(upbeat music)
- Okay, so we're going with Robert Kiyosaki
where into the next Millennial Money lesson
or Money and Millennial lesson.
Here with Alexandra Gonzalez and Robert Kiyosaki,
and I think this is what our schools should teach you,
instead of go to school, get a job, and get out of debt.
Are you nuts?
And save money.
Are you nuts?
It's crazy.
And pay your taxes, are you nuts?
It's crazy 'cause the rich don't pay taxes.
Well, they pay less taxes.
So this is part of what you need to decide now 'cause
if you keep doing what you're doing, you'll keep paying
more taxes.
- [Alexandra] Exactly.
- You'll make more money and pay more taxes.
Not smart.
So anyway, this is an continuation
of why the rich don't work for money, but what do
they work for?
And this is not according to me.
This is according to the government and the tax department.
So the tax department which, every country has taxes,
determines, they wanna know what type of income do
you work for.
So when you say to someone your age, or a child
to the parent, parent to the child, they say it's go
to school, get a job, they're working for this type
of income.
Earned income, as you can see from this diagram here,
as you see from the diagram here, this is earned income here
and the first thing you pay is the highest taxes
'cause you worked for money.
- Yes.
- The government doesn't want you working for money.
They punish you for that.
They want you to hire employees or invest.
Okay, so earned income is what they work for.
The second is portfolio income.
It's also called capital gains.
So if I buy I house for let's say $100,000, I sell
it for $200,000, the $100,000 is capital gains.
If I buy a stock for $10 and sell it for $20, the $10 is
capital gains.
This is the second highest taxed.
So the tax breaks that President Trump is working
on today is primarily for these guys here.
So they're doctors, lawyers, highly educated people,
and they have stocks.
Most of these guys don't have stocks, of the working class,
they have a 401(k), but they don't get the break.
But these guys, if you're active in stocks and that kind
of stuff, or flipping houses, you get a break.
But what the really rich work for is passive income,
and passive income for me, I have a business.
Whether I work or not, money comes in.
And you've seen me, I'm not here, am I?
- No, never. - Never (laughs).
I've earned my right not to be here.
Real estate, I get every year, my wife and I Kim, we add
more real estate.
Also we have commodity income from oil wells and things
like this.
Even the stock price of oil's gonna go up and all this.
We still get this.
But this is another type of income.
This here, what I'll get into, is called phantom income.
It's taxes I don't pay, so it's a little bit
beyond most people's minds, but let's say
my tax bill is $100,000.
By doing what the government wants here,
the government may give me a $50,000 tax break.
That means $50,000 in taxes I don't have to pay.
- [Alexandra] Wow.
- So the $50,000 didn't go to the government, it went
back up here.
So that's what financial education does, is it teaches
you about the financial statement which is not taught
in school.
Again, they teach you FICO scores, which is
really fido scores.
Ruff, ruff, ruff, where's your tail little doggie?
Okay, and then for you, at your age now, you wanna know
this, this is what they're teaching you to work for now.
Ironically, when you save money and you have a 401(k),
this is the kind of income.
So it's savings and 401(k)s are taxed the highest types
of income.
To me, it's stupid, but if you don't know any better,
saving money and what do you call that 401(k)s is good.
In CAD, that's called RRSP, and Australia it's called
the superannuation.
But this is what most people have 'cause they went
to school, they got a job.
And then this is what the rich really have.
It's passive and it's because I'm an active investor.
I don't buy this 'cause this is passive investors.
I am active, I am professional in all of these areas.
So I work for passive income, which means I'm not here.
The check comes in, the checks come in.
Every year, now you've seen Kim and I, and your mother now,
she's working on here.
And so your mother's income keeps going up,
your father's income keeps going up,
and they don't have a job.
That's what they did, right?
- Yes, yeah.
- So any comments on this?
- So like you said, our entire life we're taught
to work for earned income as opposed to passive income
and portfolio income, and we're never offered
those classes in the university, but thanks
to the financial education that I received with you
and going to seminars and working at this company,
I was able to learn about those types of income
and what I wanna do with my career and my life.
- Correct.
- [Alexandra] Investing in real estate, things like that,
you have to take outside of school classes for that.
- Yes.
- [Alexandra] And so I think it's incredible
because that is where you make the majority of your money.
- Well, if you didn't go to school.
- Exactly.
- I do recommend taking these classes first,
'cause you can get hammered really easily.
- Oh no, of course.
It's incredible that we have to go to outside sources
instead of inside sources in the university to learn
about these things, to learn about portfolio income,
passive income.
- And be a non-professional investor.
- [Alexandra] Exactly.
And then all I have to do is worry about going to school,
going to work, getting their paycheck,
but at the same time it's very risky 'cause you have
no control over your life.
- None. - [Alexandra] None.
- None.
And the worst thing about it, too, is that most people
who are A students, they think they can just go out
and do this one.
It's possible, but it's like trying to be a pro golfer.
You don't take one class and one lesson and say
oh okay, I'm gonna take on the professionals.
It's years of work to get here.
And financial education is practiced, study, lessons,
being a student, so I spent a lot of time here.
Lot of time, that was rich dad.
If you read Rich Dad, Poor Dad, in there it talks
about Ray Kroc, the founder of McDonald's, and people asked
Ray Kroc, they said what business is McDonald's,
he asked the class, this is the University of Texas class,
MBA program, he said what business is McDonald's in,
and everybody said hamburgers.
And he says no.
McDonald's is a real estate company.
- [Alexandra] Exactly.
- And the reason for that is because they get
passive income, they use debt, they pay no taxes.
That's why McDonald's is a big company
whereas what most people do is they start
Mom and Pop hamburger stand and they work really hard
and pay earned income.
- So I think it's a lot of years of hard work
and many, many mistakes, and you also have to learn to lose
the fear of making mistakes and of losing money.
- Well, it's part of the process.
It's only the academic types like my poor dad, they think
if they memorized a right answer, that's all the need.
It's like the right answer for a golfer is hit
the ball straight, keep it in the fairway, putt in one.
Okay, that's the right answer.
Trouble is, they can't do it.
- [Alexandra] Exactly.
- And in the real world, it's what can you do?
Deeds, not words.
And academic types who are running our government are
just talk.
They have no real world experience,
and that is what's costing us the most money.
We have A students running our government
and our Federal Reserve Bank.
That's the problem.
So you understand now the rich don't work for money,
but they work for different types of income.
- Yes.
- And do you understand the government wants us to do this?
- [Alexandra] Yeah.
- That's why they give us tax breaks.
Before we go on to the next lesson for Millennial Money,
my job was just to shake your head and stir it,
not give you answers.
What's going through your head now?
What are you thinking?
- I know I'm not gonna get there tomorrow, but I know
I have to make baby steps in order to be able to get
financially educated and become where I want to be
where I don't rely on a paycheck anymore.
- It depends if your parents gave you a working class DNA.
You gotta work hard for money,
and that's one of the biggest traps there is.
You wanna work for the right type of income,
but not for money.