If you could know the future, would you invest differently?
Rich Dad’s Prophecy is the book by Robert Kiyosaki that is subtitled:
Why the biggest stock market crash in history is still looming…
and how you can prepare for and benefit from it!
This book was written (with co-author and Kiyosaki partner Sharon Lechter, CPA) in 2002. All the predictions made in this book are on track, if not ahead of schedule.
The main “prophecy” is that BIG stock market turmoil is coming in 2016. This is the year that approximately 2,282,887 baby boomers turn 70, and are required BY LAW to make mandatory withdrawals from their 401(k) accounts. In 2017, the number of people turning 70 jumps by 700,000 to 2,928,818 and continues to increase every year thereafter.
What does this mean? Since the creation of pre-tax retirement funds, Americans have been given incentives to put/spend their savings in stocks and mutual funds. Markets go up ONLY when there are more people buying than selling. 2016 is the year that an astronomical bubble of retirees is forced to withdraw. This is mandated by the law that created 401(k) accounts specifically so that taxes are due and paid to the federal government NO LATER THAN age 70.
Kiyosaki tells the story of his “Rich Dad Prophecy” based on the enactment of “ERISA” (Employee Retirement Income Security Act of 1974). What his “rich dad” foresaw were the problems of passing control of retirement funds to individuals. These problems include:
1. Most people save nothing, or much less than they need for retirement and medical bills, which continue to rise.
2. Those who created 401(k) accounts were forced to become “investors,” an activity previously reserved for wealthy (and educated) speculators. In the process, the stock market was flooded with funds.
This is exactly what happened:
– Most people without corporate pensions, replaced by optional 401(k) plans, continued to spend their money on tangible goods and save little or nothing (in fact, racking up record amounts of consumer debt).
– The minority of workers who created investment accounts (they still number in the millions) pumped billions into stocks and mutual funds. The stock market rose to record levels on the inflow of cash.
Note: It is no coincidence that the 1974 ERISA step is the bottom of the market, after a 1973-1974 plunge to below 600 Dow Jones Industrial Average. 1974 was also the center of a recession triggered by the Middle East “oil embargo” and the “Nixon Shock” that followed the removal of the dollar from the gold standard.
As Kiyosaki’s rich dad predicted: “Always keep an eye out for changes in the law. Every time a law changes, the future changes.”
All of this background sets the stage for the expected crash in 2016. With over 2 million retirees forced to sell stocks (and pay taxes on any gains), the market MUST contract – or implode!
Kiyosaki wrote this book forecasting the impending crash in 2002. This is BEFORE the financial crash of 2007-2008 (which continues today). During this crash, the market lost 50% of its value from a high of 14,000. (Since then it has recovered 85% to 12,000.)
Americans continue to have pitiful savings rates. Additionally, record unemployment caused by the current recession has forced many who DID save and invest to empty their retirement accounts. The number of new employees will not compensate the number of people who retire. After years of recession, there are actually fewer people employed, earning less, and investing less.
Combine these problems and you have a market in irreversible decline. As millions of other workers watch the value of their investments and retirement accounts decline, they will start selling too, trying to salvage the remaining value even if they have to pay penalties.
The process continues and the market spirals down at an accelerating rate! In the process, retirement savings and investment accounts in the millions will be wiped out.
Conclusion: the prediction of an accident in 2016 is probably optimistic! You can be here sooner as retirees can withdraw funds earlier – they will only delay withdrawals until age 70 if they don’t need the cash sooner!
Kiyosaki balances the dire prophecy with optimistic advice, specifically on how to build your “financial ark.” He writes: “Sometimes the greatest opportunities present themselves at times of greatest crisis. And for those who have positioned themselves well, it is not about surviving the disaster, but about achieving financial independence and wealth.”
He continues: “But this is not something to fear. The Rich Dad Prophecy reveals not only the best ways to safeguard wealth, but also how to truly prosper from the events to come. The fears, dreams, and actions of baby boomers will control our economic future. You should consider building your own personal financial ark to stay afloat in the troubled waters ahead. In Rich Dad’s Prophecy, you’ll discover how to prepare to thrive in the coming financial disaster. It’s a must-read for those who want to support themselves and grow their wealth for years to come.”
Rich Dad’s Prophecy will do more than educate you on the predicted stock market crash. You’ll learn how to build your own personal “financial ark” that will ensure that you not only weather the storm, but benefit from the turmoil to come. For more information on Rich Dad’s Prophecy, as well as Kiyosaki’s other books, resources, and seminars, visit Rich Dad’s website at RichDad.com.
