Robert Kiyosaki – Get Your Money Out Of The Bank -Don't Save - Hedge
Robert Kiyosaki always says that the big
mistake is so many people believe it's essential to save. That's ridiculous,
Kiyosaki explains; and the reason that's ridiculous is that what happened in
1971 is crucial. In 1971 the US dollar stopped being money. In 1971 the US
dollar became a currency. And what that meant is Richard Nixon in 1971 took us
off the gold standard. That's like giving an alcoholic free rein to the bar, or
it's like giving somebody who can't control their spending unlimited credit
cards. What's happening is all the savers today are losers. You know the
problem with 1971 is that the federal government keeps printing money. The
value of your money keeps going down. If you notice as the value of the dollar
goes down, prices go up. They call this inflation. But really what it is; is
the dollar's value coming down. So savers are getting wiped out today. To save
money, that is not the new rule that's an old rule.
A very big problem for most
people is to stop using the word save and use the word hedge. You've got to
hedge your money. Hedge against losses That's why this idea that you're going
to tell people you need to save money; that's really an obsolete idea. Because
the concept went obsolete in 1971, the US dollar in the last few years has lost
almost 80% of his purchasing power. This has happened throughout history. It
happened thousands of years ago with the Romans, with the Greeks, with the
Germans, with the English, the Japanese, and the Chinese. Every time they've
made money into a currency, something you could print at unlimited. Every time
they have that has happened, the currency has gone to its true value, which is
zero. I am afraid as this economic volatility continues, the savers who will
operate in by the old rules of money are just going to get wiped out because
the purchasing power of their dollar is going to go down. You can't keep up
with the bank's printing money. That's the old rule of money; is saving money.
And the new rule is a hedge.
The reason 1971 is such a critical time, was
because the US Federal Reserve became the bank to the world. They could print
as much money as they wanted. Never in the history of the world has anybody
been allowed to print money for the rest of the world. Every time people have
done this, chaos is broken out. And that's why there's chaos in the world
today. In 1913, when the US Federal Reserve Bank was created, they were
basically allowed to print money for the world. Every time that has happened
throughout history, a despot has arrived; for example, in 1933, a man named
Adolf Hitler rose to power when the Weimar Republic was allowed to print as
much money as it wanted to do. And when Russia's currency broke down; a man
named Lenin rose to power. When the Chinese economy broke down, Mao Zedong
rose. Today we're at that critical point right now.
One of the causes of it was in 1933. This
thing called the US Federal Reserve, was created. They have done a pretty good
job of making the richer; unfortunaltelt, the poor getting poorer. So that is
why when I talked to people, I really need them to understand the new rules of
Money, which really began to take effect in 1971 when we were allowed to print
Money for the rest of the world. It understands that this system here is
causing the rich to get richer and the poor and middle-class to get poor. But
most importantly the lower middle-class is almost getting wiped out. High
prices, volatilities in the market, food getting more expensive, gas getting more expensive, savings getting
wiped ot, home values going around. And the reason the troubles have started
again is the US Federal Reserve Bank is not US; is not federal, and does not
have ant Reserve, and is not a bank.
So if you understand that then you can
start to hedge your position rather than save Money, and that is a new rule of
Money. This is why banks are the worst place for your Money. Get your Money out
of the Banking System. Leaving all your
Money in a bank account; that is terrible advice. I am going to explain to you
guys why putting all of yout Money in the bank is a guarenteed way to lose
Money because of inflation.
So first of all what exactly is inflation? The
definition of inflation is a general increase in prices ad fall in the
purchasing the value of Money over time. So over time your Money is worthless
as far as buying power. A perfect example let’s look the cost of bread in 1930
compared to the cost of bread today. So in 1930 you paid nine cents for a loaf
of bread while today on avarage, you are paying $ 2.50 for that same loaf of
bread. So the purchasing value of your Money decreased significantly from 1930
t0 2019. I want you to understand. Your parents are not intentionally giving
you bad advice by telling you to save Money in the bank account.They are just
confused because this is a strategy that worked fort hem. Because in the 1980s, things very different.
I am going to explain why that is right now.
So this is not necessarily bad
advice for the 1980s. It worked fort hem but it is not gonna work for you. So
for this example we are talking about a CD or a Certificate of Deposit.
Essentially you deposit your Money you are not able to touch it for a certain
number of years, and as a result you earn a guaranteed rate of return. In 1984,
the avarage yield on a five year CD, where you deposit your Money for five
years, and you can not touch that Money was 12.06% per year. In 2016 the avarage
return on an five-year certicate of deposit was 0.86%. From 1984 to 1998 the
avarage rate of inflation was 3.5 %. And since 2000 the avarage rate of
inflation has been 2.2%. So let’s go ahead and do the math on this; if you had
100000 dollars at the end of 1983, by 1988 due to the enflation, that 100000
dollars would have the equivalent buying power of 118.769 dollars.
Now lets say
you took that 100000 dollars and invested it in a five year CD at the beginning
of 1984. 100000 dollars would have been worth 176707 dollars five years later.
So fort hat five year CD, you made 76.707 dollars but you out-paced inflation by 57938 dollars.That is wht your
parents give you this advice. Because it work fo them but it is not gonna work
for you. I am gonna show you why. 100000 dollars in 2016, based on that 2.2%
avarage rate of inflation since 2000, is the equivalent buying power of roughly
111495 dollars in the year 2021.
Now if you invest in one of those CDs with
0.86% return, 100000 dollars in 2016 will be 104375 dollars in 2021. Inflation
ou-paced you by 7120 dollars. But let’s say you did not even put your Money in
a CD, because most people do not.What most people do is the leave their Money
in a checking or a savings accounts. The avarage return on a checking account
is 0.05%. So 100000 $ in 2016 at 0.05% per year, would be 100250 dollars by
2021. S0 while it appears that you made 250 dollars, you actually lost 11245 dollars
because inflation out-paced you.
I have
news for you. The 1980s are over. Anyways how can you out-paced inflation? How
can you avoid losing the buying power of your Money? The answer is to invest.
So i just want to show you on way that you could invest and this is a very
conservative way. So the S&P, 500 is a good way to track the avarage
returns of the stock market. And you can invest directly in a fund that tracks
the S&P500 as well. So I know a lot of people out there will say things
like the stock market is a losing game or everyone loss Money in the stock
market. But just to show you that that is incorrect from 1928 to 2016, the
S&P500 Index had a profitable year %74 of the time. Now there may be short
term corrections where you are down on your Money but you do not sell. You just
hold on and you continue investing.
The best strategy when you are investing is
dollar-cost averaging. So if you wanted to invest in the S&P500 İndex if
you were investing in a fund that tracked the S&P 500, you might deposit
the same amount every single month into a fund that tracks the S&P 500. So
at that point you are buying shares at a high price, buying them at a low price
and buying them in the middle. So as aresult this lowers your avarage price
paid per share. Since 1928, the S&P 500 has returned on avarage, 9.8% a
year.The only way to outpace inflation is to invest. And by now i hope you
understand thay keeping your Money in the bank in a checking account, in a
sawing account, in a CD, is a guaranteed way to lose your Money. So you need to
make sure you are doing something to out-pace inflation. And one of the best
ways to do this is investing in a passive index fund.
I know people are going
to be skeptical of that 9.8& return because that is based on almost 90
years of data.So I wanna give you a real example; so we are gonna take a look
at inflation since 2000, and the return of the S&P 500 Index since 2000; so
since 2000 inflation has avaraged 2.2% per year, as we said earlier.Sp lets
take a look at the performance of the S&P 500 Index. So on January 1st,
2000, the S&P 500 was a t 1425.59, and on January 1st 2017, exactly 17
years later the SP 500 was at 2275.12. So over those 17 years we saw a 59.5%
return on the S&P 500 Index.So if you had dumped 100000 dollars into a fund
tracking the S&P 500 Index in 2000, you wold have 159500 dollars as of the
beginning of 2017. So you out-paced inflation by 14737 dollars.
Imagine how
much Money you would have if you had just left your Money in the bank earning a
small interest rate. You have to realize that putting your Money in the bank is
a guaranteed way to lose your Money.Putting Money in the bank account is a
guarenteed way to lose Money. It is something that people do not understand
because your parents are trying to help you. But unfortunately thet are giving
you terrible advice by telling you to leave your Money in the bank. It is a
guarenteed way to lose Money; because you are never going to keep up with the
rate of inflation with what the bank pays in savings and checking accounts.
Source: The Atlantis Report
