How To Be A Truly Successful Investor

How To Be A Truly Successful Investor

  • Money moves and so should yours…
  • 5 tips to survive a recession…
  • Like I always say, financial education is KEY
Robert Kiyosaki

Robert Kiyosaki

Contributor, Freedom Financial News
Posted March 26, 2024

Dear Reader,

On January 10th, 2008, then Fed Chairman Ben Bernanke said, “The Federal Reserve is currently not forecasting a recession.” Only a few months later, the U.S entered into one of the worst recessions in our history.

Only two weeks ago, Fed Chairman Jerome Powell stressed that the central bank’s July rate cut was a mid-course correction only. Officials are not going to be so quick to abandon that strategy, even if the market is signaling it is not enough, economists said.

During the 2008 recession, millions of “investors” who had dutifully moved their hard-earned money into a 401(k) were wiped out in the blink of an eye. Just a couple of years earlier, everyone was euphoric as the stock market soared. But when the recession hit, unexpectedly and quickly for the untrained investor, whole fortunes (and retirements) were lost.

Today, the stock market is again at a record high.

Does this mean there will be another market crash soon? Honestly, there’s no way to know. But one thing is certain, markets are cyclical. They go up and they go down. The key to success as an investor is knowing how to make money in both up and down markets.

How do you make money in any market?

The key to making money in any market is financial education. Unfortunately, most people simply have no idea how money works. Even worse, they have no idea what is in their 401(k). They simply have the money deducted and trust a manager to take care of it.

Occasionally, they might seek out a bit of advice from a financial advisor. But usually they don’t know what to do with that advice, or even if it’s good or bad advice.

And there is bad advice.

For instance, some common advice is “save money, and invest for the long term in a diversified portfolio of stocks, bonds, and mutual funds.” This advice is exactly why so many people lost their life savings in the last recession. They bet on market timing rather than investing wisely.

Money Moves And So Should Yours

The one piece of advice I always stress is to be prepared in any market. One truth is that money always moves. In any market, whether up or down, there are those who money is flowing to and those who money is flowing from. Obviously, you want to be on the flowing-to end!

This means that you can’t park your money in one investment and call it good. You have to understand what the markets are doing, how you can capitalize on them, and move your money accordingly. This means you have to move beyond advice to financial education.

As Rich Dad Advisor, Andy Tanner says, “It needs to be less about, ‘What do I do?’ and more about, ‘What do I learn?’”

How to Survive a Recession

1. Know your position

The sad reality is that most people don’t even know what their retirement money is invested in. The money gets pulled out of a check, goes to a magical place called a managed investment account, and is moved around by a wizard called a financial manager.

The first step to success in any market is obvious enough, but too often ignored. Know what your money is invested in!

2. Know how you’ll perform

Once you understand what your money is invested in, you need to understand how those investments will perform in a given market. For instance, if interest rates are hiked substantially, as the Fed seems to be prepping for, there’s a good chance that stocks and bonds will fall—and these make up most investors’ retirement accounts.

Therefore, in such a market, it may be time to invest in real estate before interest rates go higher.

3 . Get educated

This means that you can’t just take advice about the market, you have to educate yourself so you can see what’s coming and have time to prepare.

If you don’t plan on investing in financial education, then by all means, keep your money in your 401(k) and let it sit there. It’s safer than moving money without the knowledge of how or why. But if you want to be prepared to make money in any market, you need to understand how to make that money work for you.

4. Slowly pare back your risk

With the proper education, you can see better where the markets are going, how your current asset mix will perform in the coming markets, and how much risk you have. This allows you to make the proper adjustments to minimize your risk and take positions that will perform well whether the market is going up or down. And it leads us to the final point.

5. Buy in pairs

Professional investors always buy in pairs. One position is for growth, and the other is for protection. So, for instance, if you’re heavily invested in the stock market and paper assets, you want to take an insurance stake in precious metals or commodities. If you buy real estate, you want to also buy insurance for that real estate. The list can go on and on. This of course takes financial education, but the investment is worth.

Get Educated For Success

The key to financial intelligence is how to use both cash flow and capital gains to grow wealthy. So many people are not successful, because they’re generally focusing on only one of the two. The majority is focusing on capital gains.

In my opinion, one of the primary reasons people invest in tomorrow, rather than today, is simply because they think they cannot find or afford an investment that pays them today. As a result, they often become believers in tomorrow. These are the people who often fall prey to financial predators selling dreams of the future.

As my rich dad said, “An investment needs to make money today and tomorrow.”

It’s time for you to take ownership of your financial future. And that starts with education!

This is the reason that Kim and I started the Rich Dad Company. We believe you need to have the knowledge to think for yourself, and that the key to success is understanding how money works so that you can make it work for you in every circumstance.


Robert Kiyosaki
Contributor, Freedom Financial News