This book contains almost no actionable financial advice. It focuses on two fictional characters Kiyosaki made up for the sake of the book. Poor dad, who’s Kiyosaki’s biological father, is a highly educated man who works hard but struggles financially. Rich dad, who’s Kiyosaki’s best friend’s father, is an uneducated man who becomes wealthy through his own businesses.
I gave two stars for this as it changed the way I thought about how money works, but I think any of those points can be learned from other sources. I would not recommend this book to anyone who is looking for financial advice. The episode on “If Books Could Kill” goes through all the issues in this book, better than what I could point out here.
Some Bad Advice / False Claims in Rich Dad, Poor Dad
He claims that everyone should join a multi level marketing company to learn about sales and making money:
Often I recommend joining a network-marketing company, also called multilevel marketing, if they want to learn sales skills. Some of these companies have excellent training programs that help people get over their fear of failure and rejection, which are the main reasons people are unsuccessful.
He encourages the readers to invest in penny stocks arguing that it’s not gambling if you know what you’re doing:
An example of how fast gains can be made are 100,000 shares purchased for 25 cents each before the company goes public. Six months later, the company is listed, and the 100,000 shares now are worth $2 each. If the company is well managed, the price keeps going up, and the stock may go to $20 or more per share. There are years when our $25,000 has gone to a million in less than a year. It is not gambling if you know what you’re doing.
Here’s a quote of where Tax Fraud is encouraged:
For example, by owning your own corporation, your vacations can be board meetings in Hawaii. Car payments, insurance, repairs, and health-club memberships are company expenses.
He encourages tax avoidance, it’s not a surprise that he’s filed his company for bankruptcy and he’s personally in 1.2 billion dollars of debt”.
When I occasionally come up short, I still pay myself first. I let the creditors and even the government scream. I like it when they get tough. Why? Because those guys do me a favor. They inspire me to go out and create more money.
Justifying insider trading:
It’s all ‘insider trading.’ There are forms of insider trading that are illegal, and there are forms of insider trading that are legal. But either way, it’s insider trading. The only distinction is: How far away from the inside are you? The reason you want to have rich friends is because that is where the money is made. It’s made on information.
Quotes I liked
Here are some quotes I liked from the book, although I may not agree completely with the context in which they are used:
In school we learn that mistakes are bad, and we are punished for making them. Yet, if you look at the way humans are designed to learn, we learn by making mistakes. We learn to walk by falling down. If we never fell down, we would never walk.
If you’re the kind of person who has no guts, you just give up every time life pushes you. If you’re that kind of person, you’ll live all your life playing it safe, doing the right things, saving yourself for something that never happens. Then, you die a boring old man.
Workers work hard enough to not be fired, and owners pay just enough so that workers won’t quit.
Most people fail to realize that in life, it’s not how much money you make, it’s how much money you keep.