“Is there some kind of secret to making money that no one told me about? Am I doing something wrong?” It is extremely common for people to ask themselves these questions at some point.
Among the many who say they can let you in on the secret, Robert Kiyosaki is at the top of the list. His flagship book, Rich Dad Poor Dad (RDPD), remains a consistent bestseller after decades in print, with over 32 million copies reportedly sold in dozens of languages! Kiyosaki claims to share the financial tips that “rich people teach their kids that the poor and middle class don’t.”
Is the secret to riches readily available? Are this guru’s tens of millions of readers well on their way to easy big bucks?
Dad vs. Dad
RDPD contrasts two vastly differing attitudes and approaches to earning and spending money. Poor Dad, Kiyosaki’s biological father, is book-smart but timid, trapped in the “rat race” of a job and “buying liabilities.” Rich Dad, an adopted mentor, is street-smart and gutsy, building a business empire that hires the “rats” and grows wealthy off their labor.
Robert eventually comes to appreciate Poor Dad’s selflessness as an educator, but is still glad to have been groomed by a hard-nosed rich dad to become a “hard-core capitalist.”
A Jumbled Bag
RDPD has remained on my shelf for years despite the serious misgivings I have about it. On the one hand, the book imparts important financial advice and motivation in a uniquely powerful way. On the other hand, this terrific core is fluffed up with simplified clichés, questionable anecdotes, and irrelevant tangents.
The takeaway premise of RDPD is also condescending to the non-wealthy and drips with arrogance. The fact that the “nebach” protagonist is the author’s own father makes the book’s writing a bit hard to stomach at times. Disgusting middos.
Perhaps it’s not surprising, then, that financial reporters have revealed that Kiyosaki’s astounding literary success is more about slick showmanship than financial acumen.
Kernels of Truth
“Sheker ein lo raglayim,” falsehood can’t stand. RDPD remains on bestseller lists because it contains important kernels of truth. Most adults are primarily focused on their jobs rather than generating passive investment income. But job salaries are capped by bosses and trimmed heavily by government taxes.
Then, through “buying liabilities”, incurring large mortgages, car leases, and credit-card debt, which drain cash flow, most become economically entrapped. As a result, they need to keep working even harder to cover ever-growing negative cash flows. People caught in this cycle lack the savings to buy income-generating assets that offer an exit ramp from the “rat race.”
A Different Education and Mindset
Kiyosaki argues that all that’s needed to avoid this trap is financial education and a growth mindset. Poor Dad’s overemphasis on technical knowledge comes at the expense of educating students on how to capitalize on opportunities with much greater potential. More focus should be placed on the language and tools of money: accounting, investing, entrepreneurship, and marketing.
But even with these economic skills, those pursuing wealth need the confidence and desire to pursue opportunity. Many people are overly fearful of failure or have negative attitudes toward the rich. It’s exceedingly difficult to reach a goal that is laden with emotional baggage. And supposedly, Rich Dads teach all this while Poor Dads don’t.
Clichés and Questionable Anecdotes
I was impressed by RDPD’s incisive, clear presentation of complex accounting concepts, and I entirely agree with some of its lessons. Most Americans do need better financial education, and many find themselves mentally and economically boxed in. For long-term health, wealth, and happiness, we need to focus much more on long-term investing than on short-term indulgence. I’m a big fan of all these messages, and Kiyosaki illustrates them vividly and clearly.
But, beyond that, when talking tachlis, the book is long on simplistic generalizations and short on practical direct guidance. Kiyosaki claims that “anyone can achieve great wealth” because “it’s not rocket science” and “there are millions of ways to achieve your goals.” The vague ideas he offers toward attaining these goals include asking successful people what they do, listening to audiobooks, and choosing friends carefully.
To bolster his claims about the easy ways rich people supposedly use to “create wealth,” he shares various personal anecdotes. Kiyosaki once supposedly bought and flipped a house with 100% financing, turning a $40,000 profit in just five hours.
Another supposed wealth avenue he took was buying shares in tiny companies about to go public, turning $25,000 into a million in less than a year, he claims. If “you know what you’re doing,” these investments are “simple and possible,” and those who don’t capitalize on these opportunities are too “scared, lazy, or small-minded,” the guru proclaims boldly.
Lots of Junk
Beyond the sadness of a situation in which a son uses his father’s frustrations and limitations as a symbol of failure, Kiyosaki’s get-rich-quick ethos rings hollow. Obviously, Hashem controls who gets what; there’s no certainty to anything we do.
But even in basic hishtadlus terms, most self-made wealthy people work very hard and take significant risks to find and exploit opportunities that will prosper over time. Not everyone has the skills, temperament, or financial flexibility to open companies, find investments, or take significant financial risks. While half the book offers very solid lessons about financial structures, discipline, and vision, the other 50% is junk.
Even a Farce
Over the years, since his book made him famous, Kiyosaki has been revealed to be a very sketchy fellow. He admitted that much of the book, including his Rich Dad, is entirely fictional, a form of parable. The book’s co-author, Sharon Lechter, also sued him, claiming he cheated her out of the book’s proceeds. She ultimately got a $10 million settlement from him.
More fundamentally, the author’s wealth was largely created, not from spectacular investment deals as implied, but from entry fees to RDPD seminars. Kiyosaki offers to reveal further financial secrets at these gatherings. RDPD seminars have been the subject of lawsuits and exposés for overselling get-rich-quick schemes. And in 2012, his seminar company was hit with a $24 million court judgment for scamming another partner, pushing the RDPD seminar company into bankruptcy.
The Real Talent
Kiyosaki clearly didn’t inherit his poor dad’s selflessness, and following his own investment advice didn’t seem to be the key to his financial success. Even within the book, there are hints that Kiyosaki is twisting his history, philosophy, and investment capabilities.
Consider this example. After graduating from college (which he disparages) in the 1970s, the young Robert worked in the “rat race” for Xerox. Later, in the aforementioned anecdote about making a killing in real estate in the 1990s, he mentions borrowing $2,000 for the down payment, saying his money was otherwise tied up.
We’d expect someone who could make money quickly and easily to have an extra few thousand dollars to invest, decades into his “Rich Dad” career! This and other quirks in the Kiyosaki story lead me to believe that his spectacular investment claims are mostly bogus.
And, as I alluded to at the beginning, given that the book’s “simple” path to building wealth has been around for decades, there should be hordes of RDPD millionaires lolling around. Where are they?
Google if you want to read more about the twists and turns of this interesting character. But it seems quite clear that what Kiyosaki truly excels at is gaining attention and selling books. He should write a volume about that!
Bottom line, while I think skimming the RDPD book is worthwhile, don’t expect any money magic.
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