My Take on Robert Kiyosaki and His New Book

Seems like everyone I know either loves or hates Robert Kiyosaki, the author of Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not! as well as entrepreneur and speaker. (He's kind of like Dave Ramsey in that way.) If I were guessing, I think more Free Money Finance readers dislike him than think he's useful. I believe that they dislike him because he often says some very off-the-wall things (at least in some readers' opinions), especially in his Yahoo Finance column.

My take on Kiyosaki is a bit more balanced than the usual love/hate opinion. Here are my thoughts on him and his new book:

1. Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not! was a good book in my opinion -- even if the rich dad and poor dad were made up (as some people say.) I read it several years ago and it was a key part of my early thinking on personal finances. That said, I don't agree 100% with the book (there are very few books I agree 100% with.)

2. I don't think I've read any of his books since the first one, so I can't really comment on them. No real reason for me to avoid them, it's just that they didn't look that different than the original when I looked at reviews.

3. You can't deny that Kiyosaki has been successful in business. From what I can tell, he's making a bundle of money selling books, seminars and the like. Of course making lots of money doesn't mean you know what you're talking about, but it does show that you're good at, well, making money.

4. Kiyosaki has written some bizarre thoughts in his Yahoo column. My thinking is that he does this just to cause controversy, stir the pot a bit, and distinguish himself from other personal finance advisors. Let's face it, the basics of personal finance are fairly simple, and many "experts" say the exact same things. I think Kiyosaki's "strangeness" is more of a marketing move to establish his brand as "different." I don't think he's crazy at all.

5. Much of what he says that appears strange is simply the way he says it. Often he says something that seems totally whacked out, then when he details what he means you can see that his "differences" are simply semantics. For instance, in Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money, he says he hates the advice "spend less than you earn." Then he goes on to detail that you should work on earning more. And as he explains this it's clear that the differences between what he's saying and what the "spend less than you earn" people say is not that different.

6. Just like any financial "expert", Kiyosaki has some good points and some bad points. And just like with any of the others, you need to think for yourself when you read what he suggests.

7. I actually liked Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money quite a bit and I'll be sharing several thoughts from it over the next few weeks. It was a surprise to me that I agreed with so much of it since I had assumed I wouldn't (based on many reactions to the Yahoo column.)

8. Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money is pretty basic. I'd say it's for a financial newbie or for someone wanting a simple overview of basic personal finance principles. I liked it because it goes over the basics of money management in a different way that makes it worth reading. And as I've said several times, if you can just get the basics down, you'll do very well financially.

So those are my thoughts on Robert Kiyosaki and his new book. Stay tuned for more thoughts on Rich Dad's Increase Your Financial IQ: Get Smarter with Your Money and my take on them.

Comments

[MattC]

On point #3, I don't think he has ever shown through examples his success in the real estate market. Selling a lot of books makes you a good author - not a good business man. Almost anyone could write a book about their money making ability, it's the proof that I'm interested in.

[ekrabs]

I want to confess upfront that my bias is towards "dislike". Haha.

1. I agree that I liked his first book as well. It wasn't bad in the sense that he is a good storyteller and an inspirational writer. I too have never agreed 100% with any book, but relative to other personal finance books out there, I have never disagree with so much of it. Some books, I may disagree with only 2 to 10% of it. His is more like 50 to 70%.

3. With all due respect, I'm not entirely certain that this shows his "money-making skills". The only thing required to sell books is a matter of popularity and marketing. I'm tempted to say that his books sell well because, unlike many actual financial books out there, it's very easy to read and very gimmicky. I mean, the title alone has the wording, "What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!"

4. Your theory may be possible, but... can you provide some kind of evidence of this pot-stirring? I would think that it's far more important to provide accurate and solid information, regardless of whether it stirs the pot or not. Otherwise, sooner or later, you'll just prove yourself to be exactly that: A crack-pot! :D (Get it... ok, sorry no more puns.)

5. I'm OK with this, though just to be clear, "Earn more" AND "Spend Less" are BOTH fundamental pillars of financial health. I find it strange that an author who advises others on personal finances and business would have distinguish one over the other. But then, his preference for owning businesses have never been a secret.

6. Absolutely agree! PLEASE think for yourself, not just because someone recommended you a book and said he was good.

[Jonathan H]

I'm sorry, but the man is a snake-oil salesman. His books are written to appeal to the get-rich-quick crowd (read my book and you'll have a mansion in Hawaii and get to boss people around!).

In amongst the garbage he may say some things that are legitimate money managing techniques, but there's too much bad, useless, or occasionally illegal advice to sift through to get it. I believe it would be a mistake to recommend his books to people trying to get a handle on their finances who aren't yet able to differentiate between good advice, and a wastes of time and money.

Here's some good info on why to not recommend Kiyosaki: http://www.johntreed.com/Kiyosaki.html

[Moneymonk]

You have to be a capitalist in the first place just to get the jist of his book.

The man is always going to gear you to making money, however to really get him, you have to already be a owner or investor.

The man thinks outside the box. I like his book. However like you, I don't agree 100%.

RK changed my thinking, so I have to give him credit for that.

[Curt]

I love this book. The financial IQ in America is negative 2. Just look at the saving rate, which is -1%

Robert is right about a lot of things, real-estate has huge tax advantages, becoming a business owner or investor is the way to make a lot of money - yet hard for the average joe to get involved with.

The primary concept to learn from Robert is to stay allert and informed about financial matters, so that you can 1) continue to find new ways to decrease your expenses and 2) continue to find new ways to increase your income.

[Oliver]

i took his book called 'prophecy' away with me when i went overseas for a while. I ended up reading it 3 times. The first time I thought it was ok and had some good ideas. The second time I didn't think it was that great because you couldn't use any of the ideas in practice. The third time I read it I could tell where he contradicted himself, sometimes within the space of 2 pages.
He also seems to think less of other people because they're not good 'investors'. I don't think he's very good himself, just a good author like the others said.

[Lord]

I wonder why he stirs up such antagonism. Is it because it is about getting rich and not just living a middle class life? Is it because he shows there is no procedure for becoming rich the way there is for becoming middle class? Is it because they think the rich don't deserve it, have advantages, luck, or it is they feel it impossible for themselves to achieve it? Is it because they feel he is leading people astray from the middle class path, that most people are too dumb to profit from his advice?

[db]

Well, I can only tell you why I dislike RK.

1. I run in the opposite direction from anybody who plays up becoming a real estate speculator as the primary road to riches. Not that I'm against real estate, but I think that a big part of our current problem is because people like RK have totally changed the mindset of Americans about real estate (for the worse). I object to the current thinking that makes even your primary home primarly an investment vehicle for profit.

2. I think he's pretty negative about education, and I dislike the trend to downplay education and the sort of work (like engineering and the sciences) that a good solid education can bring you AND that this sort of work (as opposed to a general business degree) is the most important sort of work anyone can pursue. We should as a society be pushing people into engineering programs, not real estate seminars.

I could rant on and on about this one, but I'll just say that he loses me simply by being so fervently anti-education.

[Matt]

The linked John T Reed article above pretty well demolishes the Kiyosaki myth. The man has never made any verifiable money in real estate so why should I trust him as a real estate guru?

I am very skeptical of most real estate guru types because most of them ignore the risks of high leverage. Yes real estate has great advantages because you can get 20x1 leverage or better but it also has huge risks.

[Ah1082]

To ekrabs:you said "The only thing required to sell books is a matter of popularity and marketing."; You make it sound so easy then I assume you've done it yourself and have made millions of dollars doing it?

[Lord]

Yes, I think his detractors are upset by his honesty, by his noting that study hard, get an education, work hard, build a career, only leads to a middle class lifestyle. They have invested in the formula, only to find the results dissatisfying. They are unhappy with the way the world works and want it work the way they want, the way that rewards their dedication, effort, and time. A bit of denial, a bit of disappointment, a bit of envy, a bit of anger, a bit of fear, a bit of helplessness.

[Sarah]

His *honesty*? He lies and lies and lies. Check out the Reed article linked above.

He's just another travelling salesman. Funny how you never hear from the people he's taught to be rich! (But, sadly, there are plenty of fools out there right now who have lost their shirts on real-estate speculation.) Now, is pitching his BS ideas successfully a business success itself? I guess it is. But guess what--that's not exactly what he sells as the way to get rich. He's not scared of competition in real estate, but he might be in get-rich-quick real-estate seminars!

[aaktx]

I put myself in the dislike category as well. I have read the intial book and found it interesting. My problem is that he advocates excessive leverage and speculation. Sometimes it works out and you become wealthy. Lots of time you care under water with big loans and bankruptcy(see current mortgage mess).

[db]

What, actually is wrong with a middle class lifestyle?

Not the one that equates to living paycheck to paycheck and having a huge mortgage, auto loan and credit cards out the wazoo.

But rather, the one where you work an honest job that satisfies you for a salary that is more than a living wage and allows you to adequately provide for yourself and your family?

Or, do we all really need to be obscenely wealthy (if perhaps unscrupled) millionaires?

[Ah1082]

While I agree that some of his beliefs and ideas must be taken with a grain of salt, he has actually inspired me to increase my passive income within the last 2 1/2 years. Also, he does not advocate speculating in real estate if you've read his books. He recommends investing in real estate for cash flow (i.e. rental real estate, apartments, etc.) There is a HUGE difference between Flippers (speculative) and those that hold long term for cash flow. By doing this, it does not matter whether the real estate market is down or up. Please know the difference before you rip him without knowing all of the facts.

[Lord]

> What, actually is wrong with a middle class lifestyle?

It is going out of style. Get rich or end up poor. Seeking security is fundamentally flawed; only money can provide security. Trump was accurate about this. Not everyone is up to it. Some don't even consider themselves worthy of it.

[Bret Frohlich]

I count myself on the "Like" side, but I'm definitely not a worshiper.

I read Rich Dad and Cash Flow Quadrant and I took away some great thoughts and ideas. The most important are the tax advantages of businesses and passive income versus W2 income. Another important thing Kiyosaki brings up religously is the folly of buying "assets" that bleed you financially.

I don't consider him to be overly aggressive in recommending leverage or speculative deals, for a real estate investor. And, he's pretty big on recommending due dilligence before any purchase.

The detractors have some valid comments, but that doesn't mean you can't learn something from reading Kiyosaki. If Personal Finance authors were required to actually make money from something besides selling books, the shelves would be pretty empty.