Wise Investments Blog

Rich Dad Poor Dad What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not

Rich Dad Poor Dad What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not

“If you want all insider wisdom on how to personally get and STAY rich, read this book! Bribe your kids (financially, if you have to) to do the same.” — –Mark Victor Hansen, co-author of the #1 Chicken Soup for the Soul series

“To get over the top financially, you must read RICH DAD, POOR DAD. It’s common sense and market savvy for your financial future.” — –Zig Ziglar, world-renowned author and lecturer

“If you want all insider wisdom on how to personally get and STAY rich, read this book! Bribe your kids (financially, if you have to) to do the same.” — –Mark Victor Hansen, co-author of the #1 Chicken Soup for the Soul series

“To get over the top financially, you must read RICH DAD, POOR DAD. It’s common sense and market savvy for your financial future.” — –Zig Ziglar, world-renowned author and lecturer

User Ratings and Reviews

2 Stars A good starting point, but a real financial education is necessary.
If there’s one thing this book doesn’t do, is promise you absolutely that you will be rich. Instead, it motivates you to try and look at life, your career, and how you spend and manage money a little differently. However, a real financial education - courses you could take at a community college that teach you how to manage risk, understand investing, real estate, etc etc are ultimately necessary for success.

Interesting anecdotes and stories abound, and honestly they’re the best teaching tools used, regardless of their truthiness. You’ll learn how to manage money, how corporations work, and why owning a home could be the worst decision you ever make. However, there are a few stumbling blocks that really limit the usefulness of this book:

1. He doesn’t full discuss how corporations - and their alternatives - work in detail. He also says that corporations can be used as tax shelters. That’s not primarily why corporations exist. They exist to limit the liability of the investors. The major disadvantage with corporations is that earnings are actually taxed twice - once when the earnings are calculated, and again when the investors are paid out. You could also say that they’re taxed again when you buy something (sales tax) or when you buy property/investments with the money gained. The point is, corporations are not some magic formula that allow people to keep money that the government would otherwise take away.

2. Risk is vastly understated with many investments. He does a good job of trying to slap sense into how people incorrectly view the stock market - by likening dips in stock prices to a sale at a supermarket for toilet paper (as in, that’s time to buy), but doesn’t explain how securities investment should be done, or even how to evaluate risk. It basically boils down to “if you like the stock, put a ton of money into it and hope to god it does well”. He also advises you to use insider information when buying and selling stock, something that readers might not be aware as being illegal.

3. He acts like having a job is some sort of curse, and people who have jobs can never save money or move further in life. Yet, he prides himself on being one of Xerox’s top 5 sales people. Apparently everyone should just quit their job or at least direct their attention to something else despite the fact that the earnings from his jobs are what allowed him to make investments in the first place.

Despite how limited and vague the discussion is, it does put a new spin on looking at things. For example, when you start working, he motivates you to direct your income not on spending and consuming things, but investing that money in assets that will generate you money. This cycle of earning money, reinvesting it, and then reaping earnings is how people indeed get rich. However, you don’t necessarily need to invest in businesses or real estate to do this. Mutual funds or even a basic savings account are considered assets that generate revenue for the owners. Furthermore, he advocates using money generated from assets - like rental income from a real estate holding - to buy luxuries, not income that comes from your job. This gives your money momentum - i.e. the car payment for a shiny mercedes doesn’t come from your paycheck, it comes from an investment.

However, a dark side to this is that many people tend to overindulge in what’s known as “found money” - money that didn’t come as a direct byproduct of work. Really, money that comes from an investment should be used for reinvestment and saving. Justifying luxury spending on the path to financial security simply because the source of the money is different isn’t necessarily wise financial planning.

This book stresses the importance of financial literacy and how the reason people are poor is because they don’t understand how money works. However, this book is only the starting point for a good financial education. Going out and getting one is the next step if you truly want to be successful.

5 Stars Great book
Has a lot of advice on how to adjust your attitude and challenges the common belief to get a “good job.”

1 Star Oh this book explains the 90’s
So after waiting ten years or so I finally got around to reading “Rich Dad, Poor Dad”. And now I understand why this economy is completely tanked.

It’s an interesting book, and has some good points, please do not get me wrong. The concept of “asset” vs “liability” is excellent and maps well to my philosophy of “things that make you money” and “things that take your money”. However he has a few fatal flaws:

First, real estate is not a “sure thing”. Yes, it’s possible for a 1.2 million dollar rental to throw off $5k a month in “revenue”. However is that over a 1 year period, 5 year period, 20 year period? How about when the property is a bust? When the tennants leave and you still have to pay that $800,000 mortgage+insurance+upkeep?

The problem with big money leverage moves is that… well you’re leveraged. And just as easily can things go down as up. In the above case, you’re being “paid” $5,000 to hold the proverbial bag on a 1.2 million dollar item. If it goes under you could be liable for around a million. How long will it take to have a million in reserves? Ok, let’s be more realistic and say half a million assuming a 50% drop in value (like that will ever happen at 5k a month? 16 years. So as long as something bad doesn’t happen in 16 years, you’re fine. Of course that is assuming you’re putting all of the 5k a month away and not oh say treat it as cash flow….

No wonder everyone’s “broke” out there these days. Oh well.

Now you get the picture: It’s easy to make money when times are going well. It’s easy to look like a complete genius and write books degrading others when your particular star is on the rise. But life is more than a 10 year horizon, and a lot of interesting things can happen in 20-30 years. Like um where we are today.

So maybe the idea is to think about what the author says in context, and not believe all the puffiness. If you understand that owning a car means having to pay for it every month in fuel, housing, insurance, washing, and so forth then you can comprehend why taking on liabilities is a bad idea. Likewise if you say bought solar panels you would have an item on your house that poured money every day into your pocket. And at the end of 20 years you could still sell them on ebay.

That’s an asset. Good luck!

3 Stars Starts off strong, but ends quite badly
This book seems to be incredibly repetitious at the beginning, but it is repeating something which many people searching for financial freedom need to get right, once and for all.

Much more than “pay yourself first” (save money) you need to concentrate all of your effort on buying ASSETS, not LIABILITIES. In particular, the author squares off with the received wisdom by viewing a home purchase as a liability, not an asset.

Well, he’s surely not the only person who thinks so. Warren Buffett among others was a renter until he began to get sincerely prosperous. My own dad was another (”Never try to make money off your home. After all, you live in it.”)

But, leaving the home aside for a moment, what this guy is saying is quite simple: buy stocks, bonds, commercial paper, commercial real-estate: whatever, but buy ASSETS. If you run out and buy a new Mercedes-Benz, you have just assumed a huge liability. If the Benz costs (say) $40,000 — that $40,000 could be put into stocks, bonds, and apartment houses, where it would probably bring in something like $4,000 a year. The car is simply an expense of many thousands per year.

It’s hard to quarrel with this, but two other points of view come to mind. One is (of all things) “Personal Finance for Dummies,” which reminds people that money is not the most important thing in life. Well, in “Rich Dad, Poor Dad,” it IS the most important thing in life. For all the bragging that Rich Dad does about being the master of money rather than its slave, it seems clear that he works dawn-to-dusk in the service of Money.

The other point of view — really, a point of difference — comes in the second half of the book, where the author shares his “secret” methods of growing rich rapidly. One amounts to flipping and trading real estate — which may work — but the other one seems downright zany: cashing in on the IPOs (Initial Public Offerings) of companies which are about to go public. Well, I have lived through exactly one situation like that: a hot software company was about to go public, and stock options had already been awarded — and then, at the last moment — there was another offering for families and friends. The only people who heard about this offer were precisely the families and friends of employees, plus the people who had initially funded the company (e.g., a group of Swiss investors).

This whole thing worked out fairly well for my family — my friends all thought that I was trying to sell them penny-stock, and universally hung up in horror when I was trying to do them a favor — but it strikes me as very unrealistic for Mr. and Mrs. Main Street.

Still, all in all, the first half of the book is something to concentrate your mind: what am I buying with my money? Am I buying assets or liabilities? Would I be better off (in the long run) with that $1,000 set of golf clubs, or should I settle for some much less expensive golf clubs and sock the rest into investments?

Very interesting reading.

5 Stars Kiyosaki’s predictions are all coming true - RDPD is right on the money!
There is no question that Robert Kiyosaki is controversial but man everything he predicted in RDPD and folowing books is coming true.

Witness:

* Kiyosaki says that a house is not an asset. Look at the foreclosure

rate today.

* Kiyosaki warned us about the stock market. Say hello to DOW 6,800

and dropping fast.

* Kiyosaki warned us about the folly of a J-O-B which really stands

for just over broke, if you are working. Look at the high unemployment

rate today with new record lows coming out today.

This book is definitely not for Harvard graduates. Typical Harvard graduates are too busy updating their resumes and pounding the pavement trying to find a j-o-b just like the one they just got downsized from to benefit from a book like this. On the other hand, for people who are willing to be changed; are sick and tired of the rat race; tired of paying for somebodyelse’s dreams; tired of having their boss determine how many sick days they deserve or how many vacation days they can take will enjoy and benefit from this book.

I also recommend Loopholes of the Rich and The Business School for People who like helping people. Slams at network marketing people by 1 star reviewers are predictable and stale. Question 1 stars: How is your lifestyle? What kind of car do you drive? Where do you go to vacation? How much did you pay in taxes last year?

The investment advice is also right on. Just talk to all of the people who are losing money following conventionable advice. You would think that people would have learned after the $7 trillion $$$ market loss in 2000-2001 under Bill Clinton. Today the market is in far worse shape, but didn’t Kiyosaki warn us of that just as his Rich Dad taught me so long ago? Most people have a 401(k) that looks more like a 101(k) and their protfolio’s are bleeding red. If you followed the advice of your financial planner or broker, you are broker now as a result. Why do you think they are called “brokers”??

A house is an asset? Yes, if you are the bank. If you want to turn a house into an asset, it’s very simple, do what banks do and become a real estate investor, but do it intelligently and properly. Many people who thought their hosue was an asset are now into foreclosure or have seen their equity plumet by over 70%. A house an asset? Think again.

As for that website that keeps getting mentioned here, if it really was that good there would be no need to repeatedly mention it here would there? And if you do go there guess what you will find: Ads for comparable products (junk) trying to compete with RK.

RDPD is a OUTSTANDING book. I highly recommend it along with Think & Grow Rich. Both books are needed now more than ever. Also recomemnd More Wealth Without Risk by Charles Givens.

My motto is: I’ll do today what others won’t so I can do tommorrow what others can’t. The recipe is simple; just follow Kiyosaki’s advice. It has proven to work for those who use it.

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