Book Review: Rich Dad’s Guide to Investing

I wasn’t the biggest fan of Rich Dad, Poor Dad, but I still decided to read this book, Rich Dad’s Guide to Investing by Robert Kiyosaki, for a couple of reasons. First, I have some friends that are real Rich Dad proponents and have bought their Cashflow 101 board game and actually own investment property now. Second, it was available at the library so I didn’t have to buy it. Rich Dad’s Guide to Investing is actually the third book in the series, Cashflow Quadrant was the second. But that was checked out, so oh well, maybe next time.

The premise of this book is to show people “what the rich invest in, and what the poor and middle class do not”. Well, I suppose book does that, if barely. But it does it with exceedingly poor writing and very vague concepts. Basically, childhood stories and his patented sayings are repeated over and over for 246 painful pages. For your benefit, the first two “phases” of the book can be summed up in the following three sentences:

1. The rich can invest in tastier investments than “the rest of us”, due to many more risky investments such as most hedge funds and pre-IPOs being restricted to government-defined accredited investors, of which their are various ways of becoming one, one of which is earning at least $200,000 a year.

2. 90% of all corporate stock shares are owned by 10% of the population. You should want to become one of these people. Working as an employee of a company for a salary is not the way to do this, and overall is for schmucks.

3. The best way of becoming one of these 10% of people is starting a business. Real Estate is one of these possible businesses. I have a tape program and other books *cough* RichDad.com *cough* that can help you do this.

The final third phase actually had some interesting ideas in it. Basically using businesses to minimize your tax burden and hold your assets. For instance, having a company car and using an LLC to hold your investment real estate. Liability issues are also managed this way, separating your assets and the assets of the business. Unfortunately, only vague ideas are given and no concrete details about, for instance, if you should go with an S-Corp or an LLC is provided. Only “you should consult an attorney or a tax professional if you want to do this”. Was reading this book worth the time? I’d say it would be, if you just read the last third of the book.

Next in line: The Millionaire Next Door by Stanley & Danko.

Comments

  1. The Millionaire Next Door is one of my highly recommended books. Based on what I’ve seen on your blog you’re really going to like that book.

    FWIW, I find it ironic that the Cashflow 101 game costs $200. You get more than a game with it, but for $200 I think you’re better off just buying books and a game separately. Book: The Millionaire Next Door. Game: Monopoly. Now you’re all set, and for a total cost of maybe $40. I’ve just saved you 75%. ;)

  2. doh, that’s 80%. bad math day.

  3. Good to see some critical comments for the Rich Dad series. Too many PF bloggers are in love with this guy. I agree that the whole series can be summed up in one word, vague. It’s time to stop feeding this guy’s bank account. If he were so rich and smart, he wouldn’t be selling books and board games.

  4. Money Turtle says:

    I agree with the earlier comments about Rich Dad, Poor Dad. His books are a series of info commercials. You’ll definitely like: The Millionaire Next Door. Enjoy!

  5. “The Millionaire Next Door” delivers a great message but it drags on with it. You could probably read a review (or Cliff’s notes if they had them) of this book and walk away with just as much knowledge. It’s full of statistics, many of them outdated by now, that you will not remember. It may not be worth a full read.

  6. I didnt enjoy The Millionaire next door much, but maybe thats cuz I read it this year. It was published long ago, and at one point, it had a “future prediction” data or something along that lines for the year 2005. it just didnt feel right reading an outdated book. heh. it does drag, but at least they have data to back up the facts. maybe there wasnt anything i didnt know already in that book. I suppose 5-7 years ago it would have been more neat to read.

    as for Rich Dad series.. i enjoyed the first Rich Dad, Poor Dad (and I managed to push my way to finish Guide to Investing).. I think we all know that he repeats too much, and he’s vague, and there’s lots of generalizations. Plus $20 bux for this book? or even more? still, there’s lots of good concepts in there, and its not exactly a dense read. I’ll always recommend borrowing/renting the book though. its not really worth the buy. Oh yeah, like half the book in Cashflow Quadrant is like in Guide to Investing.

  7. > If he were so rich and smart,
    > he wouldn’t be selling books and board games.

    Well, not exactly. In retrospect, the book and board game idea seems pretty smart considering how rich it has made him. ;)

    As for the books themselves, I’d recommend them to people who haven’t read about such topics before as they can serve as a good eye opener about what’s out there. But for people who are already ‘financially literate’ as the author puts it, repeatedly, the books are very vague.

    I really enjoyed The Millionaire Next Door when it first came out. But that’s mostly because I find facts and figures interesting. The main point of the book is easy to sum up, though. Rich people are rich because they spend little, save much, and use some sense when dealing with financial affairs. At least that’s what I remember, it’s been six or seven years since I read it.

  8. I have come to agree with the John T Reed website that Kyosaki is a scam. I would double check with a lawyer his LLC advice.

  9. I found this book helpful for me. Yes, it is not instruction for becoming a millionaire step by step. But this book changed my point of view regarding my well-paid job and made me think about tomorrow not in aspect of new car or house. It is very important for our (I am from Russia) soviet brains :-)

  10. Alex Givant says:

    Read here for anti-Kiyosaki view

    http://www.johntreed.com/Kiyosaki.html

  11. I should have bought the book.
    Instead, I got ripped off with the Kiyosaki training program. I paid over $4500 upfront on my credit card. I received two over the phone training sessions before an emergency arose with my family, and I could not continue the sessions, which I immediaely informed them about. When I contacted them many months later, I asked for a partial refund because, I certainly did not get anywhere close to $4500 worth of services.

    They did indicate that they would give me more sessions, but at the time, I was in a desperate situation and was living through an enormous amount of problems, including losing my home, my business, and facing living on the streets. I told them, I could not do the lessons, that I was losing everything, and that I just needed a refund, something, anything, $1000…$500; please just give me something, so I could get a place to live. I begged them for some type of refund, I was desperate. I told them, that I did not receive the services and I deserved to have some of my $4500 plus back. Over $4500. come on, for two 1 hour phone calls. Give me a break. How can you justify keeping my money. They did!

    If they had given me my money back, I probably would have turned around like a fool when I was able and gave it right back to them. But today, I am no longer a fool and I would not give them a dime. I think the man stinks. He doesn’t care about people, he only cares about money. He is full of crap, and I bet that most people who have given him money, have not made anything back.

    When I signed up for the course… he talked about real estate, and was really negative on the subject of stocks. Well, guess what, real estate stunk for a minute, and he’s now selling the concept of stocks. Flow with the wind you pigeon, dropping your crap all over the place as you go.

    He has his paid monkeys prancing around stage, but for the average person forking out the dough, I wonder what their actual return is.

    If you are one of his flunkies, you will probably post and yell and scream at this, while most of his victims will likely not say anything. Rich Dad.. Poor Dad… Well Mr. Kiyosaki, I don’t care how damn many daddies you have, you should have been aborted.

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