Before I get into my review of Rich Dad, Poor Dad, a couple of background items.
First, I had been aware of the author, Robert Kiyosaki, for some time. His pitches for his books and seminars felt like the typical hype for this type of ‘financial advice,’ aimed at the mass market. The subtitle of the book is, What the Rich Teach Their Kids About Money—That the Poor and Middle Class Do Not!
Second, I write a lot of book reviews and publish them here. The feedback from readers is good and it allows me to stay in touch with a lot of friends and associates, more than I ever could through coffee meetings. I don’t review every book I read. Some are good books but very difficult to read. Some aren’t of interest to this readership. And some books are mediocre, and I don’t see much point in reviewing a book I wouldn’t recommend to people.
But I thought, in a contrarian moment, maybe it would be fun to review a terrible book one time. This is that book and this is the time.
Rich Dad, Poor Dad is the best-selling finance book of the 21st century in America. While I’ve been aware of Robert Kiyosaki for a long time, some of his recent headline-making statements have gotten my attention. He’s advising people to avoid cash as the dollar isn’t real, it can’t be trusted. He’s suggesting that investors put their money into silver and Bitcoin. In January, he was in the news claiming he has $1.2 billion of debt, but that if he went bust, the bank would go bust, so it wasn’t his problem.
Anyway, I picked up a copy of the 20th anniversary edition of Rich Dad, Poor Dad, and read it. On the cover if proclaims, “Celebrating 20 years as the #1 personal finance book of all time.” This isn’t just the bestselling finance book of the 21st century but of all time. Well, okay then.
I was expecting poor quality advice and used-car-salesman sort hype and crap. I was not disappointed.
The book isn’t completely terrible. I’d say that ten percent of the book is good stuff. The author is very entrepreneurial and recommends starting a business to just getting a job and working for others. He also advocates financial literacy and investing. He is clearly a lifelong learner himself. That’s all good by me.
I’d judge that another 30% of the book is bad advice. The author has his own definition of liabilities that don’t square with anything accounting calls a liability. He advocates buying assets rather than buying liabilities. Huh? He defines a ‘liability’ as a depreciating asset or an asset that will cost money to maintain. He never defines liability properly.
He explains Balance Sheets and Income Statements by drawing arrows indicating the direction of flow of cash, saying that’s what matters. He never defines basic concepts like net worth, net income, revenues, or expenses.
He warns people away from saving cash, since dollars are a fiat currency that Richard Nixon took off the gold standard in 1971. And while he feels that the U.S. dollar is not real, he advocates (not in the book, but more recently in the press) investing in cryptocurrencies.
And while he likes real estate since it provides cash flow, more recently he has been advocating, in addition to Bitcoin, that people invest in silver. In other words, speculate in a commodity rather than save money in an interest-bearing account.
And what of his current $1.2 billion in debt? He does advocate using leverage but advises that debt should be secured only by the asset and non-recourse to the borrower. For solid income properties, that’s often the way it is done, but that’s not feasible for a novice investor, especially with some of the assets he advocates buying.
My favorite is when he advocates for the real ‘secret’ of the rich: using corporations. He says that corporations have lower tax rates than individuals, so they are the secret weapon of the rich. Of course, he never mentions double taxation, or the difference between a C corporation and an S corporation. Worst of all, he doesn’t tell his readers about the 11th Commandment of most tax experts: Thou Shall Not Own Appreciated Real Estate within a C Corporation.
And what is the remaining 60 percent of the book comprised of? Poorly written stories, fables about his rich dad (his friend’s dad) and poor dad (his own father), and a lot of repetition of this trite crap. Clearly, he did what a lot of authors do. They have 20 pages of material, but one can’t sell a 20-page book. So they add a bunch of fluff to pump the book up to a size that can be called a book and sell that.
Rich Dad, Poor Dad is now its own industry, with 18 books in the series written by Kiyosaki, high priced seminars, and more.
Oh, and two more books with a co-author. The co-authored books are Why We Want you to Be Rich, Two Men, One Message, and Midas Touch, Why Some Entrepreneurs Get Rich—and Why Most Don’t. The co-author is Donald Trump. I am not making this up.
So, save yourself the time and money. Don’t read these books and ignore everything this hack has to say. This is a terrible book.
That was fun.
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