$25,000 will only be worth $250 in 40 Years!!!

Or so says Robert Kiyosaki in his recent Yahoo! Finance article Think Rich to Lower Your Taxes. And when I say $25,000 will only be worth $250, he actually writes it will have the equivalent purchasing power of $250 of today’s money. But, isn’t that an extremely high inflation rate? Yes, it is.

Based on this calculator, Future Value of a Dollar Calculator, that represents an annual inflation rate just over a 12%. Starting… now. The last time we had inflation rates that high, Reagan was in office and my brother was in diapers. 1990 was the last year inflation rates hit even 5%. {For some fun calculations with historical inflation rates, go the an inflation calculator which calculates inflation rates from 1800-2006, based on the Consumer Price Index.)

So why does R. Kiyosaki make this statement? Well, for one, he is a doomsday sensationalist. He says these things to get his audience’s attention. But, in the article Think Rich to Lower Your Taxes, Kiyosaki aims to point out that many people pay more in taxes today than they need to. He points out that with certain real estate transactions you can use a 1031 tax-deferred exchange to legally defer all taxes on your capital gains. There are certain other investments with similar means of deferring taxes.

Kiyosaki is a smart man and has made a ton of money through his books, real estate, speaking engagements and seminars, and his educational games and programs. But you also have to realize he is always a salesman and sensationalist. Read his articles, or his books (I personally gained a lot from Rich Dad, Poor Dad. It changed the way I viewed many things). But when you read his books look for the information that applies to you and to your situation. Not everything he says is 100% applicable to YOUR situation, and that’s what matters to you.

I do like some investment advice he provides: Look for investments that put money into your pocket today – positive cash flow. Residual cash flow with minimal input is even better (such as renting out a house or apartment units). If you can rent a house for more than the monthly mortgage payment, that would qualify for positive cash flow.

In the end, you shouldn’t believe everything that that Robert Kiyosaki, or Donald Trump or anyone else says. Read their words, listen to them speak, then apply the golden bits of their wisdom that apply to your situation. After all, it is your money!

Fun Fact of the Day: Kiyosaki touts gold and other precious metals as investments, and has long been vocal against the dollar as a currency and stocks as long term investments. Did you know he owns gold and silver mines?

For more fun reading inflation and hyperinflation- check out this article about hyperinflation, where the inflation rates soard into the billion percent range!