Robert Kiyosaki Shares How To Figure Out Which Investing Level You’re At
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Yaël Bizouati-Kennedy
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Nicholas Morine
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Robert Kiyosaki, the bestselling author of “Rich Dad Poor Dad,” has shared how to figure out which investing level you’re at — in the hopes of helping you better navigate financial markets.
“If you are a true investor, it does not matter if the markets are going up or coming down. A true investor does well in any market condition,” Kiyosaki said.
According to him, understanding where you stand could mean the difference between being rich or poor, as investment success depends solely on how smart the investor is, according to an article on the Rich Dad website.
As Shawn Carpenter, chairman and CEO of StockAlarm, explained, while investing is a proven, timeless way to build wealth and secure your financial future, not all investors are created equal.
“Different individuals possess varying levels of knowledge, experience, and goals regarding investing,” said Carpenter. “Understanding where you stand as an investor is crucial because it significantly impacts the decisions you make and the outcomes you achieve in your investment journey.”
Here are the five investing levels, according to Kiyosaki.
Level 1: The Novice
If you have too much debt, your first step is to get out of it, argued Kiyosaki.
At the novice level, you also likely have little-to-no knowledge of money and investing, he said, so a great investment is just to start investing in your financial education.
“Self-awareness is the first step to improvement in any area of life,” said Todd Stearn, founder and CEO of The Money Manual. “It’s important to look at your financial situation and decide on your goals. Be honest about the amount of risk you’re willing to take.”
Level 2: The Saver
Kiyosaki argued that most people were taught that being financially responsible means being a saver. However, he said that while savers can enjoy interest on their money, the interest rates themselves rarely keep up with inflation rates.
“It’s a loser’s game,” Kiyosaki argued. “If you are a saver, consider taking a few courses on investing, either in stocks or real estate, and see if anything interests you.”
Level 3: The Amateur
The amateur dabbles in riskier instruments such as stocks, bonds, mutual funds, insurance and exchange-traded funds, according to Kiyosaki.
“This is amateur investing at its best. A person at investing level three understands that they need to invest, but they don’t really know where or how to invest. So, they default to what is easy and right in front of them: 401(k)s and easy investments like mutual funds. Often they also have a financial advisor, who is really just a salesperson for financial companies,” he argued.
At this level, the risk is not being sufficiently diversified and relying too heavily on financial advisors.
“Invest in your financial education and start to take control of your money. Once you’re ready to start making your own investment decisions rather than letting an advisor do it for you, then level four is a good level for you,” he added.
Level 4: The Professional
The key to success at this level is lifelong learning and great teachers, he argued.
“Rather than passively dump their money into a 401(k) or mutual funds, professional investors interview several tax advisors, attorneys, stockbrokers, and real estate agents, find advisors who practice what they preach, and run fast from anyone who is selling investment advice and getting rich on commissions and fees alone. They look for investment advisors who make money investing in the same investments they are selling,” he said.
According to Seamus Nally, CEO of TurboTenant, real estate can be a fantastic investment — but it is definitely one that can be a massive undertaking, especially if going the traditional route of buying property.
“Since buying property is a large financial (and lifestyle) decision, it’s important to be at a level of investing where you understand the importance of asking those questions and getting expert guidance,” said Nally.
Level 5: The Capitalist
Finally, being a capitalist investor “is like being at the top of the world,” said Kiyosaki.
“Not only do level five investors make their living from their investments, but they also multiply their wealth exponentially by putting the velocity of money to work for them,” he said.
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