Rich Dad/Poor Dad

I finished Robert Kiyosaki's Rich Dad/Poor Dad last night. While the book is interesting and kind of a fun read, I don't think it will be a foundational book for me. While I definitely buy into the central theme, which is that the wealthy and the poor/middle class think about money and risk in fundamentally different ways, the book itself is just far too lacking in specifics to be truly useful. To be clear, I don't think the book is really meant to be a "how-to" manual. But, even so, Kiyosaki needed to include more specifics to back up his claims, including more information about his own background and credibility. The examples he does give, mostly from his own experience in real estate, are sorely lacking in detail.

This is basically what I got out of the book:

1) He advocates financial education and general financial literacy. The rich think about money differently than the rest of us, so we need to learn to think that way. This mostly involves understanding the concept of cash flow and the concept of moving money out of the expense column and into the asset column.
2) He identifies 4 components of a solid financial education. These include: a) Accounting, b) Investment Strategy, c) Market Behavior, and d) Law.
3) His points about the 3 key management skills are very legitimate. These include a) managing cashflow, b) managing people, and c) managing your own time.
4) He advocates the benefits of corporations as tax shelters but, per John T. Reed (see below), watch out for getting yourself into tax fraud by following his advice too literally.
5) He's also really big on learning how to spot opportunities. This actually goes along with his advice spending time to educate oneself financially.

This web page actually does a pretty good job of Cliff Noting the book: http://www.richdad.us/

Is Kiyosaki Credible?

The big problem with taking Kiyosaki too seriously is that there is just way too much substantive criticism of him out there. This was surprising to me, given that I've seen him on PBS so many times.

Here, for instance, is a link to a 20/20 story on his method: http://abcnews.go.com/2020/story?id=1982669&page=1. While I think the test in the story was stupid, the fact that he would agree to that sort of a test makes me really question his judgement.

In another example, the author John T. Reed goes further than 20/20 with this critique. Note: I have no idea who John T. Reed is, but the critique is quite detailed. As a side note, the article seems to make it clear that "Rich Dad" is probably a fictional character. I think that's actually fine, but Kiyosaki should have made that clear from the outset.

Finally, ff you look up Rich Dad/Poor Dad on Amazon and go down to the 1 star reviews, you will see some very detailed reviews that rip him apart.

Of course, all of that criticism doesn't mean that he's wrong. But, the picture just isn't pretty when you look at the criticism that's out there and combine it with the lack of specifics in his examples, the lack of complete transparency about his own background (including his business failures and successes), the mystery of who this "Rich Dad" character really is (or was), along with his own seeming lack of regard for his "Poor Dad" real father, who seems like an extremely admirable individual.

Conclusion:

The key, when reading this guy, is to understand that he's really just giving you the big picture. Someone like myself, that has the ability to read critically, can get some good information from this type of book. For less critical readers, the book may be doing them a disservice - giving them the impression that getting rich is easy. It's disturbing that he's sold something on the order of 23 million copies of his books. The useful parts of this book could probably be boiled down to a 15-page pamplet.

Up next: Ramit Sethi's I Will Teach You To Be Rich.