Book Review: Rich Dad, Poor Dad By Robert Kiyosaki

I recently reread Robert Kiyosaki’s Rich Dad, Poor Dad book. I read the book when it first came out in 2000, and I was still somewhat of a budding entrepreneur. I figured I would re-read the book now that I have more experience under my belt. I also wanted to see if it’s held up to the test of time and if I like it as much as I did when I first read the book. A lot has happened financially in the past ten years, and I’m curious if some of his predictions came true.

When I first read the book, I primarily liked how he viewed the world from a different perspective. It got me to think differently about my business and investing than previously.

There seems to be a group that either love or outright hates Robert’s books and thinks they are all trash. The Simple Dollar review, for example, adds a lot of personal bias, and I don’t think it’s a fair review. I have somewhat of a neutral viewpoint and will review the book based upon my experience in the business world.

Rich Dad, Poor Dad, should be viewed as a general starting point — an investment/startup summary, rather than a list of specific items to do as an entrepreneur. Robert Kiyosaki emphasizes six key points throughout the book.

It’s the differentiator between his “poor” dad (his real dad), and the “rich” dad that helped him understand business and become wealthy.

  1. The rich don’t work for money
  2. The importance of financial literacy
  3. Minding your own business
  4. Taxes and corporations
  5. The rich invent money
  6. The need to work to learn and not to work for money

The Good

Flawed Educational System

As Robert mentions many times in the book, our traditional educational system is flawed. Our education system is designed primarily to create employees and could be a negative influence for an entrepreneur. As Kiyosaki mentions, he’s not suggesting don’t go for higher education, he’s suggesting higher education does not assist with “street smarts”. Financial literacy is something that is rarely discussed in school, and if it is discussed, it is only at basic levels. Based upon my personal background, I’ve made this a personal focus and will make sure my children are well educated in this subject.

The cost of education continues to increase much faster than the rate of inflation. It’s becoming more clear our education system is broken. Robert’s statements about this topic are accurate.

Being An Entrepreneur Is Less Risky

It’s typically stated: owning a business is riskier than working for someone else. In my opinion, owning a business gives you all sorts of self-reliance skills you will not get when working for someone else. If anything with today’s “cradle to grave” mentality, we are creating more dependent individuals.

Owning a business has given me much more independence and invaluable skills I could still use if I were to work for someone else. Things I used to consider risky or could never imagine doing before owning a business, I now do on a weekly basis.

Your Primary Residence Is NOT An Asset

Over the years it was generally accepted that your primary residence was an asset. Robert flat out states (and I believe correctly), your home is not an asset since it does not generate positive cash flow. The housing bubble and collapse proved this correct.

“Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets”

While rental properties have also gone down in value, if you focused on positive cash flow, you still are bringing in money every month. Robert even states in his book, home values do not always go up.

Pretty much all consumable goods are liabilities, and something even I got tripped up with. He states you should buy investments that generate cash flow to help pay for your “doodads”. I think this is a great way to look at how to purchase your toys.

What is an Asset or a Liability?

“An asset is something that puts money in my pocket. A liability is something that takes money out of my pocket.”

A load of naysayers of Robert’s books points out this statement doesn’t follow general accounting standards. This is true, and Robert acknowledges this. The point, which many misses, is that you should be focusing on cash flow to get wealthy.

“Wealth is a person’s ability to survive so many numbers of days forward… or if I stopped working today, how long could I survive?”

This statement I still use today and devoted a few posts about this topic::

  • How Wealthy Are You?
  • Goes Net Worth Matter?
  • How to Become Wealthy

The Bad

There are many reports that Robert’s “Rich Dad” does not exist and was made up. This is more than likely true, but there have been many personal finance books that are works of fiction. The book Wealthy Barber” comes to mind. The issue some people have with Robert is he makes his book a work of non-fiction when it’s not, and I agree with this issue. I find it interesting on John Reed’s website he puts down Robert’s work, but at the same time, he’s also selling his own work.

Robert does somewhat downplay the role of risk in the investment suggestions. This is somewhat true, but he does suggest you fully understand your investments before diving in. Robert states investing is only risky if you don’t fully understand what you are investing in.

Summary

While I still recommend this book, especially for starting entrepreneurs, the book has some flaws. Take some of what Robert Kiyosaki says with a grain of salt. It should be read, if not for the motivation, just to get you to think differently than a salaried employee. I don’t love or hate it, and hence the reason why I give this book a 3 out of 5 stars. In my opinion, many topics he discusses hold the test of time.

If you do decide to read Robert’s books, I only recommend reading Rich Dad, Poor Dad, and Rich Dad’s Cashflow Quadrant. Most of the other books are simply a rehash of these two books. I DO NOT recommend attending any local seminars.

I will keep his book on my list of best personal finance books for the primary reason to get you to think outside the box.

Book Review by Larry Ludwig

You May Also Like

About the Author: job247sure

7 Comments

  1. First off I want to say great blog! I had a quick question that I’d like to ask if you do not mind.
    I was curious to find out how you center yourself and clear your mind before writing.
    I’ve had a tough time clearing my thoughts in getting my thoughts out.
    I do enjoy writing but it just seems like the first 10 to 15
    minutes are usually wasted simply just trying to figure out how
    to begin. Any suggestions or tips? Appreciate it! http://Alldown.ru/engine/redirect.php?url=http://www.mbet88vn.com

    1. This could be the result of worries, but I think you are in a better position to clear your thoughts. You can also clear your mind by taking a walk around your compound, have a little gist with your friends around or talk to someone with the topic you wish to write on on your mind. Think about it, research it and also put down the thoughts as they come – highlight those points you would wish to emphasise. Be sure you are self-organised before you seat to write. Don’t use “big” grammar- write in simple prose- and try to be clear about your audience for whom you are writing for. Please don’t write to over impress.

  2. First off I want to say great blog! I had a quick question that I’d like to ask
    if you do not mind. I was curious to find out how you center yourself and clear your mind before writing.

    I’ve had a tough time clearing my thoughts in getting my thoughts out.

    I do enjoy writing but it just seems like the first 10 to 15 minutes are usually wasted simply just trying to figure
    out how to begin. Any suggestions or tips?
    Appreciate it! http://Alldown.ru/engine/redirect.php?url=http://www.mbet88vn.com

    1. Thanks for your appreciation. For me, writing flows from the fountain – they come naturally. I choose a topic, research about it and see if it will meet the public’s expectations- address some challenges/ problems; can people learn from it i.e. is it didactic? etc. Then I begin writing as it comes; review and edit before posting.

  3. I think this is among the most important info for me.
    And i am happy studying your article. However
    should statement on few normal issues, The website style is ideal, the articles is actually great : D.
    Good activity, cheers

Leave a Reply

Your email address will not be published. Required fields are marked *