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Investor Psychology

Q&A With Donald Trump and Robert Kiyosaki

The authors of Why We Want You to Be Rich explain some key points of their new book.

Call it a meeting of the get-rich-quick minds. Robert Kiyosaki, author of the best-selling Rich Dad Poor Dad, partnered with billionaire real estate developer and reality TV star Donald Trump to create the book Why We Want You to Be Rich. More of a pep talk than an instruction manual, Kiyosaki and Trump tell readers to think like the rich because the middle class is rapidly shrinking. The book debuts in stores Oct. 10.

By telephone, Kiyosaki and Trump recently discussed their new book with Kiplinger's.

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KIPLINGER'S: Mr. Trump, what's the most important thing readers should take away from the book?

TRUMP: I think it's just that they are going to have a better life. Money is not everything, as the expression goes, but it certainly makes life easier. And we teach people how to make money and we teach people how to have a better life. And some of that is through money and some of that is through attitude. The book is very much about attitude and it is also about creation of wealth.

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Mr. Kiyosaki, would you agree?

KIYOSAKI: Yes, but I think the main reason we got together was not to talk so much about money, but also the concern about the collapse of pension plans, the idea that so many Americans don't have 401(k)s or Medicare and health insurance costs are on the way up. Why we got together was that most financial experts say to live below your means. And Mr. Trump and I definitely don't live below our means; we work hard to expand our means. I think that's what makes our book different than the traditional personal-finance book, which says live below your means, save money and invest in mutual funds. It's very different.

Mr. Trump, are there any parts of Mr. Kiyosaki's philosophy you disagree with?

TRUMP: I think we have a similar philosophy. I was a big fan of his book, Rich Dad Poor Dad, which was one of the most successful personal-finance books of all time. As you know, I wrote the most successful business book, The Art of the Deal. We met each other, we liked each other, and we thought we could combine our philosophies. It may be a question of degrees. He's very entrepreneurial and so am I. But over a period of time, I've begun to preach to some people that they shouldn't be entrepreneurial because they don't have it in them. Just like a golfer, some people can't putt and some can't hit the ball. It's not necessarily for everybody. No two people are going to agree a 100% on everything, but I think we agree about 95% of the time.

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Mr. Kiyosaki, any areas where you disagree with Mr. Trump?

KIYOSAKI: It's an honor to work with him. Back in the '80s, when my wife and I were flat broke, I read his book The Art of the Deal. To me, the book was like the lighthouse in the darkness, and it sort of pulled me out of my setback. What he and I talk about is that we all have financial challenges. Rich or poor, we all have problems. What makes us different is how we handle our problems. Some people just give up. Some people turn their money over to a financial planner. And some people become entrepreneurs. Mr. Trump has a lot more zeros after his net worth than me, but we're both entrepreneurs, and we both invest in real estate. We both don't live below our means, we like expanding our means.

Mr. Trump, what's the best real estate advice you give in this book?

TRUMP: I think part of the advice I give in this book is that you have to know your subject, whether it's real estate or not. I know a lot of people go into real estate and they lose a lot of money because they don't know what they are doing. You have to know your subject. If you are in real estate, even if you know real estate, you have to know your locale or your area.

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Mr. Kiyosaki, what's the best specific advice you give in this book?

KIYOSAKI: I'm always the guy who watches the long-term trends, that's why I read. Right now, what I'm watching is a number of hedge funds that are taking companies private through private equity and all this. And that's driving the price of the stock market out of control. There's so much liquid cash chasing so few real assets. I think we have a bubble in credit and debt. I sit there and watch that and do my best to figure out where is this thing going to go and what do I invest in.

In your book, you criticize mutual funds for not being transparent. But I get the impression from reading your book that you prefer to invest in hedge funds, which themselves are not very transparent. How do you reconcile this?

KIYOSAKI: Well, hedge funds are for rich guys, and you have to know the guy that runs the hedge fund. And realize that hedge funds use leverage. I never recommended hedge funds; I just say that if you are a rich guy, look at them. With mutual funds, there's a market for them, which is a mass market, just like a lot of people shop at Wal-Mart. That's not where the rich play. I think the real purpose of the book was to point out why the rich are getting richer and why the middle class is worried about their retirement and medical expenses. It's a different mindset from the start. I don't invest in mutual funds because I don't have to.

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Given what is happening in the real estate market, is it a good time for your readers to get into real estate investing?

KIYOSAKI: Absolutely not, that's really ridiculous. You should always buy low and sell high. The bad part about it is that so many financial guys are suddenly recommending real estate. My answer is that I like it when markets crash because that's when I go back in.

TRUMP: The market hasn't crashed; it's just not as good as it was two years ago. Two years ago, the market was the greatest in the history of the world. And now it's a good market. It's not a bad market now. But you just can't get lucky; you have to know what you're doing.

KIYOSAKI: You got to be smarter today.