So please stop promoting it
It’s a rare day where I don’t see a post about how the book Rich Dad, Poor Dad has inspired someone to try and get rich or change their approach to investing/finance. The reality is, however, that Rich Dad, Poor Dad is a giant steaming pile of shit. This book should in no way be promoted as a book worthy of anyone’s time.
The author of this steaming pile of shit — Robert Kiyosaki — also does not deserve any more fame or attention. This man is one of the original “finance gurus” whose sole purpose was to build his own wealth at the detriment of yours. These people are charlatans and have no interest in helping anyone but themselves.
In general, the ideas in this book are on the shallow side and quite obvious and unsurprising to anyone already engaged in entrepreneurship or investing. Unfortunately, the ideas held within this book will probably come across as profound for many people who are encountering these concepts or ideas for the first time.
The book promotes, among other things, starting or buying a business, making this business run itself, and getting rich via said business. But in reality, starting and running a business is incredibly time consuming, difficult and expensive. Starting a business most certainly isn’t for everyone. In fact, truly successful businesses are rare.
Robert tells us that we need to think like a rich person — like the “rich dad” that he claimed had mentored him. It’s interesting to note that Robert never provided any evidence as to who this person was, or if they even existed. The “Poor dad” was his own father, supposedly. Robert advises in his book that we should invest in multiple businesses and homes using someone else’s money. The book suggests that readers could find investments that:
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have returns of 100 percent to infinity. Investments that for $5,000 are soon turned into $1 million or more.
While, in some incredibly rare cases, it may be possible to find a business that could provide 200x returns, in the US, 65% of businesses fail within their first 10 years of operation. In Australia, 60% of businesses fail in their first 5 years. And a business that survives beyond 10 years, doesn’t mean that it is a massive success and making the owner rich. These statistics are just for the businesses that manage to survive, let alone pay their owner an income.
The book also speaks of being employed as a bad thing and gives the impression that employees are broke and miserable. The author effectively insults people who prefer to be employed.
Personally, I have been both business owner and employee. As a business owner, I was broke and miserable given that I was working 80 hours per week or more for almost no pay. As an employee, I work 50 hours per week and earn more than $200,000 per year. My work is challenging, interesting and I am surrounded by passionate and intelligent people. Tell me, am I better off being self-employed or an employee?
Don’t take tax advice from a charlatan
An entertaining part of the book, from a bad advice perspective, was where Robert provides highly questionable tax strategies. Robert recommends using a corporation to write off vacations as board meetings or claim health club expenses as business expenses. It goes without saying that by doing these things one can end up in significant trouble with the tax man.
Robert also down-plays the value of higher education and traditional learning. According to Robert; rich people learn only by doing or from living life while educated people are just stressed and poor.
A good example is where the supposed “rich dad” says:
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All too often business schools train employees to become sophisticated bean-counters. Heaven forbid a bean counter takes over a business. All they do is look at the numbers, fire people, and kill the business.
And then contradicts himself by saying:
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Accounting is possibly the most confusing, boring subject in the world, but if you want to be rich long-term, it could be the most important subject.
While there are numerous things in this book that can be highlighted as poor advice, I’ll finish with this: Robert legitimately suggests that you pay yourself first even if that comes at the cost of paying your creditors, even if one of those creditors is the tax man. It’s no surprise at all that this man worked with Donald Trump…
This is a direct quote from the book, from the “Rich Dad” perspective:
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So you see, after paying myself, the pressure to pay my taxes and the other creditors is so great that it forces me to seek other forms of income. The pressure to pay becomes my motivation. I’ve worked extra jobs, started other companies, traded in the stock market, anything just to make sure those guys don’t start yelling at me[…] If I had paid myself last, I would have felt no pressure, but I’d be broke.
It should be plainly obvious that paying yourself first shouldn’t mean ignoring the fact that you owe people money, destroying your credit score and reputation with creditors and paying avoidable fees and interest. Good business operators pay their employees, creditors and other business expenses first. Once you have paid everyone else, you can pay yourself an income.
If you take financial/business advice from Robert Kiyosaki, you may as well take financial/business advice from the most infamous failed businessman and conman, Donald Trump
It’s quite sad that this book became so famous. Robert used the fame of this book to develop and promote seminars that he charged his attendees to attend. At these seminars, he then sold more “advanced” and costly seminars to those gullible enough to believe his bullshit. This is a tactic that was adopted by many a conman who followed and also used by the infamous Trump University.
And it’s understandable that people bought into his shit. It sounded extremely attractive given that what he was promoting was effectively that you could get rich by simply “thinking like a rich person”. Whatever that is. At a time where most people discussing wealth generation were advising people to make sacrifices early on (such as avoiding luxuries or buying expensive homes) while preparing for a future of wealth. Instead, Robert was telling people to think and act like a rich person now and use other people’s money to build your dream lifestyle. It all sounds exciting and… well… quick.
I regularly express my distrust of and disdain towards the gurus that we encounter every day online now that social media and platforms such as Medium have made it easy for these gurus to promote themselves. Well, Robert Kiyosaki was one of the original gurus. And he was clearly very effective at promoting his giant pile of steaming shit given that so many people still preach his bullshit to this day.