Page 112 - Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money

Chapter 6

Financial IQ #4: Leveraging Your Money

On August 9, 2007, the stock market plunged nearly 400 points. The

Federal Reserve and central banks around the world began injecting billions
in cash into the economy to make sure the panic did not spread.
The market was still nervous the next day. As I was getting ready for the

day, a newscaster on a morning television program was interviewing three
financial planners and getting their opinions. Their unanimous advice was,
“Don’t panic. Stay the course.”
When asked for further advice, all three said, “Save money, get out of
debt, and invest for the long term in a well-diversified portfolio of mutual

funds.” As I finished shaving, I wondered if these financial experts had all
gone to the same school for parrots.
Finally, one advisor took a moment to say something different. She

began by condemning the real estate market for causing the mess in the
stock market, blaming greedy investors, unscrupulous real estate agents,
and predatory mortgage lenders for causing the subprime mortgage mess,
which led to the crash in the stock market.
This advisor said, “I told my clients that real estate was risky, and my

advice has not changed. Real estate is a risky investment, and investors
should invest for the long term in blue-chip stocks and mutual funds.”
As the financial planner on television was ending her attack on real

estate, my wife Kim walked into the room and said, “Remember we have a
closing today on the 300-unit apartment house.”
Nodding my head, I said, “I’ll be there.”
As I finished dressing, I thought, “It’s funny, the financial advisor saying
that investing in real estate is risky. The real estate markets are crashing at