Sunday, January 11, 2009

Real Estate: The Secret Weapon of the Rich

Taxes are a necessary evil in our society, and for many it seems natural to grouse about having to pay a large percentage of our earnings to the government while those who have more money seem to be bearing less of the burden than they ought. It's certainly disheartening that it works this way - as the fortunate shirk their obligations through legal loopholes, the rest have to pick up their slack. It's frustrating and unfair, and there's no question that many of the complaints against the upper class are quite legitimate.

Unfortunately, simply recognizing injustices and complaining about them isn't sufficient to change the ways of the world. The rich will inevitably have money and therefore power, and they will use this power to stack the deck in their favor, particularly when it comes to using tax breaks to keep their money. They will claim that there simply isn't enough money for everyone to get what they need, all the while cutting corners and keeping their spoils for themselves. This extends to elected officials as well - how many poor politicians have you heard of?

That's why you are going to have to take action. Don't be one of the downtrodden masses. If you want more money, you are going to have to go get it yourself. And yes, you too can get more money in the form of tax breaks.

Robert Kiyosaki, author of the "Rich Dad, Poor Dad" books, makes the sensible suggestion that those who are not rich but would like to be should watch what the rich do, and then do the same. You don't really need to watch too closely, however, to learn the open secret of the wealthy- that secret is real estate.

"One of the reasons I chose to work predominantly in the B and I quadrants are the tax advantages," he says in his book, "Cash Flow Quadrant." The cash flow quadrant, after which he named the book, is his rich dad's diagram of the four different kinds of people, with respect to where they get their money and their philosophy about procuring money which, oddly enough, match up. In other words, people who are Employees have one set of values while the people who are Self-employed have another.

According to Robert Kiyosaki, the real money is in the business and investment quadrants of the Cash Flow Quadrant.

As they say, if you can't beat 'em, you've got to join 'em. This is doubly true when you're talking about the wealthy. With this mindset, you'll realize that tax breaks for the rich aren't really so bad, since you can take advantage of them when you become rich.

The path to riches is actually very simple; all you've got to do is start investing, or join the 'I' quadrant. If you have a high-paying job, you may be able to do this without leaving the 'E' (employee) or 'S' (self-employed) quadrants, but Robert Kiyosaki advises that you move into the 'B' or business quadrant, devising a system that will make you money regardless of whether you are putting time into it or not.

So, invest - invest in apartments, condos, vacation homes, whatever suits your fancy. This is the true, time-tested road to wealth.

Author: Alexandria P. Anderson specializes helping people to find and purchase Golden Valley MN Homes, as well as Golden Valley property for her Minnesota realty clients.