and then turns around and peddles the idea that the Rich get Rich through loopholes.

He chastises people who don't understand basic financial terms, and then he makes up a new definition for 'Asset', ignoring the established meaning.

He has written a story about how to get rich in property, with specific examples of deals he did, even though there is no evidence that he did them.  Nowhere is there a disclaimer that these are illustrative parables.  Some of the deals he described are just not possible.  In true Religious/Cult style he covers himself by saying that there will allways be doubters who say that what he did is not possible.

He published a book (or two) predicting the fall of equities,
AFTER the fall had actually happened, but claiming his Rich Dad had predicted it all along.

He repreatedly claims that property is a better investment than Shares, even though over the period in which he claims to have been investing, the reverse has been true.

He appeals to people who believe that the only difference between them and the rich is that the rich have learned some simple insight which they missed out on because of their conventional education.

I presume he paid Today FM for the interview on "The Last Word", it was basically an Add for him in which he wasn't challenged.  We get these sweetheart interviews fairly regularly, they should be obliged to announce that it's an ad.

-Rd


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## Tommy (2 Sep 2003)

*Re: cashflow 101*

Liam to be fair I think you are misquoting Clubman and misrepresening his point.


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## LiamG (2 Sep 2003)

*Re: cashflow 101*

Hi Tommy

I apologise if you think I am misrepresenting Clubmans point. The point I am trying to make is that I think one should have at least read one of the books before damning them. 
From what I gather Clubman has "skimmed" certain elements of RK's opinions via interviews etc, then read Mr Reed and decided that his system is incorrect.

Incedentally, after reading Reed, it has opened my eyes too but having read a few of the books I feel I would have a more informed view.

Daltonr, I agree with a lot of the points you made. It always bothered me that the Cashflow game has a number of cards where you can "win" via stocks yet he then comes out in one of his subsequent books to forsee the end of the stock market!

As I said before, the main use of RK is, I feel, motivational.


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## ClubMan (2 Sep 2003)

*Re: cashflow 101*

*From what I gather Clubman has "skimmed" certain elements of RK's opinions via interviews etc, then read Mr Reed and decided that his system is incorrect.*

I never said that his system was "incorrect" and don't have enough understanding/insight (or inclination to find out more) to judge this to be honest. But I do have grave reservations about any sort of magic bullet get rich quick (or even slow) systems that people promote by writing "best seller" books (why not a book on how to write best seller books instead for example?). _RK's_ is just one. There are many more.


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## Tommy (2 Sep 2003)

*Re: cashflow 101*



> The point I am trying to make is that I think one should have at least read one of the books before damning them.



You don't necessarily have to read any of Kiyosaki's books to argue (convincingly IMHO) that *some * of his ideas are harebrained, for example, encouraging novice investors that it is a good idea.. 

(1) to invest in property using a limited company structure, a device which will be suitable in a small minority of cases but an absolute disaster otherwise.

(2) to claim tax deductions against rental income for all sorts of hooky quasi-personal expenses such as foreign holidays, Porsche cars etc when such expenses are clearly not tax-deductible and when claiming such expenses could cause a taxpayer horrendous problems and costs in the event of any future investigation of their tax affairs.


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## daltonr (2 Sep 2003)

*Re: cashflow 101*

Liam,

To be fair to Clubman, there are lots of things that we know are a bit hookey without actually trying them.  E.g.  if you describe a Pyramid Scheme then I can damn it without trying it.

You're right that it's isn't fair to damn an author without at least reading his books, but my interpretation of what Clubman said was that it sounded like "Just another Scheme" and we've seen these schemes before.  

He was relying on the reporting of John T. Reed, but then lots of people pass comment on Iraq based on the reporting of Bob Fisk et al, without actually being there.

There are a lot of GURU's out there willing to sell you their advice, but quite often they are unwilling to show you how the advice has worked for them.  RK will tell you about his big houses, his Ferrari's and Porche's, etc. etc.  And he probably is very wealthy, but much if not all of that wealth could be from writing books in which he lies about making his money in property.  When people have tried to dig into his property empire or business past, it doesn't bare much resemblance to what he describes.

Part of the problem of course is that an awful lot of people bought RDPD after the Last Word Interview so those people will staunchly defend RK for fear of seeming foolish.

I'm struck by how many similarities there are between these books and organised religion actually.

-rd


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## ClubMan (2 Sep 2003)

*Re: cashflow 101*

*You're right that it's isn't fair to damn an author without at least reading his books, but my interpretation of what Clubman said was that it sounded like "Just another Scheme" and we've seen these schemes before.*

Yes - that's my basic point.

*Part of the problem of course is that an awful lot of people bought RDPD after the Last Word Interview so those people will staunchly defend RK for fear of seeming foolish.

I'm struck by how many similarities there are between these books and organised religion actually.*

And I'd have to agree with that too. Being human there is an amazing amount of cognitive dissonance involved in a lot of what we do/think and financial decisions are not immune to this (but ideally should be!).

By the way - under no circumstances will I be going out and buying books like _RK's_ - or even borrowing them from the library or whatever.


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## LiamG (2 Sep 2003)

*Re: cashflow 101*

Hi Guys

Just FYI, I bought the book well before the Last Word interview.
What I thought the thrust of the book is actually quite commonsense - reduce outlays, increase income (from assets). Thats what I took from it - not the bit about holidays etc (which, was only an aside really).
I do see the point of the cultishness of it though - I registered on his website and have been encouraged to spend more money on his products!
I can see why people such as Clubman, Tommy etc would not be his greatest fans but if it encourages people to reduce debts and stop living beyond their means, I'm all for it to be honest. If, however, people read it and go off and incorporate a company/buy Porshes etc based on a generalised book then I'm afraid there is nothing ANYONE can do to help them!!


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## ClubMan (2 Sep 2003)

*Re: cashflow 101*

*I can see why people such as Clubman, Tommy etc would not be his greatest fans but if it encourages people to reduce debts and stop living beyond their means, I'm all for it to be honest.*

They would be just as well off reading the AAM Guide To Savings & Investments, other _AAM_ content, the Motley Fool etc. instead in that case. In fact they'd be better off since all of these resources are free unlike best seller books about specific "systems".


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## LiamG (2 Sep 2003)

*Re: cashflow 101*

As an avid reader of all the sites you mentioned, I would agree. However, as I read many financial books, I can see no real harm in RDPD - anything to improve ones financial education.


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## Slim (2 Sep 2003)

*Cashflow 101*

Hi All

Have read the posts above with interest. I think it is getting a little OTT. I am always interested in financial advice books etc but have realised that I only need one or two. I am afraid of wasting any newly acquired thrift on buying advice books. I have always been wary of sending off €X to the guy in the advert to learn how he became a millionaire and I certainly would never pay $5,000 to listen to someone telling me how I can if I believe I can etc...

Can't you see that this is essentially what this is? ...A rehash of Motley Fool (excellent) and others (Alvin Hall) etc... €200 is also too much for a board game that "teaches" you a lesson. Save the money, enrol in a nightclass, put the 5K towards a deposit on property to rent out or pay off personal debt... DO NOT GIVE IT TO THIS MAN TO BE TOLD THE BLEEDIN' OBVIOUS! - LIVE BELOW YOUR MEANS/PAY OFF UNPRODUCTIVE DEBT/INVEST IN A PROPERTY TO RENT OUT etc etc

Slim


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## adrian (2 Sep 2003)

*Cashflow 101*

I agree that $200 is too much for a board game and see your point "DO NOT GIVE IT TO THIS MAN TO BE TOLD THE BLEEDIN' OBVIOUS". The reason I originally asked the question was that I didn't want to be duped into spending that much for a game, and then feel foolish by having filled some schemers pocket. 

But no one on this board is talking about paying $5000 to listen to someone telling you can if you believe??

The books are another matter. I think I paid less than €10 for one of his books, now that's not going to break the bank. Just about the price of 2 pints in this country, now I know which is better value to me. 

Some of the stuff I learned from the book:
- what's good debt and bad debt
- that failures teach us more that success
- what it means to short a stock, what are the different kinds of options
- a flaw of mutual funds
- avoidance of CGT on real estate sale in US

A lot of people almost seem to have fear of what they dub "religious/cult type movements" - would never read one of his books, would never play the game, but would spend lots of time reading critical reviews or responding to this forum to give their views? Surely most people who read his books are interested in smart investing, will have read other books and are sensible enough to make good financial decisions for their own lives? I mean this guy is a best selling author, so if so many people are reading his books and receiving such bad advice we would see a lot of people who've read the books falling into financial ruin? Not happening.


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## ClubMan (3 Sep 2003)

*Re: Cashflow 101*

*A lot of people almost seem to have fear of what they dub "religious/cult type movements" - would never read one of his books, would never play the game, but would spend lots of time reading critical reviews or responding to this forum to give their views?*

I guess that could be aimed at me so once again I'll reiterate that I simply skimmed, and didn't spend lots of time reading, some of the interviews and critiques on _RK's_ stuff. I consider myself pretty open minded generally but I have no overriding desire to go deeper than this given what I gleaned to through skimming. A good example of cognitive dissonance or cult style behaviour in this context is arguably the attempted marginalisation by those who believe that the "system" does have something to offer of those who don't buy/read the book as having something to fear. While this doesn't really bother me I believe that it is BS. Notwithstanding my ignorance of the details, I am confident that I, and many others, have nothing new to learn from such systems that we cannot learn for free elsewhere. On a broader issue, quick fix/magic bullet/get rich quick schemes (whether or not _RK's_ fits the bill - I can't really say) are arguably misleading and dangerous to those who are naive about financial matters and/or don't have all their critical faculties about them when learning about them. All of this is merely common sense to me.

*I mean this guy is a best selling author, so if so many people are reading his books and receiving such bad advice we would see a lot of people who've read the books falling into financial ruin? Not happening.*

While I have no evidence to dispute that I wonder if you have any to support it? The thing that always makes me nervous about people writing "best sellers" about money making schemes is why are they doing this rather concentrating on practicing/perfecting/refining their schemes? Like the many contributors to _AAM_ I'm sure that there are many altruistic people out there willing to share the benefit of their knowledge/opinions but authors of such books tend not to fit this bill promoting, as many of them do, an aggressive and individualistic pursuit of wealth as the end behind the means. Not my bag particularly but fair enough if you're into that. However, by promulgating their schemes they are proving the efficient market hypothesis in action and, as their schemes become more widely understood, any inherent advantage that they provide or purport to identify (assuming the scheme does what it says on the tin in the first place!) will disappear and the playing field be levelled once again for all.


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## piggy (3 Sep 2003)

*Re: Cashflow 101*

*Quote:
quick fix/magic bullet/get rich quick schemes (whether or not RK's fits the bill - I can't really say) are arguably misleading and dangerous to those who are naive about financial matters and/or don't have all their critical faculties about them when learning about them.*

RK doesn't offer any get rich quick schemes, unless investing in property or building a business is a get rich quick scheme.

Other than that this debate has become pretty stagnant. I think it's fair enough to critisise RK. But I pretty much go along with Adrian's last post. I personally learnt something from it, and he is motivational. 

*Quote:
"However, by promulgating their schemes they are proving the efficient market hypothesis in action and, as their schemes become more widely understood, any inherent advantage that they provide or purport to identify (assuming the scheme does what it says on the tin in the first place!) will disappear and the playing field be levelled once again for all."*

RK's _"schemes"_ generally tend to be, invest in shares, property and build successful businesses. I don't think these ideas will disappear because RK is promulgating them!

Piggy.


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## daltonr (3 Sep 2003)

*Get Rich Quick*



> RK doesn't offer any get rich quick schemes, unless investing in property or building a business is a get rich quick scheme.



Actually he does describe MANY deals that he claims to have done which are the definition of get rich schemes.  

I don't have a copy of the book to hand, but anyone who's read it will remember examples of Selling Property before he'd finished buying it.  At a huge profit.

He gave an example of someone who didn't have enough money to put his kids through College or enough time to save it.  No problem, a tip from RK and the guys money was invested in a property that more than paid for college.

He gives an example of buying a house way below value, simply by including a cheque with his offer "to show he was serious"

He talks vaguely about slowly building up your wealth, by saving and investing.  But then the zinger...  His examples all seem to involve almost instant gratification.

Yes it's possible to spot a bargain property and turn it around quickly for a profit, but the probability of doing it is a lot lower than RK suggests, and it's dishonest of him to use examples like this to motivate people.

The ZERO DOWN phenomenon in the US really does destroy lives and RK is one of it's leading evangelists.

For an example of downright WRONG information here's an example.  At the back of the Cash-Flow Quadrant regarding Education He says....

Succesful Middle Class Investor
    Values education, often college graduate
    Attends courses & seminars on investing.

Rich
    Values only 'Street Smart' education, often 
    acquired from peers and/or self learned.

An good education may not ensure that your mind is in the right place to get rich, but it will make it easier for you to have a comfortable life with some money to invest if you ever do get your mind into gear.

RK's contempt for college education is dangerous if people pin their hopes on it.  But it's a great selling strategy for his books among his original target market, Amway America.

-Richard


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## tedd (3 Sep 2003)

*Re: Cashflow 101*

I have read (but not bought!!) the book. I would agree with Clubman. I didn't learn anything beyond what I knew from free sites like AAM and the Fool. I found some of the information far too specific to the USA. I particularly found the advice about surrounding yourself with a "team" of professionals (eg accountants and lawyers) somewhat difficult to translate to Ireland. It's fine if you are one of these professions yourself or have family members/friends/associates who work in these areas and can bash out your ideas and (hare-brained) schemes for hours to sort the wheat from the chaff. If you are paying an hourly rate for all this advice, well, you'd better make sure your ideas are profitable from the start!

I decided to spend less than I earned...and I started by not buying this book.


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## Slim (3 Sep 2003)

*Cashflow 101*

My last post was deleted, something to do with the thread being moved. I will try to recapture.

Adrian

Sorry, I was not addressing you directly although you started the thread. I read on some part of the discussion about weekend seminars costing $5k - possibly on the J. Reed link - I think that some of these GURUs are as bad a television evangelists.

However, I intend to borrow a book of RK's from my local library and see what he has to say, but I bet I've heard the basics before, probably on Motley Fool.  

Slim


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## Slim (15 Sep 2003)

*Re: Cashflow 101*

I hope my last post did not kill this thread. I borrowed the book, RDPD, from the local library and found it a pleasant read, good bathroom accompaniment. However, the underlying message is sound enough, ie don't waste your money on liabilities but buy assets. He points out that most people are too scared to invest in, say, property etc.  I agree and I have decided to invest in a house to rent out despite my lack of cash and fear of losing on the deal.

I take many of his anecdotes with a lot of salt and some of it verges on the unbelievable or else he really is so smart he knows that an oil company will strike oil the month after he buys its stock?? I am convinced that the RDPD scenario is a bit of a metaphor to tell his points. 

I may well borrow a follow up book but I have seen most of it before on Motley Fool etc. Nice read though.

Slim)8


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## ClubMan (15 Sep 2003)

*Re: Cashflow 101*

*I agree and I have decided to invest in a house to rent out despite my lack of cash and fear of losing on the deal.*

If you are concentrating most or all of your wealth in a single asset class and in a single geographic region (e.g. Irish property - your PPR plus a rental property) then most observers would agree that you are exposing yourself to greater risk than if you diversified your investments (by asset class and geographic region and risk/reward profile). This may be a suitable investment strategy for some individuals, particularly if they understand all of the implications and risks etc., but in general concentrating investments in this way would not be considered prudent. I presume that you're not investing in property mainly or solely because of what you read in one book!?


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## daltonr (15 Sep 2003)

*Re: Cashflow 101*

>you are exposing yourself to greater risk than if you >diversified your investments

Rich Dad Poor Dad doesn't go into this at all which is a big weakness.  RK's philosophy is that Property is the best investment, full stop.

He uses the argument that a bank will not loan you the money to buy shares because the banks know shares are not secure.  That's nonsense.  If that was their criteria they'd never lend money for Cars or Holidays because they have no return.  Banks only care if you can pay them back.

I think RK's fascination with Property is it's easy to convince people that it's easy to make money from it.   Everyone understands that it's better to own your home than rent, so it must be better still to rent to others.

The show on BBC at the moment about property fortunes is also slightly dangerous.  Unless they follow it with "How I lost my shirt in Property", it's be worried that they weren't being balanced.

-Rd


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## ClubMan (16 Sep 2003)

*Re: Cashflow 101*

In general terms (i.e. not referring specifically to any contributors to this topic)...

It always amazes me how many people will invest in property rather than (directly or indirectly) in equities for example, often because they consider the former easier to understand than the latter (see yesterday's _Tribune_ for an example - a middle aged couple who bought four properties in the same estate for €800,000 in total and shied away from any equity investments because they reckoned that they couldn't understand the stock markets) while not realising that residential investment property should usually be treated as a business venture rather than a more straightforward personal investment. Property investment has its place in an overall balanced investment portfolio for some individuals but the assumption that property is a good or better investment per se is a fallacy in my view and some people seem to plunge in with a very simplistic view of the implications and potential risks involved.


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## Slim (16 Sep 2003)

*Re: Cashflow 101*

Clubman

You are correct! I am not basing the decision to but to let on the book but have been hankering that desire for some time now. The book has had minimal effect on that decision but was an interesting and encouraging read. Regarding your comment on limiting one's exposure to one asset class, I think the advantage of property is that you can put down a deposit, borrow the rest and let someone else pay off the loan. Despite what people are saying, property in Ireland rarely heads south in the same way that shares can, so can be sold off if necessary.

Or am I being naive and simplistic? Doubts creeping in again...

Slim


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## rainyday (16 Sep 2003)

*Re: Cashflow 101*



> property in Ireland rarely heads south in the same way that shares can, so can be sold off if necessary.



Hi Slim - IMHO, it sounds like your decision is being based on the quite untypical performance of shares in recent three years. If we were having this discussion in late-1999 at the peak of the .com boom, would you be convinced that shares are absolutely the way to go because they have been performing so well? I've no doubt that many, many commentators would have stated at those times that 'shares rarely head south'.

The last independent comparision which I saw (from 2001) showed that, over time periods of 20-50 years, equity investments narrowly beat property investments by 1-2 percentage points.

However, I have been put off property by some other disadvantages. You can't sell 10% of a house - If you need cash for an unexpected bill, you can easily sell 10% of your shares overnight. To get that amount of cash out of a house, you would probably need to top-up your mortgage (incurring legal costs) or sell off the entire property. I'm also concerned about the lack of diversity. My biggest asset is my house. By purchasing another property, that would mean that a huge portion of my personal wealth would be dependant on the Irish house market.

There is no right/wrong answer for this one - but that's my tuppence worth.


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## ClubMan (16 Sep 2003)

*Re: Cashflow 101*

_Slim_ - I am definitely not trying to undermine you or anybody else who decides that property investment is the appropriate strategy for their own individual personal circumstances but just teasing out some of the potential issues/pitfalls in the hope that this information will help people perform the required analysis for themselves rather than simple assuming that "bricks and mortar" are necessarily a good or better investment than the alternatives.

I'd go along with most of _Rainyday's_ post above. I take your point about the "gearing" issue (borrowing to invest) but I personally would be reluctant to concentrate most or all of my wealth into one asset class and/or geographic location or to use my PPR as gearing for _any_ investment.

If you have doubts, even if they simply arise from my comments, then I would suggest that you do nothing until you have eliminated them or decided that they indicate that this is the wrong investment strategy for your personal circumstances after all.

Hope this helps.


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## daltonr (16 Sep 2003)

*Re: Cashflow 101*

Obviously you should only invest in things you understand.  But there's a flipside to that coin that people often ignore.

You should understand why another investment is not as good.  It's fine to give up diversity and plough everything into property, as long as you know why this is better than putting a portion in shares or Trackers or whatever.

Incedently it's interesting that the gearing aspect of property makes it so attractive.  Gearing is possible in equities too, if you buy on Margin.  Novices are advised never to do this, But property novices do it all the time.  

-Rd


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## Slim (16 Sep 2003)

*Re: Cashflow 101*

Rainyday & Clubman

I take your comments on board but wonder how I can establish whether or not it is absolutely the right thing to do. Would you say that it would be inadvisable to take out a 100% mortgage, cross secured on PPR equity, in order to buy to let? There would be very little margin for vacancy but I could carry a little each year. I realise that location is a big factor. I am living in a relatively small but prosperous border area. I could dither forever...

Slim


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## rainyday (16 Sep 2003)

*Re: Cashflow 101*

Hi Slim - IMHO, you should be extremely cautious about accepting any charge on your PPR for any investment (e.g. property or own business or whatever). Banks will not take out a mortgage on a property unless they are prepared to take your property off you if things go bad. I'd accept that the chances of this happening are very slim, but there is a chance, all the same.

Are you prepared to accept the small risk of seeing your family evicted? I'm not.


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## daltonr (16 Sep 2003)

*Re: Cashflow 101*

>There would be very little margin for vacancy but I could 
>carry a little each year.

Treat it as a business.  How much vacancy are you allowing for?  10 months occupancy per year is the norm for commercial letting, so that'd be a start.  can you offord 2 empty months per year?

In a worst case scenario if you can't find a tennant, how many months can you cover the mortgage?   3 would be a minimum IMHO.  6 would be nice.

I worry about a 100% mortgage for First time Buy To Lets.  In the time it takes to asses an investment you should be able to save a bit.  If you can't then you may be too close to break even to extend yourself further.  How much can you realistically save in 6 months or a year.  Have you an SSIA?  That'll give you a nice deposit and it's not that long to go.

-Rd


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## Slim (16 Sep 2003)

*Re: Cashflow 101*

Rd

Thanks for that. Yes, probably could cover 3 mths. Also could put up deposit of 15 -20% but thought I would go 100% and if it worked out put the deposit cash towards another property. I will treat it as a business.

Cheers

Slim8)


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## ClubMan (16 Sep 2003)

*Re: Cashflow 101*

*Would you say that it would be inadvisable to take out a 100% mortgage, cross secured on PPR equity, in order to buy to let?*

I personally would be very reluctant to do this because I'm relatively conservative when it comes to money/investments but somebody else who understands the risks involved and can live with them and would not be screwed in a worst case scenario might have a different opinion. Apart from completely wacky stuff it's generally difficult to say that an investment is advisable or inadvisable/good or bad in isolation without factoring in the personal circumstances of the person involved, possible alternative investment strategies etc. Sorry to be vague about it but there are no easy, canned, catch-all answers when it comes to this stuff. :|


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## daltonr (16 Sep 2003)

*Re: Cashflow 101*

Slim,

If you've factored in a reasonable amount of vacancy per year, and you feel you can cover some unexpected down turns, and you understand the risks and are willing to take them for the rewards, then go for it.

best of luck.

-Rd


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## capaill (16 Sep 2003)

*Re: Cashflow 101*

Slim

Another thing to factor into your costs for your rental property are
(a) Do you have to furnish the property?  If so what are the costs for that
(b) The management costs of letting a property.  A lot of people forget the overhead in maintaining their property so that it retains it's value.  Things such as reguarly painting the property, repairs to the building, even cutting thg the grass in the summer (if it is a house).  Also if problems arise you have to fix them for your tenants.

Just something that I find people don't consider when considering going into the "buy to let" area.  Your investment (time and additional costs) does not finish once you purchase the property.

C


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## ClubMan (16 Sep 2003)

*Re: Cashflow 101*

Yes - another pertinent point and another reason why residential investment property should be considered a business and not just a "passive" investment.


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## Slim (21 Sep 2003)

*Re: Cashflow 101*

Thanks all for the advice. I am viewing properties in the area starting Monday. I am just a little worried by recent comments from IMF regarding the possibility of a housing "bust" in Ireland and the overall prospects for economic growth in Ireland. I suppose I would hate to buy at X and then find similar properties going for a discount later in the year or next year. Also, if jobs disappear, who will rent the house?

Slim


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## daltonr (22 Sep 2003)

*Re: Cashflow 101*



> I suppose I would hate to buy at X and then find similar properties going for a discount later in the year



You need to decide if houses are overvalued or not.  You could just as easily put off buying and see prices rise.  You can't guess which way the market wil move, but you can try to figure out what the house is worth to you.



> Also, if jobs disappear, who will rent the house?



This is a different issue and well worth thinking about.  The worst scenario is getting caught with a double whammy, nobody to rent and prices dropping below what you paid.

But that's business.  If property prices were guarenteed to rise and there was always a plentiful supply of tennants, we'd all be millionaires and nobody would need to rent.

-Rd


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## Moneybags (11 Mar 2004)

Interesting article on how to play the Cashflow board game in today's Irish Independent (registration required).


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## MattGeri (17 Oct 2004)

Guys,

John T Reed is a wannabe Guru.

You can check out www.mastermindforum.com/k...toreed.htm for Roberts reponse to Reed.

Here is a little info on Reed:
1) Reed currently owns no investment real estate. His last purchase was 21 years ago and he never owned more than 2 properties at a time. 
2) "Buying real estate is scary. Anyone who has done it can tell you that. I was scared every time I ever bought a property, with good reason, it turned out. I lost $750,000 on my last two purchases." --- John T. Reed
3) And lots more here [broken link removed]


I have personally benefitted from reading and playing RK's material. I have setup a few online businesses and make a profit. I attended a real estate internship during the Summer which taught me a lot. I am now investing in Stocks and Shares.

I wish you all the best.
Matt


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## rainyday (17 Oct 2004)

> I attended a real estate internship during the Summer which taught me a lot.


How much did it cost you?


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## MattGeri (17 Oct 2004)

It was free, all I had to do was pay the flights from Ireland to the USA and back.

The internship was more geared towards personal development than real estate. It also went a lot into business. It was awesome.

Matt


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## daltonr (18 Oct 2004)

> It was awesome



Looks like you picked up more than financial info.
You're speaking fluent American.

-Rd


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## soc (4 Nov 2004)

Anyone have a whirl at the game at the Money Show, in the RDS, over the weekend??


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