Professional Documents
Culture Documents
Summary
Rich Dad, Poor Dad is one of the dumbest financial advice books I have
ever read. It contains many factual errors and numerous extremely
unlikely accounts of events that supposedly occurred.
Kiyosaki is a salesman and a motivational speaker. He has no financial
expertise and wont disclose his supposed real estate or other investment
success.
Rich Dad, Poor Dad contains much wrong advice, much bad advice,
some dangerous advice, and virtually no good advice.
You may wonder if I just criticize or have I written a better book. I wrote a
bunch of them. Heres one on advanced fundamentals of real estate
investment and another on basics. Click on either for more information
about it or to order it. My Succeeding book is more similar to the actual
subject of Rich Dad.
Law-breaking advice
Advocates committing
a felony: have rich
friends for trading stock
based on non-public
inside information, he
says "That's what
friends are for."
Recommends tax fraud
by deducting vacations
and health club dues
Brags about using a
partner weasel clause
in which his cat is his
partner
Bad liar
Can't keep track of his story
Shouts from the rooftops
how rich he is, but refuses
to disclose real estate
portfolio because he
"doesn't want people to
know he has money"
Apparently lied about going
bankrupt in 1985
Claimed his net worth is
$50-$100 million
depending on the day; his
Rich Dad Poor Dad coauthor
said in court that he only
made $9 million
His "best teacher ever"
changed repeatedly
1. '92 - Ralph Kiyosaki
(Poor Dad)
Creature of Amway
Over time, I have received numerous reports that Kiyosaki is primarily a
creature of Amway (now Quixtar) and other multi-level marketing
organizations. Reportedly, his books were not selling until he allied himself
with that crowd. Then the volume of sales to those MLM guys made him a
best-selling author, which caused normal non-MLM people to think the
book must be good. Click here for an email I received along those lines.
There is an unauthorized Web site about Amway at www.amquix.info.
Some readers have said that if I am going to criticize Kiyosakis book, I
must offer a version of how to better yourself that does not have the flaws
of Rich Dad Poor Dad. No problem. That would be my book Succeeding,
which, somewhat to my surprise, is my top seller of the 38 different books
I sell.
In the summer of 2007, the Ohio state government Division of Real Estate
and Professional Licensing published an extraordinary statement by a
consumer of Robert Kiyosakis book Rich Dad Poor Dad and Cash Flow
'Poor dad'
The idea behind Kiyosakis title is that his real father was upper middle
'Rich dad'
One day, he asked his father how to make money. His father said he had
not made much money and did not know how to make it. He suggested
that Robert ask the father of his next-door playmate, Mike. That boy's
father was a successful local businessman. He was also an eighth-grade
dropout and ultimately a multimillionaire with a bunch of small businesses
like construction, restaurants, and convenience stores. Kiyosaki
developed a father-son relationship with the neighbor. That is who he is
referring to when he uses the phrase rich dad.
One visitor to this site asked me if I was sure Rich Dad really exists. No,
Im not. In fact, I now lean to believing that there never was a Rich Dad,
that Kiyosaki made the whole thing up. If I had written such a book, I
would have named him in the book, if only out of gratitude. It is
noteworthy that Kiyosaki refuses to identify Rich Dad and the Honolulu
Star-Bulletin was unable to figure out who it was, in spite of the rather
obvious next-door neighbor Mike whose father owns convenience stores,
restaurants, and a construction company clues. The man was
purportedly around 30 to 45 years old in 1955. So he would be 83 to 98
now. How many people on that one street in Honolulu could possibly fit
that description?
As I recall, the first convenience store was 7-11 and I believe they became
widespread around the 1960s. Its possible Kiyosaki is using the phrase
convenience store loosely and really means corner groceries, which did
exist in the 1950s.
But I also find the mix of business unlikely. The guy owns convenience
stores, restaurants, and a construction company. I guess I can imagine a
guy who owns convenience stores and a construction company. Its odd,
but not impossible. However, I have less ability to picture a restaurateur
who also owns a construction company. I knew one. His restaurant went
out of business. For one thing, the restaurant business is extremely
management-intensive. At good restaurants, the owner is usually there
almost all of the time. Same is true of construction. Plus restaurateurs that
Ive known are very different kinds of people from construction guys.
Kiyosakis real father (Poor Dad) was named Ralph Kiyosaki. I encourage
readers in Hawaii to try to research Ralphs home ownership when
Kiyosaki was nine years old (1955) and try to figure out which adjacent or
nearby homeowner might have been Rich Dad. If we can find a person
who fits the description, and he is either a public person or dead, I will
publish the identity.
A bunch of people have told me Rich Dad was a now-dead guy named
Kim or Kimi. Fine. Get Kiyosaki to say that. Or get Kims surviving relatives,
like Kiyosakis friend Mike, to say it. A bunch of yahoos on the Internet
saying it means nothing. People on the Internet see Elvis at their 7-11.
should have written us a book on real estate investment. She may be the
brains of the outfit if Kim did not add any value to her advice. (Actually,
the employee probably was just guessing and her having guessed right is
meaningless. In fact, predicting market-wide appreciation in real estate
values is impossible to do. Decisions can only be evaluated based on what
the decision-maker knew at the time, not on results. You can get good
results from bad decisions, e.g., a winning lottery ticket; and vice versa,
e.g., attempting a 25-yard field goal that goes wide right when you are
down by two points with three seconds left in the game.)
If Kiyosaki claims to be a competent real estate investor, he needs to show
addresses of properties he bought that reveal greater returns on those
properties than were earned on similar properties at the same time by
persons who claim no extraordinary expertise. I suspect an examination of
properties he or his wife owned will show that he earned that same
returns as local homeowners and that the only thing extraordinary about
his purchases is that he had a large amount of book royalties to use to
buy them.
The guy who called me has the impression that Kiyosakis tortured psyche
and insecurities stem from growing up as an obese kid in Hilo in the
1950s. Since he did not know Kiyosaki until the military, that information
must have come from Kiyosaki.
No more Bob
Kiyosaki went by Bob for most of his life. Since he became the famous
author, he insists that everyone call him Robert. Sure, Bob.
would show a profit within 20 days. One lost all he money. Another made
zero. The third made $243.
Kiyosaki was brought in to coach them and to advise them during the 20
days. Based on the article, it sounds like about all he did was whine about
the three would-be entrepreneurs, the short time frame, and so forth. He
also pronounced their failures a successtypical Kiyosaki logicbecause
they learned from them. The ABC 20/20 story ends with,
Which begs the question: Does anyone really need 18 books to learn to
fail?
Obviously, Kiyosaki has sold 26 million books on the promise that they
would help you succeed. Then, when people who have been personally
coached by him fail, he blames them and, like the Queen in Alice in
Wonderland, declares their failures to be successes.
I guess it would be too much to ask for him to admit, Gee, I guess my
advice was of no value to these three.
If I had been asked to participate in such a challenge, I would have said I
have no expertise in telling anyone how to make a profit with $1,000 in 20
days. I do not know how I would have done that if I had been given the
money. Probably write a short book and use the $1,000 to print it and
create a series of Web pages about it. See my book How to Write, Publish,
and Sell Your Own How-To Book
for the details on how to do that. It would be interesting for 20/20 or a
similar program to give $1,000 to Kiyosaki himself and let he himself
show how to turn it into a profit using some method open to his readers.
You would have to have a microscope on him every second and prohibit
any undisclosed actions or conversations to prevent him from using
methods not available to his readers.
What business has Kiyosaki ever made a profit in? With regard to his 26
million books, he is not a businessman. He is only an author. The
businessmen generating those sales and profits are his publishers.
to clean up their acts. Thats good, but the book goes on to deliver a pack
of lies that make getting rich seem much easier than it really is and make
education sound much less valuable than it really is. Basically, people
want to get rich quick without effort or risk. Kiyosaki is just the latest in a
long line of con men who pander to that fantasy.
Can the ordinary person get rich? Yes
Is it as easy as Kiyosaki makes it sound? Not even close.
Can it be done as fast as Kiyosaki says? Nope.
Is education as worthless as Kiyosaki says? Every pertinent study has
shown that the more education you have, the higher your net worth and
income. Also, educated people live longer, have fewer divorces, better
health, and so forth.
Here are U.S. Bureau of Labor Statistics figures on education that were
released on 8/17/07:
doctoral degree
$1,441
professional degree
$1,474
masters degree
$1,140
bachelors degree
$962
associate degree
$721
college dropout
$674
$595
$419
unemployment rate
doctoral degree
1.4%
professional degree
1.1%
masters degree
1.7%
bachelors degree
2.3%
associate degree
3.0%
college dropout
3.9%
4.3%
6.8%
Motivation
Another compliment readers often pay Kiyosaki is along the lines of, Well,
at least he motivated me.
Yeah, by lying to you. Thats like me telling you I buried $100,000 in your
backyard which is yours for the taking. Would that motivate you? No
question. You would probably spend the next two weeks digging up your
backyard. After you found out it was a lie, would you think I was a great
guy for having thus motivated you to get all that healthy exercise? I doubt
it.
I did not miss that at all. In fact, I discussed the matter of his definitions of
assets and liabilities squarely and repeatedly in this review. Furthermore,
the vast majority of the book has nothing to do with that point and some
of the book contradicts that point, like Kiyosaki bragging about his Rolex. I
also note that in eight years, this is the only person who thought that was
the point of the book.
The only time different people look at the same thing and come up with
different answers as to what it is they are looking at is when the thing they
are looking at is amorphous, like a cloud or a Rorschach inkblotor a
politician.
Politicians try to be all things to all people. That requires them to say
nothing (amorphousness), but to sound like they are saying something
(the point). They toss in a little spin to try to get all those people with
those different views to see in the politician things that they like. Kiyosaki
slogans like Dont work for money. Make money work for you, are
amorphous in their actual meaning, but have the effect of spinning the
reader into thinking he has just gotten good advice.
Heres a pertinent passage from Temple University professor John Allen
Pouloss book A Mathematician Reads the Newspaper.
A similar argument helps clarify why inane I Ching sayings or ambiguous
horoscopes seem to many to be so apt. Their aptness is self-provided. In
effect, their cryptic obscurity provides a random set of answers that the
devotee fabricates into something seemingly appropriate and useful.
psychologists count on the amorphousness of Rorschach ink blots to elicit
evidence of a persons core concerns.
My own supporters occasionally commit the mistake of reading things into
my writings. I once got an email complimenting me on my writings. The
writers favorite quote by me was, When everyone is digging for gold, sell
shovels. I thanked him for his compliments, but said, I never said that.
He then wrote back that he searched all over my Web site, but could not
find it.
Cult
What Kiyosaki is really doing is operating a cult of personality. Anna
Quindlen had an excellent article about such cults in the 8/14/00
Newsweek. She was talking about politicians and said they seek to elicit
the words, I dont know why. I just like the guy. Politicians want to be
judged by their personalities, not their character or policies. To members
of Kiyosakis cult, it matters not how many false or probably-false
statements I find in Kiyosakis writings. They just like the guy. Personality
is an appropriate criterion for selecting someone to hang around with. But
it is a highly inappropriate criterion for evaluating Kiyosakis advice,
because hes not going to let you hang around with him and your familys
finances are serious business.
I am not a politician. When I write something, I want to make sure
everyone gets the pointthe same point. Here is the point of this
analysis:
Rich Dad, Poor Dad contains much wrong advice, much bad advice, some
dangerous advice, and virtually no good advice.
Short on specifics
About every third email I get about this analysis tells me that they agree
with me that Kiyosaki is short on specifics about how to get rich. In the
first week of February, 2008, yet another woman told me she agreed with
my saying he is short on specifics, I said Kiyosaki had made her blind to
the statement I made in huge letters (below after this sentence) and she
switched subjects to my ungentlemanly behavior in making such a
comment. Although she did not deny that I had pointed out in huge letters
that I never said any such thing.
On page 92, he tells of his rich dad keeping him waiting for long periods
when he was nine years old!! He was ignoring me on purpose. He
wanted me to recognize his power and desire to have that power for
myself one day. On page 172, he says, I have found the principles of
finding value are the same regardless if its real estate, stocks,...or a new
spouse...
On page 154, Kiyosaki says the reason you want to have rich friends is
to get inside stock market information that you can make low-risk profits.
He ends that discussion with the sentence, That is what friends are
for. That is the narrowest, most mercenary definition of friendship I have
ever seen. I doubt Kiyosaki is the only person who feels this way about his
friends, but he may be the only one dumb enough to say it in a book.
My Succeeding book tries to get you to always keep in mind the
paramount importance of living a balanced life with emphasis on friends
and family and doing the things that you find rewarding for reasons other
than mere monetary income.
real estate. He later got into trouble with the law and was the subject of a
60 Minutes segment about his mansion in Florida that creditors could not
get at after he declared bankruptcy.
According to the Honolulu Star-Bulletin, Kiyosaki wont say how much he
is worth or in what hes invested. Kiyosaki claims, I own companies. Im a
major shareholder in oil and mining companies, plus real estate
companies. I have intellectual property companies. But he wont identify
any of them. Why? As you will read below, one of my readers checked
Kiyosakis claim that he was a major shareholder out in a securities
industry data base and found not a trace of him in spite of the fact that
major shareholders are required by law to be identified. If he is a major
shareholder, it is in minor corporations so small that their shares are not
traded publicly.
A book editor unrelated to Kiyosaki used industry statistics to tell me he
figures Kiyosaki has netted at least $11 million from his book royalties
since 2000.
With regard to Kiyosakis Money buys me freedom statement, my
Succeeding
book has a chapter on wealth that discusses both the advantages and
disadvantages of being rich. Yes, there are disadvantages, like making
your family members kidnap targets or making yourself a lawsuit target.
Last I heard, Kiyosaki was being sued by the co-author of Rich Dad Poor
Dad, Sharon Lechter.
Mr. Privacy
Kiyosaki says, I keep my holdings private. You know why that is?
Lawsuits. If you have money, you get sued.
Let me get this straight. Kiyosaki says he is rich, that he makes millions of
dollars, and is about as high profile about his wealth as you can get about
itbest-selling how-to-get-rich books, appearances on TV shows like
Oprah, interviews to daily papers and national magazines. Yet he won't
followers imagine
He did not get it the way he impliesfor example, his wealth may
come almost entirely from telling people how to get wealthy and he
may not have been wealthy himself until he told people how to get
wealthy
He achieved wealth in an unethical or illegal way
All of the above
For the record, I created another page to address the jealousy issue. Click
here to see it.
avoid
mutual
funds and
401(k)s
because
they are too
risky
Reed comment
Mutual funds vary in their risk. Some are very low risk. 401(k)s
have tax benefits that are hard to ignore. Also, you can invest
them in almost anything you want in many cases. If they are
invested in broad-based, low-cost index funds, like Vanguard
500 Index, they have no risk other than the risk that the entire
market will collapse.
Bogus gurus like to give extremely simple rules. Ignorant readers
love them. Thats fine when the subject permits. But this is an
extremely simple rule that is not valid because of the complexity
of the subject.
I dont believe that. He was bankrupt and homeless in 1985 by
his own admission. Although a lawyer who searched the federal
case management system on line says he could find no
bankruptcy filing for Kiyosaki. He claims to have sold 26 million
books. The highly successful book What Color is Your
Parachute? has only sold seven million copies since it first came
out in 1970. But even if you accept the 26 million figure,
Kiyosakis co-author royalty would appear to be about 72not
enough to get you anywhere near $50 million even if you had no
living expenses. He claims to make money in other businesses,
but will not disclose enough detail that anyone can check that.
says his net
worth is
$50
million to
$100 million
depending
on the day
the
investments
of the
wealthy are
managed
well
says he was
able to
retire at 47
So why didnt he? Hes still hustling his butt off to sell stuff.
This is primarily an income-tax-rate distinction as Kiyosaki
explains it. He says these types of income are taxed at 50%,
20%, and 0% respectively.
The phrases passive income and portfolio income do appear
in the Internal Revenue Code. I have used earned income to
describe money you make from your salary or business.
there are
three
different
types of
income:
earned,
portfolio,
and passive
I own 10
rental
buildings in
Miami,
Austin, and
Phoenix.