Robert Kiyosaki's Rich Dad poor Dad

[darkrose50]

Robert Kiyosaki's Rich Dad poor Dad:

Robert Kiyosaki is the top selling author about personal finance . . . ever. His works are full of wish fulfillment, and promises to teach you secret magic that will make you wealthily . . . well he knows it, and tells you that it is a thing, but no specifics. The specifics will cost you $500, and then $35,000. Even after 20-years of this magic scam artist wizardry we did not see a sharp uptick in independently wealthy folks running amuck, or know anyone that used his $35,000 wizarding course to become independently wealthy.

Dilemma: My brother-in-law bases his financial world-view mainly based on this guys works, and I need to find a nice way to break the news to him that Robert Kiyosaki is a scam artist . . . nicely.

[1] Robert Kiyosaki's books have truths in them
[2] Robert Kiyosaki's systems are scams

For example:
[3] Robert Kiyosaki says that 401(k)’s are “sucked dry” by “wall street” who “have no money in the game” . . . no offices, no payroll . . . they should work for free (but not Robert Kiyosaki)
[4] Robert Kiyosaki has a $500 seminar, that upsells to a $35,000 real-estate course
[5] Basically take your money out of your 401(k), and give it Robert Kiyosaki . . . because magic . . . you know a scam

I watched some YouTube videos and he was involved with at least two other scam artists:
[6] One started talking about how stocks go up, and go down . . . he started his history lesson with the 1990’s . . . big red flag
[7] This other guy (same as 6) said that he can teach people how to make money not only when the market goes up, but when it goes down
[8] This other guy (same as 6) said that stocks are at an all-time high AND CANNOT GO HIGHER
[9] So basically sell your 401(k) and give your money to this this other guy (same as 6) who will teach you to make money when the market goes down . . . because the market can only go down from here

[10] No proof of Robert Kiyosaki's success . . . non-con-artist success that is
[11] Also $200 for a board game about how to be financially competent? From a billionaire? Who wants to teach people how to spend money well? Red flag!
[12] The law says X, so you can’t make people do Y . . . laws can change, and we have examples of these laws that he says are impossible in other countries
[13] Gold and silver are “Gods money”. . . . the dollar will collapse . . . . and stocks will be worthless somehow . . . please . . . what we place value in is largely dependent on faith in the currency (gold also has value because we say so) . . . folks with shares in Volkswagen after Germany collapsed . . . still have stocks worth real money from a real company . . . the value did not vanish
[14] He seems to not mention compound interest . . . this is like the #1 thing in my book (I don't have a real book)
[15] Robert Kiyosaki seems to say "401(k)s take too much money for nothing . . . none of them are good . . . none of them provide a good service because they charge you money . . . this is bad . . . I will provide a good service . . . for money." Basically a scam artist paradox.

[16] This guy has been selling his books for 20-years . . . I will bet you a large sum of dice that there was not a sharp uptick in people who are independently wealthy based on this guys works (note the things that he mentions that are true like money makes money, and people can learn money skills . . . these are universal truths)
[17] We do not know anyone who based on his scam became wealthy . . . now note that his books have some truths in them . . . like money makes money and making money is a learned skill . . . so, you know people who were not convinced of this before reading the book, may be convinced of this after reading the book

This guy is a scam artist

[halfeye]

Is he a rich scam artist or a poor scam artist?

(not talking about presidents)

[Vinyadan]

Personally, I would throw that trash away and just read Chuck Tingle's Living Inside My Own Butt For Eight Years, Starting A Business And Turning A Profit Through Common Sense Reinvestment And Strategic Targeted Marketing

[Crow]

He's not likely to take well to being told something he holds in regard is a scam, and will likely shut down before listening to any of your points.

Perhaps redirection might work better? You could try turning him on to listening to some of Dave Ramsey's (free) financial advice instead? Through that, the scamminess of RDPD will dawn on him organically.

[Lacco]

He's not likely to take well to being told something he holds in regard is a scam, and will likely shut down before listening to any of your points.

Perhaps redirection might work better? You could try turning him on to listening to some of Dave Ramsey's (free) financial advice instead? Through that, the scamminess of RDPD will dawn on him organically.

You could prevent the shutdown of communication through asking questions - instead of giving him the answers.

Add Crow's redirection - again via a question "Oh, have you heard about D.Ramsey? What are the differences between the two?" and he might check it.

I know it's hard to keep the communication open sometimes - especially when you KNOW it's a scam - but asking questions instead of stating the truth you know may get you further.

[Razade]

Ask them why anyone with the knowledge to get filthy stinking rich would want to help you and to help you for basically free? Ask them why, if they have this sure fire way, aren't they using it instead of making lots of money off selling books and giving tours talking about how they have a system to get rich quick?

[Peelee]

Ask them why anyone with the knowledge to get filthy stinking rich would want to help you and to help you for basically free? Ask them why, if they have this sure fire way, aren't they using it instead of making lots of money off selling books and giving tours talking about how they have a system to get rich quick?

This is far and away the best answer.

darkrose, ask him to think of other rich people, and what they are currently doing. Because no matter who he picks, what they're doing will be "the same thing that got them rich." Warren Buffet isn't teaching business classes, Bill Gates isn't holding computer and software workshops, Steve Jobs never wrote a book on marketing, Jeff Bezos isn't telling people to start up online businesses with efficient distribution models.

You know what every single one of them did when they got rich (or significantly richer)? They kept doing exactly what made them rich. Buffet continued investing, Gates kept working on Microsoft, Bezos kept working on Amazon, Jobs kept hyping up Apple.

Kiyosaki is no different. He's rich, and he's still doing exactly what got him rich - writing a book on how to get rich. If he got rich from something else, he would still be doing that thing. That's the linchpin here. Hammer that in. Rich people keep doing what got them rich, and he's spending his whole life hyping up that book and holding seminars, because that's how he got rich to begin with. Actually following the advice didn't get him rich, or he would still be doing that.

[Razade]

Following his advice will actually get you arrested, which is another reason why he isn't doing it. A lot of his advice involves numerous felonies I can't even begin to expound on here not just because of the rules but how long it'd take to explain them.

But ya know. It's not your job to convince someone who doesn't want to be convinced either. When they lose their money just remind them you tried to save them and they refused.

[snowblizz]

Robert Kiyosaki's Rich Dad poor Dad:


[11] Also $200 for a board game about how to be financially competent? From a billionaire? Who wants to teach people how to spend money well? Red flag!

This guy is a scam artist

I've played a computer version of that game (no I did not pay for it). It annoyed the hell out of me every single time even as I beat it. I've got a degree in economics so I *know* when I say that the rules of the game, the content, is specifically stacked to conform to his view and specifically stacked against anything else.

As always there's kernels of truth in there. It's a bad idea to buy a yacht when you are a janitor e.g.. Which makes it hard to debunk because those kernels will be squeezed hard by people not wanting to give up on the idea that wealth isn't something you might have to work for, or be lucky.

[darkrose50]

Dave Ramsey is interesting. I like him overall.

I like his idea about buying a car. Buy a beater, and buy/sell your way up.

I like his idea about trying your best to have your mortgage or rent be no more than 25% of your net income.

I disagree with his idea that debt should be paid off ASAP. I have a student loan that is at something like 2.75% that I was never in a hurry to pay off. I see a 30-year mortgage as a good thing as inflation will make it easier with time to pay back, an increased cash flow is good, and I can make more than 3.75% in the stock market.

I disagree with his notion that 401(k)s are just as good as pensions, or that 401(k)'s are better than pensions. A lot of folks are clueless about money. Pensions are good for just about everyone. 1/6 teachers are millionaires, and a large contributing factor to that are pensions. My dad has a pension, and does not trust or believe in investing. He would be in a world of hurt without that pension.

I disagree with his notion about unions, but that is political.

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I find Graham Stephan to be entertaining, and that his advice seems solid.

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I enjoy watching CHRIS CIOVACCO's weekly technical examination of the market [something like CCM financial on YouTube, ccmmarketmodel.com].

[Peelee]

1/6 teachers are millionaires

You keep saying that even though it is incredibly misleading.

Spoiler: Quick and dirty average teacher salaries. Hoover, for the record, is one of the richer cities in the Greater Birmingham Area.

Show

a large contributing factor to that are pensions.

Brookings article on teacher pensions and why what you probably know about them is wrong.

And, from an article titled "14% of millionaires are teachers":

In addition to pensions, educators, including college professors, earn “a fair amount,” when you factor in publishing, consulting, and summer jobs, says George Walper, Spectrem president and CEO.

“If they’re smart at investing, they can do pretty well,” he adds.
....Another factor: Some 46% of the educators attribute their wealth to inheritance. That could leave them free to pursue a career regardless of the pay.

So if you're born rich, work multiple jobs, or are good at investing. None of which require you to be a teacher, or are even helped by you being a teacher.

[darkrose50]

Teachers tend to be:
* women (who overall perform better than men in the stock market)
* from a certain social background (who tend to have more money)
* from the upper-middle or upper class (who tend to have money)
* from the upper-middle or upper class (who tend to have learned money skills / cultural capital)
* intelligent (always helps with money)
* educated (always helps with money)
* not expected to live a fancy life (saves money)
* retiring with a pension (with all the saving and investing thing covered)

As a population teachers as a whole are an excellent source of learning money skills. Now having them taught to students is another thing. I was taught about compound interest by my high school dean.

[Peelee]

Teachers tend to be:
* women (who overall perform better than men in the stock market)
* from a certain social background (who tend to have more money)
* from the upper-middle or upper class (who tend to have money)
* from the upper-middle or upper class (who tend to have learned money skills / cultural capital)
* intelligent (always helps with money)
* educated (always helps with money)
* not expected to live a fancy life (saves money)
* retiring with a pension (with all the saving and investing thing covered)

As a population teachers as a whole are an excellent source of learning money skills. Now having them taught to students is another thing. I was taught about compound interest by my high school dean.

Bolding mine. And yes, I do agree that it's easy to be rich when you start out rich.

[darkrose50]

Bolding mine. And yes, I do agree that it's easy to be rich when you start out rich.

The son of a fisherman is likely going to outperform the son of a non-fisherman . . . and the son of a fisherman might have a grandfather or other relatives who are fishermen to ask for even more fishing advice.

Not only do the rich get money, but they get generational experience with money. Handling money is most definitely a set of skills. If you do not have money to handle, then you will not get experience handling money. It is a feedback loop that only helps to keep the rich rich, and the poor poor.

So asking teachers (as a group) about money may very well be a good source of advice.

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Okay so if the teacher ended his/her career making $100,000 per year, then the base pension rate would be (75%) so ~$75,000. Now we can take that $75,000 and see what it would be "worth" as a payout to an investment. If we figure bonds can get 4% per year . . . $75,000 / 0.04 = $1,875,000. So to live on an income of $75,000 per year one would need bonds valued at $1,875,000 with a 4% return rate.

[Peelee]

The son of a fisherman is likely going to outperform the son of a non-fisherman . . . and the son of a fisherman might have a grandfather or other relatives who are fishermen to ask for even more fishing advice.

Not only do the rich get money, but they get generational experience with money. Handling money is most definitely a set of skills. If you do not have money to handle, then you will not get experience handling money. It is a feedback loop that only helps to keep the rich rich, and the poor poor.

So asking teachers (as a group) about money may very well be a good source of advice.

You're ignoring the point, though. Saying "1/6 of teachers are millionaires" gives the impression that becoming a teacher is a viable path to being a millionaire, despite the overwhelming amount of evidence saying it's not; half of all millionaire teachers inherited their wealth and don't need to teach, others work multiple jobs not necessarily related to being a teacher (such as author or consultant, success at which also necessitates some amount of luck or, more likely, some amount of pre-existing connections), or are in households where both partners work (in which case being a teacher is no more vital than being literally any other profession that makes similar or greater amounts of money). Nothing about being a teacher gives any more likelihood to be a millionaire than any other comparable job.

[darkrose50]

You are not required to be a teacher to be wealthy, but teachers would be a good source of information about money.

* Teachers seem to outperform other professions with pensions (part of this is certainly being from wealthy families)
* The ones that inherited money would have cultural capital (growing up around the managing money skillset)
* Teachers tend to be intelligent and educated (not a bad combination)

Teachers look like a great source of knowledge about money to me. Not the only source, but a good source. Robert Kiyosaki's basically says that they don't teach money skills. I was taught money skills by several of my teachers. <-- This was basically what I was trying to say.

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I am not ignoring the point on purpose. Being intelligent and/or educated is a good path to becoming wealthy. As is tapping into cultural capital and/or personal experience. These seem to all be something truthful that he bases his sales pitch on.

[Peelee]

You are not required to be a teacher to be wealthy, but teachers would be a good source of information about money.

No moreso than any other profession that requires a collegiate degree, based on the criteria you've outlined. And anecdotal evidence is objectively unreliable. For example, I can counter your "teachers taught me to handle money" with me "I know a lot of teachers and professors, including one who worked with a group of business professors who banded together, bought a successful, long-running restaurant, cheaped out on ingredients, raised prices, bankrupted the place within four months, and then asked for raises at the university because with their business knowledge they could be out running restaurants instead of teaching at the college so the college needs to make it worthwhile for them." It's meaningless because it says nothing about tendencies of teachers.

[halfeye]

These days, millionaires are ten a penny. There was a time (probably about the 1930s or 1940s) when millionaires were as rare as billionaires are now. I remember a joke about a guy who travelled to the future, and his investments had made him a millionaire while he slept, but the price of a cup of coffee was £6M.

Medical doctors make more than MPs here, and I'd argue that the medics are better value for money. Teachers make some money, but not as much as medical doctors.

If inflation takes off again, everybody will be millionaires while still being poor.

[Tvtyrant]

Since a million dollars is worth one house where I live, I'm firmly in the "millionaires don't matter" category. A million dollars annually vs. A million in savings over 30 years is a huge difference; the latter category includes people in jobs like custodians and maintenance workers.

[Peelee]

Since a million dollars is worth one house where I live, I'm firmly in the "millionaires don't matter" category. A million dollars annually vs. A million in savings over 30 years is a huge difference; the latter category includes people in jobs like custodians and maintenance workers.

"Millionaire" typically doesn't count the primary residence as part of counted assets, to be fair.

[halfeye]

"Millionaire" typically doesn't count the primary residence as part of counted assets, to be fair.

Is that different from billionaires?

[Tvtyrant]

"Millionaire" typically doesn't count the primary residence as part of counted assets, to be fair.

Yeah but talking about the equivalent to a single house in assets, even a moderately nice house, as a sign of wealth is a pretty low bar. Outside of a few places like Alaska teacher pay tends to be relative to local inflation, so there aren't places with piles of wealthy teachers.

[Peelee]

Is that different from billionaires?

Yeah, in the sense that with billionaires it doesn't matter because the house'll barely move the needle.

Yeah but talking about the equivalent to a single house in assets, even a moderately nice house, as a sign of wealth is a pretty low bar. Outside of a few places like Alaska teacher pay tends to be relative to local inflation, so there aren't places with piles of wealthy teachers.

Equivalent to a single house in a specific area. If you build a moderately nice house on the moon you don't devalue what a billionaire is because it's just worth a split-level in the Ocean of Storms.

[Tvtyrant]

Yeah, in the sense that with billionaires it doesn't matter because the house'll barely move the needle.

Equivalent to a single house in a specific area. If you build a moderately nice house on the moon you don't devalue what a billionaire is because it's just worth a split-level in the Ocean of Storms.

Right, but 14% of teachers are millionaires. Since the coastal cities where houses cost the most are where salaries are highest (with some exceptions like Alaska and Wyoming) the millionaires are most likely in the same regions where it means the least.

Edit: Much of my family is school teachers, and several have assets of a million dollars or more. A lot of the value comes from holding onto things for a very long time, the magic of compound interest. Land here in Oregon is worth over 10x what it was in 1960, including crappy wastelands in the eastern part of the state.

[Peelee]

Right, but 14% of teachers are millionaires.

And about half of those are inherited wealth, and the rest are made up having multiple jobs (teacher/author/consultant), or in families where both partners work (and the average salaries of the partners are, I have to note, unreported). Unless you wish to claim 1/6 of teachers are in coastal cities (which, to be fair, they may be; I'm not familiar with the population density with that degree of specificity, but I'm banking on those other factors making up the vast majority of teacher "millionaires").

[Tvtyrant]

And about half of those are inherited wealth, and the rest are made up having multiple jobs (teacher/author/consultant), or in families where both partners work (and the average salaries of the partners are, I have no note unreported). Unless you wish to claim 1/6 of teachers are in coastal cities (which, to be fair, they may be; I'm not familiar with the population density with that degree of specificity, but I'm banking on those other factors making up the vast majority of teacher "millionaires").

Some basic math suggests 18% of US citizens reside in coastal cities, and NPR reports that many of the teachers in those cities cannot afford to live inside the cities they work in at all (looking at you San Fran.) Regardless there are maybe three states where being a teacher can be said to be a decent financial move; in Oregon they make 15% lower then private workers of similar attainment levels even after you factor in their pension programs.

But this really has moved off rails. I remember my brother reading the Rich Dad, Poor Dad book in highschool and telling my father he should have made more money.

[Vinyadan]

Does teacher comprise university teachers? Because then you have physicians, attorneys, managers, architects, engineers...

[lio45]

A lot of the value comes from holding onto things for a very long time, the magic of compound interest.

Actually, that's the magic of a rising cost of living, not of compound interest :)

As to the OP, I was lent Kiyosaki's "Rich Dad poor Dad" over 15 years ago right after leaving my MSc and entering the world of business, and it was instrumental in convincing me to branch into real estate. Cap rates in my home area at the time were really good, I bought a fixer upper mixed use 4-story downtown building, refinanced it after fixing it up, rinse and repeat, and had a nice portfolio in my Eastern Canadian hometown just in time for everything to rise up as interest rates fell sharply. Then around 2010-2012 I build a second portfolio in the U.S. Sunbelt where cap rates were great, and that one went up as well. (I'm conservative in what I choose to acquire; I demand good cap rates, among other things.)

He's a typical guru, and a scam artist, but there are truths in what he's saying. (Note that I never paid a penny for his book). Ironically enough, I can almost say I'm that one person who got wealthy through (some of) his teachings - buy well-located real estate with good cap rates in areas you believe are about to rise in value/appeal, and don't be afraid of debt.

[Xyril]

And about half of those are inherited wealth, and the rest are made up having multiple jobs (teacher/author/consultant), or in families where both partners work (and the average salaries of the partners are, I have no note unreported). Unless you wish to claim 1/6 of teachers are in coastal cities (which, to be fair, they may be; I'm not familiar with the population density with that degree of specificity, but I'm banking on those other factors making up the vast majority of teacher "millionaires").

In fact, the cause of this correlation (if these numbers in fact suggest a noteworthy correlation, which other posters have brought in doubt) might be the opposite of what darkrose is suggesting. Quite a few of my best public school teachers were very well off, all of them because of inherited wealth, earnings during a first career, or marrying someone with a much higher paying job. I never really thought about it at the time, but now I realize that it's probably a very fulfilling job--particularly when you don't have to simultaneously worry about your finances--and if you don't have to work, but you're also not wealthy enough to turn philanthropy into your full time job, then being a public school teacher is a great way to do something meaningful and avoid wasting all that higher education.

[darkrose50]

No moreso than any other profession that requires a collegiate degree, based on the criteria you've outlined. And anecdotal evidence is objectively unreliable. For example, I can counter your "teachers taught me to handle money" with me "I know a lot of teachers and professors, including one who worked with a group of business professors who banded together, bought a successful, long-running restaurant, cheaped out on ingredients, raised prices, bankrupted the place within four months, and then asked for raises at the university because with their business knowledge they could be out running restaurants instead of teaching at the college so the college needs to make it worthwhile for them." It's meaningless because it says nothing about tendencies of teachers.

Cultural capital is growing up around a skillset or idea. If 1/6 teachers are millionaires, and 46% of them inherited it, then teachers would be an excellent source of cultural capital surrounding wealth.

For instance I teach my kids that investing is a no-brainer. I go on-and-on about it. They roll their heads, roll their eyes and say "dad . . . we know". My sister's kids are raised that there are winners and losers in investing . . . as if investing were a zero-sum-game. The S&P 500 is not a zero-sum-game.

Not investing is a fools choice. Compound interest is so f---ing powerful that to deny its existence is a fools choice. Passing up free money without work or effort is certainly a fools choice.

When I was 16 my grandmother gave me $1,000 after she sold her house and moved in with her sister. I wanted to invest that money, but my mom told me that investing was a good way to loose money and forbade it. I instead went on a trip to Europe. That $1,000 would be worth ~$94,000 today if invested in the S&P 500. NO WORK ON MY PART . . . NO EFFORT ON MY PART . . . NONE! Cultural capital in money is a thing that could earn or loose you a bunch of money. My kids are going have that ~$94,000 equivalent, if I can help it happen.

Seriously money without work and without effort is a really cool thing. How people do not know this or believe this is beyond my understanding.

Big shock as well that Darkrose posted a study he thought agreed with him when it didn't and not only didn't agree with him strenuously, outright states in its conclusion that the role of IQ is the opposite of what he wants to push.

This is evidence. Now we can look for more. But this is still evidence, and it is interesting. To dismiss it out of hand does not further your understanding of the topic.