Robert Kiyosaki famously says “savers are losers”. What does this mean?
Would you leave your money in the bank if they took money out of the account every month instead of giving you interest? My guess is that you would try to figure out where else to keep your money. After all, who wants a bank who charges you interest? Right?
Wait a second. Let’d do the math. At best you are getting 1 percent yield in a savings or money market account. But…inflation is running over 2 percent. So, by having your money in the bank, you are effectively losing money every month. So why are you keeping your money in the bank again? Well, that’s why Robert Kiyosaki says “savers are losers.” They literally lose money every month by keeping it in the bank.
So what do the rich do? They buy assets. They buy real estate, they buy gold, or they buy fine art. In order to be wealthy, you have to think like they do. Keeping your money under your mattress instead of the bank does not help that much either. Historically inflation rates have fluctuated wildly. In the early 1980s, we had double digit year to year inflation. Imagine losing 10 percent or more of the value of your money in just 1 year. It would be like getting a 10 plus percent paycut! So why do the wealthy buy assets? They buy tangible assets because they go up in value with inflation.
People who own multifamily real estate understand this. Yearly rent increases occur with inflation in mind. Increasing rent with inflation helps hedge the impact of inflation on the real estate owner. Furthermore, increased rents result in increased property values over time which also help to hedge inflationary forces.
Precious medals are also often used by the rich to hedge inflation. In Roman times, an ounce of gold bought you a nice toga and sandals. Today, an ounce of gold buys you a nice suit and a pair of shoes. The buying power of gold as an asset has stayed remarkably constant over thousands of years.
Generational wealth is not created by holding on to fiat currency (paper). It is created and passed on to future generations by owning tangible things. So, if you want to be wealthy, start thinking and acting like the wealthy. Own real assets.