Ken Honda: The 5 Essentials for Smart Investing
An Interview With Jason Hartman
Learn where money flows. For example, in real estate or the stock market, money tends to flow from certain sectors to others in a predictable way, from gold to bitcoin and all sorts of other things. If you can develop the skill of knowing where and how money flows, you can be much more successful in investing. But people who just lose sight of how money flows will inevitably lose money. It’s easy to see what an impact the flow of money can have when one huge company going bankrupt affects not only people in that area, but also millions of people in countries around the world.
As a part of my series about the The 5 Essentials of Smart Investing, I had the pleasure of interviewing Ken Honda.
Money and happiness expert Ken Honda is a best-selling self-development author in Japan, with book sales surpassing eight million copies since 2001. His latest book is called “Happy Money: The Japanese Art of Making Peace With Your Money” (June 4, 2019, Simon & Schuster). Learn more at KenHonda.com.
Thank you for doing this with us! Our readers would like to learn a bit more about you. Can you tell us the “backstory” about what brought you to the finance industry?
Before I became an author on the topics of money and happiness, I had already become financially successful thanks to the education my father gave me when I was a child.
I became interested in the subject of money because in my home, it was basically what we discussed every night at the dinner table. My father was a successful tax accountant and he began teaching me about money when I was about five or six years old. He liked to ask me thoughtful questions so that I could start thinking and learning about money. For example, he would say, “There are jobs that keep paying the same amount no matter how long you do them, and there are other jobs where you get paid more along the way. So, if you’re a taxi driver, even after driving for 20 years, you get paid the same amount for driving the same distance. But successful lawyers, accountants, and other professionals learn new skills as they work and gain expertise, so their hourly rates go higher as time goes by.” Stuff like that. And as I got older, he started teaching me how money can be earned: “Some people get paid by companies, some go freelance, some become business owners, and some become investors. You can get paid from many different sources, too. If you have only one source of income, that’s not stable. But if you have multiple streams of income, that can bring you security, both financially and mentally.” Those are the kind of fundamental things I started learning since I was ten. Because of my early education about money, I became financially independent in my late 20s and owned several of my own accounting and finance businesses. I was already an active investor at that time.
When I was 29, I decided to take some time off of work and semi-retire in order to help my wife take care of our newborn baby. During that time, I reflected on what I wanted to do with my life in order to make an impact in the world. I had a flash of inspiration that one day I would become an author.
At the time, of course, I had never written anything longer than a book report in school and never dreamed of becoming an author before. But I poured everything I knew about how to become both happy and financially independent into a little self-published booklet I called “8 Steps to Happiness and Prosperity” and I began distributing it to close friends for free. Before I knew it, requests were coming in for more and more copies. Eventually my writing caught the attention of a publisher, and that’s how I started my career. October 2021 actually marks the 20th anniversary since I wrote that book, and since then I have written over 200 books in Japanese on topics like “Money and Happiness,” “Your Life Purpose,” and “Finding Your Gifts.” I somehow manage to publish about one book per month or more every year. “Happy Money: The Japanese Art of Making Peace With Your Money” was my first major English book, published by Simon & Schuster in 2019.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
As I mentioned, I started my entire career as an author by giving away my booklets for free. It was actually incredibly expensive to do so, even for me, and I thought my wife was going to kill me at some point. By the time I had given away 100,000 printed copies, a publisher called me and asked me to write a book. I’ve been writing and publishing regularly ever since, and because of the huge number of people I gave that booklet away to, I still get support from all the fans who loved what I wrote. So, the lesson I took away from that experience is that everything I give comes back to me in some way. In this case, it came back as support from readers. It also came back to me financially. Over the past 20 years, I’ve given away 2.3 million copies of the booklet alone, and I still always send out many copies of my new books as gifts. Back then, I must have spent more than two million dollars for what was essentially just gifts, but it came back to me multiple times over, because I’ve sold more than eight million books in my career so far. When I think about it, what I gave came back to me more than ten times. So, yes, I learned that your success level in work and life is determined how many people support you. I think my career as an author is an example of that.
Are you working on any exciting new projects now? How do you think that will help people?
This summer, I started an online community in English called “Arigato Living,” and we now have members from more than 20 countries around the world. We get together a few times a month to share our life stories and learn about money and happiness. I think connecting people who have a passion for what they do is truly instrumental for creating a cycle of success and happiness to as many people as possible. I believe it creates a vibrant network of people who are excited to support one another to create personal breakthroughs in many people’s lives.
Members who join this community can join a monthly live seminar where I speak about transformational topics such as Happy Money, Money EQ, Happiness, Abundance, and more. There are also live interviews with other best-selling authors, influential speakers, and mentors that have taught me about happiness, wealth, and gratitude, too.
It’s very exciting to me because I also started a salon just like this for my native Japanese community just last year, and it already has over 5,000 members and is still growing. I can’t wait for this new English community to grow and transform as more amazing people join us every day.
I have many hopes for this community, but specifically there are three goals I have in mind. First, I want Arigato Living Community to be a place for people to connect and share what they are passionate about while learning about money and abundance. Second, I want to share my growing curriculum of English courses and content to give back as much as possible and support the people who support me. And third, I want to grow a new generation of leaders who can teach others the message of Happy Money that proves that when you heal your relationship with money, you really heal your life.
I think this is the best way for me to many a difference and help people who feel called to join us.
Ok. Thanks for all that. Let’s now jump to the main core of our interview. According to this report in Fortune, nearly two-thirds of Americans can’t pass a basic test of financial literacy. In your opinion or experience what is the cause of these unfortunate numbers?
I think when it comes to the education system, we are forced to learn about other subjects in school, and money was just not one of them. It would be more practical if we could learn about topics like how to organize our life, time management, relationships, mental health, career planning, nutrition, and also financial literacy, of course. None of these very important subjects are taught in school in any practical way, and not every family is equipped to teach kids about these topics on their own. That’s why even as adults, we tend to forget to learn about money. We are left to our own devices and if we don’t put in effort to learn about those topics ourselves, we often just never learn about them at all. Even though knowledge about money topics is super important, we are sort of left behind by those who grew up with more advantages, and unless we have great parents or teachers to guide us, we’re on our own.
If you had the power to make a change, what 3 things would you recommend to improve these numbers?
- You have to learn about money IQ, which is financial intelligence.
- You also must learn about money EQ, which deals with your emotional intelligence.
- Finally, you should learn about relationship skills, because all the money you ever receive in life comes from other people. All opportunities, too. If people could learn about Money IQ, Money EQ, and relationship skills, we’d be all set.
Ok, thank you! Now to the main question of our interview: You are a “finance insider”. If you had to advise your adult child about 5 non intuitive essentials for smart investing, what would you say? Can you please give a story or an example for each?
- I think you have to think of yourself as the target of investment. Because when you think of yourself as an entity and recipient of investment, you know you have to invest in yourself so you can be productive and start generating money. You need to acquire skills like selling, consulting, counseling, cooking, teaching, or whatever skills you will need to increase the power you have to earn money.
- You have to understand how to appraise worth. You have to know how to accurately appraise certain things, and you have to know how much things are worth: how much certain cars cost, as well as real estate, paintings, gold, stocks… When you become good at appraising how much certain thing are worth, it’s easier to be successful later on. Ex: If you don’t know how much certain things are actually worth, you could suffer huge losses that could have been avoided. If you buy a car thinking it’s really high quality but it’s actually junk, you could lose a lot of money, not only in the initial price of the car but also in repairs. Many people also learn the hard way that if you invest in stocks that aren’t worth anything, you could lose a lot of money, too.
- You have to know the right people. Knowing the right people always brings opportunities for investing and new career opportunities. For example, when you are connected to the right people, somebody you know may offer you a job when you need it, or someone really influential could give you an endorsement or put you in touch with someone they know who could give you connections that could change your life. Getting to know that one person in the chain of your whole network is priceless. That’s how I met my agent, and that’s how I’ve met so many mentors and friends in my life who are there to support me no matter what. If you have a certain amount of people in your network, you can be successful even when times are difficult, but a lot of people don’t know the true power of having a network. Many people struggle in life because they try to do things on their own.
- Knowledge about the world and how society works and why certain occupations get paid more than others. It’s important because you have to know what options are out there when you decide what kind of work you want to do in life. Your job or your work is what will bring you the most money in life, so unless you know all the options that are truly available, it’s hard to make a wise decision. For example, if you want to be a doctor, you’ll get paid a certain amount within such and such expectations of a stable salary, but we know that it also requires a lot of investments in time, money, responsibility, and energy. However, if you want to start your own business, you could lose all your money in the beginning or if things go wrong, but you could also be extremely very successful later on and make much more than any stable income from a job that pays hourly or monthly. So, think of your “work” as an object of investment, too. If you don’t have much money, that’s where you start: You have to start by finding a job and start making money to begin making more investments in yourself.
- Learn where money flows. For example, in real estate or the stock market, money tends to flow from certain sectors to others in a predictable way, from gold to bitcoin and all sorts of other things. If you can develop the skill of knowing where and how money flows, you can be much more successful in investing. But people who just lose sight of how money flows will inevitably lose money. It’s easy to see what an impact the flow of money can have when one huge company going bankrupt affects not only people in that area, but also millions of people in countries around the world.
What are your thoughts about investing in cryptocurrency? Can you explain what you mean?
I think it’s definitely one option to consider. However, you do have to be careful because it’s in direct competition with the currency systems that are already in place, so many governments feel a bit threatened by it. In one country, the government banned all cryptocurrency and anyone found guilty of being involved in it can serve jail time if they get caught. So, if more governments start following down similar paths, the currency can also become worthless. For people who have the luxury of investing in many different things, cryptocurrency is an option to consider. If you think of it as part of a diversity plan, it can be a great investment, but you have to recognize in advance that it’s not backed by anything (such as gold, for instance), so it can also disappear in a flash if circumstances turn against it.
What are your thoughts about daytrading, using apps like Robinhood? Can you explain what you mean?
When the uptrend is stable, it’s relatively easy to make money, but when the trend is downward, it’s harder for average people and laymen to make money. When the stock market keeps going up, it’s easy because no matter what you buy, it’s going to increase in value to some extent. However, if the market is volatile or going down, you need the skills to know when to short at the right timing, and it requires more technical skills and emotional management. If everyone is going into the stock market with a sword like Robinhooders, who only carry swords, a great massacre might occur if the stock market crashes one day, because they’re not prepared for that. They’re only used to riding on the uptrend for the past few years.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
One of my earliest and most influential mentors about money was Wahei Takeda, who is known as one of the most successful investors in the country. Many people consider him as “The Warren Buffet of Japan.” My success is a direct result of listening and applying Wahei’s philosophies to my own life and business. He redefined not only how I invested money, but how I thought of money itself.
I once asked him, “In your eyes, what is abundance?” He answered, “It’s like having a pond in your garden that’s connected to an ever-flowing spring of water that replenishes itself.” To him, abundance is something that will never run out, no matter how much you take from it.
That being the case, you can give as much as you want to whoever you want, and people can take it from you if they need it. This doesn’t bother you in the least because you know the source is overflowing with more on the way. What made Wahei so abundant is probably that he was able to share that abundance so readily.
People with no money luck tend to forcefully stop the flow at the slightest sign of a trickle, trying desperately to keep it to themselves instead of flowing away. Treating money this way causes it to become stagnant, and then when you really need it, you’ll find the flow has either gone bad, grown over with algae, or become “undrinkable” unhappy money. Water must flow in order to function well, or it becomes unusable. Money is the same.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I like a quote by Anthony Robbins that said “You undervalue what you can do in a decade, but you overvalue what you can do in a year.” If you want to be wealthy, it’s often impossible to do it in just one year, but it’s absolutely possible for you to do it in a decade. So to me, this means that there are no short cuts to true wealth and abundance. Over time, it naturally multiplies — your opportunities, network, power of attracting people, it doesn’t add up. It multiplies.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)
I believe in the “Arigato Your Money” Movement — if we could create more happy money in the world, all of our lives would be so much better.
To earn Happy Money means so many things for different people, but essentially, I want to spread the message of Happy Money and encourage people to give generously of their skills and talents by doing what they love. When they do work in this way, people naturally want to support those businesses and support grows from within. The money you receive is imbued with gratitude and the money you spend is also given away with appreciation. This is a sustainable cycle of money powered by “Arigato.”
Thank you for the interview. We wish you continued success!
About The Interviewer: Jason Hartman is the Founder and CEO of Platinum Properties Investor Network, The Hartman Media Company and The Jason Hartman Foundation. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. His company, Platinum Properties Investor Network, Inc. helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Jason’s highly sought after educational events, speaking engagements, and his ultra-hot “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 164 countries worldwide. While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start.