Savers Are Losers!

[MJ DeMarco]

I heard a radio commercial today advertising one of Rich Dad's seminars ... one of the "hooks" was proclaimed "SAVERS ARE LOSERS!" Who are these guys kidding? I couldn't believe my ears and I couldn't disagree more. This is what people are paying to hear?

I will argue, savers are winners.

Why?

Because as a SAVER, you become a LENDER.

I could contend that: BORROWERS ARE LOSERS and LENDERS ARE WINNERS.

Hey Robert! You are a loser because you are a borrower! Me? I lend! People PAY ME to let them use my money and I get paid passively to do it. No tenants, no property management firms, no laws that change like the wind.

In the RK context, I hope that this phrase "savers are losers" is meant for those people who have $40K/year jobs and RK is merely saying that saving $100 month for 40 years isn't going to make you rich.

I would have used a better choice of words.

 

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[^eagle^]

I think he uses that phrase so that people will buy his programs.

 

[taichijedi]

While I agree that is was a poor choice of wording, he does make a point.

When using a savings account, you are paid <2%-4% (depending on you balance.) Then you are taxed capital gains on any interest earned, and most of the time savings accounts do not even allow your money to meet the rate of inflation, let alone exceed it.

Therefore savers technically are losers, in the sense that they are losing money by parking it in a savings account as opposed to a portfolio of investments (stocks, biz, RE) that will have their money working hard for them and growing.

I totally agree with you that that advertising campaign seems harsh. I know that shock ads can drive sales, but insulting you potential customer base just seems foolish to me.

 

[TaxGuy]

In the RK context, I hope that this phrase "savers are losers" is meant for those people who have $40K/year jobs and RK is merely saying that saving $100 month for 40 years isn't going to make you rich.

I would have used a better choice of words.

Bingo

Not sure that his buddy David Bach would be too happy about that, but I don't think the point would get across if he told the truth- "Savers are losers, those who pay $1000's for my seminars and subsequent upsell are winners"

 

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[andviv]

Well, I see both points...

If saving is your only strategy then inflation will eat up your money in no time flat.

If you already cashed out and are keeping large amounts of money paying you interests completely passive then who can argue with that?

Oh, and RK is a marketing genius... that phrase creates curiosity and people will bite...

 

[fanocks2003]

The concept of saving and the concept of borrowing both have faults in them. That fault, or the common denominator, is that it is a pure question of "individuals".

Save as a moron and lose as a moron.
Borrow as a moron and lose as a moron.

Same outcome.

But if you are a smart user of your saved funds (invest them for higher gains than what a bank gives you) and/or smart user of borrowed funds, then you will be pretty much alright.

It's more a question if you have any intelligence inside your skull. No?

-Saving money is easy, making money with it, hard.
-Borrowing money is easy if you fit the bank template of a great borrower prospect, but using it productively is as hard as making use of the saved funds. Both require an ounce of brain activity atleast.

So I think both of those choices (saving and borrowing) are perfect and at the same time horrible. Build cleverness and foxiness first and then start saving and borrowing.

The reverse gives you nothing but perhaps some cents in the bank (all though idle) or a big gapping hole in your credit rating.

 

[fanocks2003]

Oh, and RK is a marketing genius... that phrase creates curiosity and people will bite...

Controversy sells stuff, agree. How else can you compete? Just keep in mind to deliver on the message and you are fine.

But there is nothing wrong with creating hype. You need to. Otherwise you will just be another boring guy in the bunch.

 

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[imcmillionaire]

It all about being able to save a bit, but investing is needed.
You cannot save only a little bit for a rainy day, yet not invest in your greatest asset! YOUR SELF! Investing money , time and effort into your dreams and who you are is one the keys to successful liviing.

Any thoughts?

 

[ramy98]

I think what Robert is saying is that people who save cash are losers because it gets eaten up by inflation (all the global central banks are printing money like crazy). I think he likes the idea of spending less than you make and investing the excess in a cash flowing asset or a hard asset such as bullion. I kinda agree with him in a sense as cash is not backed by anything and should not be a store of value; from what I read every fiat currreny starting from rome collapsed to its true value of 0 or being worthless....

 

[yveskleinsky]

Me? I lend! People PAY ME to let them use my money and I get paid passively to do it. No tenants, no property management firms, no laws that change like the wind.

In the RK context, I hope that this phrase "savers are losers" is meant for those people who have $40K/year jobs and RK is merely saying that saving $100 month for 40 years isn't going to make you rich.

The people that RK is targeting have no money--so they have to be aggressive--they have to go for broke, or in fastlane terms put it in 5th (6th?) gear. Not only is RK saying saving $100 month for 40 years isn't going to make you rich, he touches on leveraging that money (not saving it) to make a better ROI--but when you start out with no money and no experience the risk can easily out weigh the reward, so the ROI quickly can become "phantom ROI" which he never discusses. He even mentioned in one of his books about a rental where he was making $25 a month cashflow and this was a good thing. I'm sure all of us with rentals can agree, that if $25 a month cashflow is the upside, then we'll pass.

One major point where you differ (among many), is that you bring up the point of why keeping it in 5th gear? Once you have millions, why rev your financial engine so hard? Why not downshift into 2nd and enjoy the ride? ...And you make a solid point. Why not get rid of the headaches and free up your time? Why not shoot for passive and live a higher quality of life?

Honestly, I don't think a lot of the "old guard" understands that there really is passive income out there. The term "passive income" for them was defined in terms of appreciation, tax benefits and planned cashflow from a tangible investment--not from something truly or mostly passive. ...Just my 02.

 

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[NoCut]

Losers are those without any savings.

No Cut

 

[David]

I dont think you can be borrowing if you ain't saving. I don't think lender are too keen on lending big to someone who has nothing.

 

[fanocks2003]

I dont think you can be borrowing if you ain't saving. I don't think lender are too keen on lending big to someone who has nothing.

They seldom do.

 

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[Bobo]

LOL - we are discussing it. Whether there is wisdom in the words is beside the point - the hook went in all the way to the barb.

 

[andviv]

very related to this topic, me thinks...

The burden of savers: propping up Wall Street - Oct. 20, 2009

 

[MJ DeMarco]

very related to this topic, me thinks...

The burden of savers: propping up Wall Street - Oct. 20, 2009

If people can't find a 4% return on their money they aren't doing their homework ... and hint ... it isn't in the USA.

 

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[Knightsman]

I dont think he is speaking of people who have established income. And what I mean about established is worth coming in.

He is speaking to lower to middle class who pinch their pennies and try to save but never get on their feet. they need to take that money and apply it to something that works. Not just trying to save money, that gets them nowhere but busting their a$$ for 60 years. And I say 60 because they never get to retire.

Of course I could be totally off base..