Building Wealth with Borrowed Money: Robert Kiyosaki's Financial Strategy

This article discusses how continuous financial learning can help people make smart financial decisions. It uses Robert Kiyosaki's guest appearance in the podcast (video embedded) to explain the importance of understanding global economics, how politics affects the economy, and how to adapt to changes in the BRICS alliance. Kiyosaki says that people should change the way they think about money, and compare it to 'toilet paper', but gold to god's money in the podcast. 

Read the summary and watch the video for inspiration.

Who is Robert Kiyosaki?

Robert Kiyosaki is a Japanese-American entrepreneur and businessman. He is the founder of Rich Global LLC and the Rich Dad Company, a private financial education company that provides personal finance and business education to people through books and videos. He is also the creator of the Cashflow board and software games to educate adults and children about business and financial concepts.

Kiyosaki is the author of more than 26 books, including the Rich Dad Poor Dad series, which has been translated into 51 languages and sold over 41 million copies worldwide. He is a controversial figure, with some critics questioning his credentials and business practices. However, he remains a popular and influential figure in the world of personal finance.

Introduction

Robert Kiyosaki is a well-known financial expert who has written a popular book called "Rich Dad Poor Dad." He recently gave a podcast where he talked about the economy, politics, and the importance of financial education. This article will summarise the main points of his podcast and help you make better financial decisions.

Key idea: 

Robert Kiyosaki's financial insights, as shared in the podcast, centre on the concept of utilising borrowed funds to acquire assets and generate income. The underlying theme emphasises the significance of financial education in making informed decisions and accumulating wealth through strategic borrowing.

The central message is that borrowing, when employed judiciously, can serve as a potent tool for building wealth and achieving financial success. Continuous financial education, which involves self-education through reading and associating with like-minded entrepreneurs, remains the cornerstone for unlocking the potential of leveraging borrowed capital for asset accumulation.

MUST WATCH

Robert Kiyosaki's Financial Strategy Books

Robert Kiyosaki has written many books about money and investing. Here are 5 of his most popular ones:

• Rich Dad Poor Dad: This book is about how to think about money like the rich do.
• Cashflow Quadrant: This book explains the four different ways that people make money.
• Rich Dad's Guide to Becoming Rich Without a Job: This book shows you how to create wealth outside of a traditional job.
• Why We Want You to Be Rich: This book is a collaboration between Robert Kiyosaki and Donald Trump.
• Rich Dad's Rich Kid, Smart Kid: This book teaches parents how to teach their children about money.

To check out his books on Amazon, click here

1. The Power of Financial Education

Robert Kiyosaki's extensive military experience lends credence to his assertion that financial education is a powerful tool for empowerment. The phrase "that was very, very enlightening" aptly captures the transformative potential of knowledge in navigating financial challenges.

The podcast highlights the importance of continuous financial education. Kiyosaki's remarkable journey from military school to financial education advocate serves as a powerful reminder for individuals to invest in their financial literacy. 

2. The Global Chessboard: Navigating Economic Shifts

Robert Kiyosaki believes that the world is undergoing a major economic transformation and that individuals need to understand this in order to make wise financial decisions. He urges people to pay attention to the geopolitical shifts that are shaping the economy. 

Kiyosaki believes that understanding the battle for economic supremacy is essential for anyone who wants to protect and grow their wealth.

3. Economic Troubles, Military Actions, and the Printing Press

In the podcast, Robert Kiyosaki discusses the connection between economic problems, warfare, and money printing. He says that when the economy is bad, the yuan and the dollar will be in trouble, and this will lead to war. 

He also warns that governments may create conflict to distract people from economic problems. This shows that we need to be careful about our money when the economy is bad.

4. Lessons from the BRICS Alliance

The BRICS alliance, comprising Brazil, Russia, India, China, and South Africa, has emerged as a significant force in the global economy. India, in particular, has attracted attention for its rapid economic growth and potential to become a major player on the world stage.

Kiyosaki's emphasis on India's strategic position highlights the country's importance in the BRICS alliance and its growing influence in the global economy. He encourages individuals to recognise India's potential as an investment destination and consider incorporating emerging markets into their portfolios.

5. Embracing Capitalism

Robert Kiyosaki repeatedly emphasises the importance of embracing capitalism in the podcast. He encourages individuals to break free from conventional thinking that may impede financial growth. This call for a paradigm shift is not just a theoretical exercise; it is a practical strategy for achieving wealth.

Kiyosaki's message goes beyond simply endorsing an economic system; it advocates for a capitalist mindset. This mindset encourages taking risks, thinking strategically, and fostering an entrepreneurial spirit.

Embracing capitalism is not just about supporting an economic system; it is about adopting a mindset that promotes financial growth. Kiyosaki's message challenges individuals to break free from traditional thinking that may hinder their financial success. The podcast encourages listeners to reassess their financial philosophies and explore avenues that align with the principles of capitalism.

Conclusion

Robert Kiyosaki advocates for using borrowed money to acquire assets and generate income, emphasising the importance of financial education in making sound borrowing decisions. He believes that continuous financial education, through self-education and networking with like-minded entrepreneurs, is crucial for unlocking the potential of leveraging borrowed capital to build wealth.

While Kiyosaki's financial strategy is not a universal approach, it offers valuable insights for those considering using debt to invest. Carefully evaluating one's financial situation and goals is essential before employing borrowed money.

NGIP Agmark Limited Delivers Profit Despite Drought: FY22 Financial Results Unveiled

NGIP Agmark Limited has announced a preliminary result of K3.97 million after tax for the year ended December 31, 2022. This is a decrease in revenue by K9.4m or 6.33% due to diminished sales in cocoa and coffee exports. However, the company still managed to declare a profit for FY22, proving its resilience despite a challenging year.

NGIP Agmark Limited Decrease in Revenue

The decrease in revenue was mainly due to a drought that hindered cocoa production for most of the year, leading to a significant drop in revenue compared to the previous year. 

However, through key initiatives from past experiences, combined with a robust reporting system and a streamlined management structure, NGIP Agmark Limited was able to minimize costs and take advantage of profit-making opportunities to ensure a profit for FY22.

The company's cost of sales decreased by K8m or 7.5% in FY22, and admin and finance costs grew by 1.31m or 2.8%, mainly due to occupancy costs. 

Despite the increase in occupancy costs, the company closed underperforming branches in the previous year, resulting in a 22% decrease in occupancy costs in FY21.

NGIP Agmark Limited Dividend Payout

During the AGM held in June 2022, the board announced a dividend payout for the FY21 performance of the audited K7.3M profit after tax. A distribution of K0.04 per share was paid in November 2022, marking the second consecutive year that a dividend was paid.

Throughout FY22, the company continued to focus on supporting its customers, especially the cocoa farmers, and solidifying strong relationships with suppliers, providing shareholder value through the challenges of 2022.

Looking forward, NGIP Agmark Limited

Looking forward, NGIP Agmark Limited aims to:

• continue its expansion plans, focusing on investing in technology to improve operational efficiency, and
• enhance customer experience, while also exploring new markets and business opportunities to grow the company's revenue and profitability.

Investors' Takeaway

• Despite facing a challenging year due to a drought that hindered cocoa production, NGIP Agmark Limited managed to declare a profit for FY22, demonstrating the company's resilience and strength.
• The company's focus on cost optimization and taking advantage of profit-making opportunities helped minimize costs and achieve profitability.
• NGIP Agmark Limited paid dividends for two consecutive years, indicating its commitment to creating value for shareholders.
• The company's investment in technology to improve operational efficiency and customer experience, coupled with its exploration of new markets and business opportunities, bodes well for its future growth and profitability.
• NGIP Agmark Limited's continued focus on supporting its customers, especially cocoa farmers, and building strong relationships with suppliers reinforces the company's commitment to its stakeholders and sustainable growth.

In Brief

Despite the challenges faced by NGIP Agmark Limited in FY22, the company has shown resilience and strength, delivering a profit and paying dividends to its shareholders. 

The company's focus on cost optimization and investment in new technology and markets bodes well for its future growth and profitability.

Credit Corporation PNG Commercial Bank Approval - Exciting Opportunities Ahead

Credit Corporation PNG has reported its financial results for the financial year ending December 31, 2022. 

• The company's core operating profit was K98.8m, up 25.0% from the previous corresponding period (PCP). 
• The net profit after tax (NPAT) was K86.04m, an increase of 11.9%. 
• The company's earnings per share rose from 25 toea to 28 toea per share. 
• The total risk-weighted capital ratio increased from 40.1% to 45.0%. 
• The dividend per share for FY22 was 22.5 toea, up 25.0% from the previous year.

Download the full report here.

Credit Corporation PNG dividend income

The Finance Division of Credit Corporation had an NPAT of K36.6m, up 41.9% from the PCP, while the Property Division recorded a core operating profit of K13.4m, up 31.0% from the PCP. 

The company's dividend income increased from K52.9m to K61.5m.

Credit Corporation PNG Commercial Bank 'Approval'

Credit Corporation is transitioning to becoming a fully-fledged niche commercial bank, and the Bank of PNG granted it 'Approval in Principle' for an unrestricted banking license. 

The company's outlook is positive, and it will continue to focus on pursuing growth opportunities while maintaining a strong balance sheet and disciplined approach to managing the quality of its loan book.

Investors' takeaway

For investors, the key takeaways are that Credit Corporation's financial performance for FY22 was strong, with an increase in profitability, earnings per share, and dividend per share. 

The company's decision to transition to a fully-fledged niche commercial bank and its Approval in Principle from the Bank of PNG for an unrestricted banking license are important developments to watch. 

The company's focus on disciplined management of its loan book and strong balance sheet is reassuring for investors.

Read about how to invest in PNG Stocks, Treasury Bills and Government Bonds.

In Brief:

Credit Corporation PNG has reported a strong financial performance in FY22, including a 25% increase in core operating profit and 11.9% rise in NPAT. The Group's total risk-weighted capital ratio rose to 45%, while its property division recorded a core operating profit of K13.4m. Credit Corporation also declared a final dividend for FY22 of 12.3 toea per share, a 25% increase compared to FY21. The Bank of Papua New Guinea granted the company 'Approval in Principle' for an unrestricted banking license, allowing it to transition to becoming a bank and ultimately listing on the ASX.

How to Invest in Stocks and Bonds in PNG: A Beginner's Guide

Papua New Guinea (PNG) is a rapidly growing economy that offers opportunities for investors who are willing to take on some risk. Investing in stocks and bonds in PNG can be a great way to diversify your portfolio and potentially earn high returns. 

In this beginner's guide, we'll cover everything you need to know about how to invest in stocks and bonds in PNG.

Choose a Broker

The first step in investing in stocks and bonds in PNG is to choose a broker. There are several reputable brokers in PNG, including 

• Kina Securities, 
• BSP Capital, and 
• Capital Markets. 

It is important to choose a broker that is licensed and regulated by the Bank of PNG to ensure that your investments are safe and secure.

Understand the Fees

When you invest in stocks and bonds in PNG, you will incur brokerage fees, which are charged by the broker for executing trades on your behalf. 

Brokerage fees vary depending on the broker and the size of the trade, but they typically range from 0.25% to 1% of the trade value.

Know the Stocks Available on POMSoX

The PNG Stock Exchange (POMSoX) is the only stock exchange in PNG, and it lists several companies in various sectors, including banking, telecommunications, and mining. 

Some of the stocks available on POMSoX include:

• Bank South Pacific Limited (BSP), 
• Credit Corporation (PNG) Limited (CCP),
• NGIP Agmark (NGP)
• Kina Securities Limited (KSL),
• Newcrest Mining Limited (NCM) and
• City Pharmacy Limited (CPL).

Check out the complete list of companies on POMSox website. 

If you want to find out how to invest in stocks, check out this article I wrote in 2017.

Differentiate Between Stocks and Bonds

Stocks and bonds are two different types of investments that offer different benefits and risks. 

Stocks represent ownership in a company and offer the potential for high returns but come with high risk due to market volatility. 

Bonds, on the other hand, represent debt and offer a fixed rate of return but come with low risk due to their stability.

Understand Government Bonds

Investing in government bonds is a low-risk investment option that offers a fixed rate of return over a set period. 

The Papua New Guinea government issues several types of bonds, including Treasury Bills, Inscribed Stock, and Inscribed Stock Indexed. 

These bonds can be purchased through a broker, and the minimum investment amount is usually PGK 5,000.

Visit the Central Bank of PNG website for more info on Treasury Bill and Government Bond.

(Screenshot Central Bank of PNG Bills and Bonds Rates)

SWOT Analysis of Stocks and Bonds Investments in PNG

Strengths:

• High potential returns in a growing economy
• Diversification opportunities to spread risk
• Government policies to promote investment

Weaknesses:

• Market volatility with fluctuating prices
• Limited options and lack of reliable information
• Currency risk due to exchange rate fluctuations

Opportunities:

• Growing economy with abundant natural resources
• Infrastructure development priorities
• Emerging markets for new investment opportunities

Threats:

• Political instability and natural disasters
• Currency risk and exchange rate fluctuations

Conclusion

Investing in stocks and bonds in PNG can be a lucrative opportunity for investors who are willing to take on some risk. 

By following the steps above, investors can choose a reputable broker, understand the fees, research available stocks, differentiate between stocks and bonds, and understand government bonds. 

With careful consideration and a long-term investment strategy, investors can potentially earn high returns in a growing economy. 

However, it is important to be aware of the risks and threats associated with investing in PNG and to seek advice from professional brokers before making any investment decisions.

How to Send Money from Papua New Guinea to Overseas Account

Many people wanting to send money to friends and family living and working or doing business overseas may have found it difficult due to the foreign currency ceiling set by the Papua New Guinea government in 2015/16. The issue is real and current. 

Consult your bank for the respective forms

Unlike in the past where you can do overseas transactions freely, presently you may send less than 30 thousand Kina to an overseas account. That means that there is a *fixed* amount to be sending per month. 

It may depend on which bank you are banking with, so find out with your bank about how much the bank can let you send in one transaction.

Find out about How to Change Your BSP PIN at the ATM

Generally, there are three important processes to follow.

1. Complete an application form with your bank to raise the amount you want to send overseas. If you do not do that you will send less than K5000 per month.

2. Complete a telegraphic transfer at the bank.  You'd have to personally go into bank to do this manually. Alternatively, it is much easier  and faster to transfer money online. You just have to register for Internet banking.

3. Complete a Bank of PNG Form- R1 (BoP-R1) and submit it to your bank, online. (Contact me for a copy of BoP form or direct email address if you need it).

The transfer is a monthly transaction done not more than once per month. Simply,  follow the three processes to send money overseas will save you time, effort and headache of standing in queues.

Step-by-Step Guide to Investing in Stocks and Shares

In the first post, PNG Insight emphasises the importance of research before investing in stocks and shares. Here is the link to the earlier post 'Why investment must have the right balance of the three starters: Research, Money and Approach'.

Unlock your investment potential

This follow-up post is, basically, a beginner's guide to finding your own way around the stock market by:

• Investigating the 2 common methods for analysing stocks; 
• Identifying 8 key stock-picking tactics; 
• up Stock and Share Account; 
• Monitoring stocks over time; 
• Choosing Research that works for you; and
• Busting 5 stocks and shares investment myths.

The whole bullet point is a process.  It can take years to confidently make the first investment. 

If you think investing in shares is something you can do in the future, you’ve got to start now. Understandably, researching and understanding the market now adds to your knowledge base as a potential investor. As you grow older you become wiser, making the right investment decisions.

Let’s make a start.

1.    Analysing stocks – the key to successful investing

Two *common* methods of analysing stocks are called Technical Analysis and Fundamental Analysis.

The technical analysis is used where stock researchers use the price, volume, charts and behaviour of a particular stock to understand the overall performance of that stock before (during and after) buying the stock. This method is very technical in nature. Chartists are examples of technical analysts who use charts to identify patterns and trends to *predict* future share price movement.

Fundamental analysts research a company’s cash balance statement, management reputation, global and local economy, commodity prices, and the overall *intrinsic* value of the company. A key indicator many fundamental analysts look for is the company’s cash.

Note: Both Technical and Fundamental analyses can be used together depending on what works for you as an individual investor. 

The minerals and oil & gas exploration companies are the *high* risk investments. Many of the *exploration* companies do not have cash at hand. If you are going to tread there, it is important that you tread carefully. 

2.    Pick stocks for analysis

This step is supposed to come before the Technical and Fundamental Analyses discussed above. It is placed second because you need to know how to analyse stocks and shares before picking them. (No point picking stocks when you do not know how to analyse them)

The 8 ways to select shares before researching are listed in the table (not a complete list): 

PNG Insight Compilation 14/11/2017 (click on image to enlarge)

Do you have accounts with Nasfund, Kina Bank, BSP or into POM stock exchange? Check out the latest Financial News, Savings and Loans, and Superannuation updates on PNG Insight.

 3. Practice makes perfect: fine-tune your stock picking/research skills

Now that you’ve picked a stock that you *think* (Step 2) to be undervalued and *confirmed* (Step 1) the stock is undervalued in your analysis, it is time to put your stock to the test. This step is crucial to determine whether you can use the research technique employed here on serious investments in the future, or not. It is about finding out what works for you.

One way to do this is to create a Share Account with ASX and build your Watchlist. 

Step 1 – Open an account (free)

Go to MyAsx Registration page and sign up.

Step 2 – Create a Watchlist 

You can add, edit and view your Watchlist. Be realistic about the number of shares you are buying and how much you want to spend. Avoid adding random shares onto your portfolio - only add the stocks you researched. This will make it easy to test (compare) the stocks against your in-depth researches. A good practice.

Source: MyASX.com.au Screenshot 14/11/2017 (click on image to enlarge)

As mentioned earlier, it is important to track the stock you’ve picked and analysed (in Steps 2 & 1, respectively). And, to also find out *if* the research you did was worth replicating when making serious investments in stocks and shares.

Here is an example of a Watchlist. Though the monitory value is virtual (not real money), the other features (volume, chart, prices, announcements…) are live market feeds- delayed by 20 minutes. 

Source: MyASX.com.au (click on image to enlarge)

RECOMMENDED READ: Stock Investing For Dummies Paperback
.

4.    Investment Myths - busted

Some people, interested in investing in the share market, thought that you would just sit and monitor the screen and make money. In fact, it is not true.

Myth 1 – You can make lots of money investing in stocks and shares

This is a half-truth. You are likely to lose money investing in stocks and shares. To avoid losing money people either do proper research before investing or pay advisors to guide them when investing.

Myth 2 – You cannot invest in overseas stocks and shares from PNG

You can. If you are serious about investing, BSP Capital and Kina Securities are the local brokers who can help you open a share account and start investing. My top hint is to find out about the recent issue with the foreign currency exchange, brokerage (Buy/Sell) fee, and minimum amount needed to open a Share Account. You can also invest in companies listed on the POM Stock Exchange.

Myth 3 – You should have a Degree in Finance and Accounting or related discipline to invest in stocks and shares

This doesn’t mean you cannot invest in stocks and shares if you know what to do. If you build up a good knowledge base, put them into practice and trust yourself – you can do it too.

Myth 4 – I’ll wait till I save enough money to invest

The best time to start is now. You can open free online accounts and test your findings using real-time data. When you have some money, you’ll know just what to do.

Myth 5 – Anyone can  make money in the stocks and shares market

No. The investors who do thorough research (or choose a brilliant advisor) can earn a decent return on their investment. It is not anyone’s cup of tea. 

I hope this post serves as the *seed* that grows into a big plant. If you have any questions relating to this post, kindly leave a comment below.

Do you have accounts with Nasfund, Kina Bank, BSP or into POM stock exchange? Check out the latest Financial News, Savings and Loans, and Superannuation updates on PNG Insight.