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John T. Reed's analysis of Robert T.

Kiyosaki's book Rich Dad, Poor Dad,


Part 1
Sep 03, 2015
Posted by John Reed on
A number of people asked me about Robert T. Kiyosaki and his book Rich
Dad, Poor Dad. When I said I didnt think he was a real-estate guru, they
insisted he was. Several told me I would like him, that he preaches a
message like mine. Eager to find such a guru, I bought his book, Rich Dad,
Poor Dad, in a bookstore.

Summary
Rich Dad, Poor Dad is one of the dumbest financial advice books I have
ever read. It contains many factual errors and numerous extremely
unlikely accounts of events that supposedly occurred.
Kiyosaki is a salesman and a motivational speaker. He has no financial
expertise and wont disclose his supposed real estate or other investment
success.
Rich Dad, Poor Dad contains much wrong advice, much bad advice,
some dangerous advice, and virtually no good advice.
You may wonder if I just criticize or have I written a better book. I wrote a
bunch of them. Heres one on advanced fundamentals of real estate
investment and another on basics. Click on either for more information
about it or to order it. My Succeeding book is more similar to the actual
subject of Rich Dad.

Wikipedia says, On August 20, 2012, Kiyosaki's company, Rich Global


LLC, filed for bankruptcy in Wyoming Bankruptcy Court.
Dangerous advice
"If you're gonna go
broke, go broke big"
Convinces people that
college is for suckers

Law-breaking advice
Advocates committing
a felony: have rich
friends for trading stock
based on non-public
inside information, he
says "That's what
friends are for."
Recommends tax fraud
by deducting vacations
and health club dues
Brags about using a
partner weasel clause
in which his cat is his
partner

Bad liar
Can't keep track of his story
Shouts from the rooftops
how rich he is, but refuses
to disclose real estate
portfolio because he
"doesn't want people to
know he has money"
Apparently lied about going
bankrupt in 1985
Claimed his net worth is
$50-$100 million
depending on the day; his
Rich Dad Poor Dad coauthor
said in court that he only
made $9 million
His "best teacher ever"
changed repeatedly
1. '92 - Ralph Kiyosaki
(Poor Dad)

I'm not the only critic


Wall Street Journal: "Rich Men,
Poor Advice"
Smart Money Magazine: "Karma
Chameleon"

Fiction posing as non-fiction


Oprah needs to confront Kiyosaki
about calling a fiction book nonfiction just like she did with James
Frey
He asks why Rich Dad has to be any
more truthful than Harry Potter
Admits fictionalizing on copyright
page of Rich Kid, Poor Kid
Admits to 20/20 that he doesn't
teach people how to get rich
"Marine corps made him what he is
today" - he was laterally transferred
to the Marine Corps from the
Merchant Marine and Navy, he never
went through the entry-level Marine
training
Lied about desertion while serving in
Vietnam (admitted later he just
missed the boat)
Became a helicopter pilot to "lead
men" (platoon leaders and company
commanders lead men; pilots lead
machinery)
Rich Dad, Poor Dad triggers the
following items on my Real Estate
B.S. Artist Detection Checklist: 1, 6, 7,
10, 11, 13, 20, 26, 27, 28, 29, 30, 31,
38, 39, 46, 49.

2. '97 - Rich Dad


3. '06 - Buckminster Fuller
The blueprint to becoming a
"Financial Genius"

Below I provide the back-up for the above accusations.

Kiyosaki sued by co-author Sharon Lechter


Sharon Lechter, Kiyosakis co-author of Rich Dad, Poor Dad, sued him in
Clark County, NV (Civil Case #07-A-549886-C). It was filed on 10/12/07. I
would be interested in seeing the complaint. Apparently, little has
happened in the case other than motions to dismiss.
On 9/4/08, the Arizona Republic newspaper carried a story that said
Kiyosaki had paid an undisclosed sum to Lechter to settle the suit.

Creature of Amway
Over time, I have received numerous reports that Kiyosaki is primarily a
creature of Amway (now Quixtar) and other multi-level marketing
organizations. Reportedly, his books were not selling until he allied himself
with that crowd. Then the volume of sales to those MLM guys made him a
best-selling author, which caused normal non-MLM people to think the
book must be good. Click here for an email I received along those lines.
There is an unauthorized Web site about Amway at www.amquix.info.
Some readers have said that if I am going to criticize Kiyosakis book, I
must offer a version of how to better yourself that does not have the flaws
of Rich Dad Poor Dad. No problem. That would be my book Succeeding,
which, somewhat to my surprise, is my top seller of the 38 different books
I sell.

In the summer of 2007, the Ohio state government Division of Real Estate
and Professional Licensing published an extraordinary statement by a
consumer of Robert Kiyosakis book Rich Dad Poor Dad and Cash Flow

game. Be sure to read it at http://johntreed.com/blogs/john-t-reed-s-realestate-investment-blog/69580419-ohio-real-estate-investor-s-warningstatement-on-robert-kiyosaki-and-bill-gatten-s-complex-pactrust-forreal-estate-investing.


Selected emails from visitors to this page

Collection of age-old clichs about money


A reader suggested that Rich Dad Poor Dad is nothing but a collection of
clichs about money. Old clichs. Clichs that have been around since
way before Kiyosaki claims rich dad originated them. The reader further
said that Kiyosaki then appears to have simply made up a bunch of
accompanying phony stories to fill the clich collection out to the length
of a book. She may be right. For example, Kiyosakis fear-and-greed
advice (see below) is an age-old Wall Street clich about securities prices.
Another reader put it this way,
But you have to admire a guy who can spin two or three paragraphs of
very ordinary financial platitudes into such a range of books.

Now admits 'fictionalizing'


On 8/15/01, a reader told me Kiyosaki now has the words Although based
on a true story, certain events in this book have been fictionalized for
educational content and impact, in the fine print on the copyright page of
Rich Kid Poor Kid. I had not previously been aware that educational
content and impact justified lying. Also, I am now confused as to why
Kiyosakis books are on the nonfiction best seller list if they are
fictionalized. Probably because as A Million Little Pieces author James
Frey discovered, its a lot easier to be a best-selling author with a
fictional book labeled non-fiction than with a novel.

'Poor dad'
The idea behind Kiyosakis title is that his real father was upper middle

class. He graduated from Stanford, Chicago, and Northwestern


Universities, all on full scholarship, ultimately earning a Ph.D. He pursued
a career in education and became the head of the education department
of the State of Hawaii. He owned the home in which the Kiyosaki family
lived. Kiyosaki calls him his poor dad.

'Rich dad'
One day, he asked his father how to make money. His father said he had
not made much money and did not know how to make it. He suggested
that Robert ask the father of his next-door playmate, Mike. That boy's
father was a successful local businessman. He was also an eighth-grade
dropout and ultimately a multimillionaire with a bunch of small businesses
like construction, restaurants, and convenience stores. Kiyosaki
developed a father-son relationship with the neighbor. That is who he is
referring to when he uses the phrase rich dad.
One visitor to this site asked me if I was sure Rich Dad really exists. No,
Im not. In fact, I now lean to believing that there never was a Rich Dad,
that Kiyosaki made the whole thing up. If I had written such a book, I
would have named him in the book, if only out of gratitude. It is
noteworthy that Kiyosaki refuses to identify Rich Dad and the Honolulu
Star-Bulletin was unable to figure out who it was, in spite of the rather
obvious next-door neighbor Mike whose father owns convenience stores,
restaurants, and a construction company clues. The man was
purportedly around 30 to 45 years old in 1955. So he would be 83 to 98
now. How many people on that one street in Honolulu could possibly fit
that description?
As I recall, the first convenience store was 7-11 and I believe they became
widespread around the 1960s. Its possible Kiyosaki is using the phrase
convenience store loosely and really means corner groceries, which did
exist in the 1950s.
But I also find the mix of business unlikely. The guy owns convenience
stores, restaurants, and a construction company. I guess I can imagine a

guy who owns convenience stores and a construction company. Its odd,
but not impossible. However, I have less ability to picture a restaurateur
who also owns a construction company. I knew one. His restaurant went
out of business. For one thing, the restaurant business is extremely
management-intensive. At good restaurants, the owner is usually there
almost all of the time. Same is true of construction. Plus restaurateurs that
Ive known are very different kinds of people from construction guys.
Kiyosakis real father (Poor Dad) was named Ralph Kiyosaki. I encourage
readers in Hawaii to try to research Ralphs home ownership when
Kiyosaki was nine years old (1955) and try to figure out which adjacent or
nearby homeowner might have been Rich Dad. If we can find a person
who fits the description, and he is either a public person or dead, I will
publish the identity.
A bunch of people have told me Rich Dad was a now-dead guy named
Kim or Kimi. Fine. Get Kiyosaki to say that. Or get Kims surviving relatives,
like Kiyosakis friend Mike, to say it. A bunch of yahoos on the Internet
saying it means nothing. People on the Internet see Elvis at their 7-11.

1992 book versus 1997


In 1992, Kiyosaki wrote a book called If You Want to Be Rich and Happy,
Dont Go To School? It is dedicated to Ralph H. Kiyosaki, former
Superintendent of Education, State of Hawaii, the best teacher I ever had.
This would be Poor Dad. But Rich Dad Poor Dad, which came out in
1997, says quite emphatically that Rich Dad was the best teacher he ever
had.
So maybe Rich Dad was the second best teacher he ever had. No.
Actually, the 1992 book also identifies the second best teacher Kiyosaki
ever had: F. Marshall Thurber.
OK. So maybe Rich Dad was third. No. Kiyosakis 1992 book has an
unusually long acknowledgment section. It lists 111 people, none of whom
appears to be Rich Dad. That is, none are singled out except for his

Poor Dad parents, in-laws, business partner, and editors.


Mind you, according to the 1997 book Rich Dad Poor Dad, Rich Dad
supposedly became central to Kiyosakis life starting in 1955 when he was
nine. So where was Rich Dad in 1992 when Kiyosaki was so diligent at
identifying the people who had been important in his life?
In a 4/18/06 Yahoo! column, Kiyosaki now says the best teacher he ever
had was Buckminster Fuller. It would be a bit of an understatement to say
that Fuller was not an eighth-grade dropout who owned convenience
stores.
Getch yer programs right here! Ya cant keep track of Kiyosakis best
teacher he ever had without a program!

EST then Money and You


A man who says he has known Kiyosaki since the military in Hawaii says
Kiyosaki got his start in the tell other people how to live their lives
business as a result of taking then becoming a speaker in the Money and
You organization.
Money and You was a seminar company started by Marshall Thurber, an
est graduate. Est was a notorious seminar company in northern California
run by Werner Erhard. Werner Erhard is apparently one of many aliases
used by John Paul (Jack) Rosenberg, a Philadelphian who started in life as
a car salesman and who then moved through a series of aliases, sales
careers, and wives before coming up with the name Erhard and the est
seminars. They were famous for not letting participants go to the
bathroom and for maddeningly vague advice. For a while, they were going
to cure world hunger by getting a lot of people just to think about it.
Money and You was reportedly a useful seminar. Shortly after Kiyosaki
went to mainland U.S. from Hawaii to run away with Thurbers circus,
Thurber decided to shut it down. Thurber let Kiyosaki and some other
speakers take over the business. They promptly emphasized the
Australian and New Zealand markets which have, at times in their history,

overvalued products and services from the U.S.


Their run in Australia ended when the Australian equivalent of 60 Minutes
did an expos about Money and You.
Basically, it appears that Kiyosaki is a good salesman, although we sort of
have to take his word for it pending confirmation from Xerox. Good
salesman is the universal description of all the expensive so-called real
estate investment gurus. They are sales guys, not real estate guys.
Apparently Kiyosaki is yet another example.
This caller also said that Kiyosakis wife Kim appears to be the one who
invested in Phoenix real estate. Bob appears to be the Ralph Kramden
(main character of the Honeymooners TV series) of the family, perennially
hatching one-hare-brained get-rich-quick scheme after another (like
Kiyosakis Money and you, velcro surfer wallets, and Rock T-shirt
businesses) while his wife invests in basic stuff. I am not ready to anoint
her a financial genius. One would have to inquire as to whether their real
estate investments in Phoenix appreciated more than those owned by the
average person. Most likely, they made the same return on their
properties as Joe and Jean Average Phoenix homeowner. If so, they would
be as qualified as Joe and Jean homeowner to write a book about it. As I
have said in many articles in my newsletter Real Estate Investors Monthly,
extraordinary performance in real estate is measured by the degree to
which your returns exceed those of ordinary homeowners who claim no
expertise. In fact, in most periods since World War II, ordinary
homeowners have done great return-wise just because they were in the
right place at the right time. On Wall Street, they say that in a bull market,
everyone thinks he a genius. And some, like Kiyosaki, who are merely
married to people who invested in real estate during a bull market, claim
that they (the non-investing spouse) are geniuses as a result.
Reportedly, Kim got the idea to invest in Phoenix real estate from a female
fellow employee of Money and You who said the Phoenix market was
going to be good. That female Money and You employee is the one who

should have written us a book on real estate investment. She may be the
brains of the outfit if Kim did not add any value to her advice. (Actually,
the employee probably was just guessing and her having guessed right is
meaningless. In fact, predicting market-wide appreciation in real estate
values is impossible to do. Decisions can only be evaluated based on what
the decision-maker knew at the time, not on results. You can get good
results from bad decisions, e.g., a winning lottery ticket; and vice versa,
e.g., attempting a 25-yard field goal that goes wide right when you are
down by two points with three seconds left in the game.)
If Kiyosaki claims to be a competent real estate investor, he needs to show
addresses of properties he bought that reveal greater returns on those
properties than were earned on similar properties at the same time by
persons who claim no extraordinary expertise. I suspect an examination of
properties he or his wife owned will show that he earned that same
returns as local homeowners and that the only thing extraordinary about
his purchases is that he had a large amount of book royalties to use to
buy them.
The guy who called me has the impression that Kiyosakis tortured psyche
and insecurities stem from growing up as an obese kid in Hilo in the
1950s. Since he did not know Kiyosaki until the military, that information
must have come from Kiyosaki.

No more Bob
Kiyosaki went by Bob for most of his life. Since he became the famous
author, he insists that everyone call him Robert. Sure, Bob.

20/20 investigation of Kiyosaki


ABC 20/20 did a program about Kiyosaki who has now written 18 books.
You can read their story about it at http://abcnews.go.com/2020/story?
id=1982669&page=1. The date on the Internet story is May 19, 2006 so
the story must have been aired on 20/20 around then. Basically, they gave
three people $1,000 each and told them to try to start a business that

would show a profit within 20 days. One lost all he money. Another made
zero. The third made $243.
Kiyosaki was brought in to coach them and to advise them during the 20
days. Based on the article, it sounds like about all he did was whine about
the three would-be entrepreneurs, the short time frame, and so forth. He
also pronounced their failures a successtypical Kiyosaki logicbecause
they learned from them. The ABC 20/20 story ends with,
Which begs the question: Does anyone really need 18 books to learn to
fail?
Obviously, Kiyosaki has sold 26 million books on the promise that they
would help you succeed. Then, when people who have been personally
coached by him fail, he blames them and, like the Queen in Alice in
Wonderland, declares their failures to be successes.
I guess it would be too much to ask for him to admit, Gee, I guess my
advice was of no value to these three.
If I had been asked to participate in such a challenge, I would have said I
have no expertise in telling anyone how to make a profit with $1,000 in 20
days. I do not know how I would have done that if I had been given the
money. Probably write a short book and use the $1,000 to print it and
create a series of Web pages about it. See my book How to Write, Publish,
and Sell Your Own How-To Book
for the details on how to do that. It would be interesting for 20/20 or a
similar program to give $1,000 to Kiyosaki himself and let he himself
show how to turn it into a profit using some method open to his readers.
You would have to have a microscope on him every second and prohibit
any undisclosed actions or conversations to prevent him from using
methods not available to his readers.
What business has Kiyosaki ever made a profit in? With regard to his 26
million books, he is not a businessman. He is only an author. The
businessmen generating those sales and profits are his publishers.

'Couldn't put my finger on it...'


I have received numerous emails about this analysis by me that you are
currently reading of Rich Dad Poor Dad. There have been several
recurring themes in those emails. One is people saying that they liked
Kiyosakis book, but that it caused them some discomfort or second
thoughts or unease. They often say they could not put their finger on
what was bothering themor words to that effectuntil they read this
analysis.

'Made me think about my finances'


The most common favorable comment I get about Kiyosaki from those
who generally agree with my analysis is that At least he got me to think
about my finances. Thats pretty lame.
The IRS makes you think about your finances every April 15th. You have to
think about your finances whenever you fill out a loan or credit-card
application. I also think about my finances frequently when I pay bills or
receive income. People who are unhappy with their financial liveswhich
is the typical Kiyosaki fanprobably think about their finances every time
they get into their shabby car or return to their unsatisfactory home (e.g.,
living with parents, bad neighborhood, too small, etc.).
There are lots of books that do a better job of getting you to think about
your finances. I suggest my Succeeding and How to Get Started in Real
Estate Investment as well as The Little Book of Common Sense Investing
by John C. Bogle and Jane Bryant Quinns Smart and Simple Financial
Strategies for Busy People. These are books that actually have what
Kiyosaki falsely claims to provide.

I think these made me think about finances comments are inarticulate at


best and dishonest at worst. What is really going on is a lot of people are
schlepping along doing a half-ass job of managing the financial aspects of
their lives. Rich Dad Poor Dad slaps them up side the head and tells them

to clean up their acts. Thats good, but the book goes on to deliver a pack
of lies that make getting rich seem much easier than it really is and make
education sound much less valuable than it really is. Basically, people
want to get rich quick without effort or risk. Kiyosaki is just the latest in a
long line of con men who pander to that fantasy.
Can the ordinary person get rich? Yes
Is it as easy as Kiyosaki makes it sound? Not even close.
Can it be done as fast as Kiyosaki says? Nope.
Is education as worthless as Kiyosaki says? Every pertinent study has
shown that the more education you have, the higher your net worth and
income. Also, educated people live longer, have fewer divorces, better
health, and so forth.
Here are U.S. Bureau of Labor Statistics figures on education that were
released on 8/17/07:

Weekly earnings by amount of education


amount of education

median weekly earnings

doctoral degree

$1,441

professional degree

$1,474

masters degree

$1,140

bachelors degree

$962

associate degree

$721

college dropout

$674

high school grad

$595

high school dropout

$419

Unemployment rate by amount of education


amount of education

unemployment rate

doctoral degree

1.4%

professional degree

1.1%

masters degree

1.7%

bachelors degree

2.3%

associate degree

3.0%

college dropout

3.9%

high school grad

4.3%

high school dropout

6.8%

On the other hand, the public-school system is an easy target for


criticism. It is generally run by union bureaucrats who graduated at the
bottom of their college classes. Colleges are also subject to criticism for
letting students spend five or more years getting low-income educations
in subjects like philosophy and social work. Wisely-chosen education
defined broadly as reading books, talking to successful people in the field
you are interested in, attending courses, and subscribing to trade
publicationsgenerally provides the highest return you can earn on your
money and time.
Kiyosaki is just telling lazy and/or stupid students a line of bull that lets
them avoid responsibility for their poor academic performance and gives
them a convenient scapegoat to blame for their lousy financial situations.
There is also more value to education than just its financial rewards. If you
like philosophy and are willing to take a vow of poverty, you ought to study
philosophy. Not everyone suffers from Kiyosakis need to impress people
with how much money he has made (or claims to have made from sources
other than selling books to Amway distributors).
most people want to believe rather than to know, to take for granted
rather than to find out
James Thurber

Motivation
Another compliment readers often pay Kiyosaki is along the lines of, Well,
at least he motivated me.
Yeah, by lying to you. Thats like me telling you I buried $100,000 in your
backyard which is yours for the taking. Would that motivate you? No
question. You would probably spend the next two weeks digging up your

backyard. After you found out it was a lie, would you think I was a great
guy for having thus motivated you to get all that healthy exercise? I doubt
it.

Missing the point


Since I posted this analysis, a number of Kiyosaki cult members have
contacted me to denounce me for missing the point of Kiyosakis book.
OK, Please tell me the point. The odd thing is that each person has a
different version of what the point of Kiyosakis book isand it is never
something I recall reading in the book. In fact, if a book has a point,
multiple readers ought to come up with the same answer when asked
what that point is. If they come up with different answers, it is either
because the author was incompetent at communicating his point, or
because the book has no point, or because the author deliberately
obfuscated the point.
From now on, if you think I missed the point, dont paraphrase Kiyosakis
point to me. Give me an exact quote and the page number in Rich Dad,
Poor Dad where it appears. I suspect everyone who is tempted to send
me the point of Rich Dad will be unable to find in the book any of the
wonderful advice they imagined was in there. It has been several years
since I first said this and I have yet to get my first quote of the point.
On 7/18/06, I finally got a quote from someone who says I missed the
point. Here it is.
Please open your copy of Rich Dad Poor Dad and turn to page 77. Look
half way down the page. You will see this:
"Rule one:You must the know the difference between an asset and a
liability, and buy assets. If you want to be rich, this is all you need to
know. Its rule No. 1. It is the only rule. This may sound absurdly simple,
but most people have no idea how profound this this rule is. Most
people struggle financially because they do not know the difference
between an asset and a liability."

I did not miss that at all. In fact, I discussed the matter of his definitions of
assets and liabilities squarely and repeatedly in this review. Furthermore,
the vast majority of the book has nothing to do with that point and some
of the book contradicts that point, like Kiyosaki bragging about his Rolex. I
also note that in eight years, this is the only person who thought that was
the point of the book.
The only time different people look at the same thing and come up with
different answers as to what it is they are looking at is when the thing they
are looking at is amorphous, like a cloud or a Rorschach inkblotor a
politician.
Politicians try to be all things to all people. That requires them to say
nothing (amorphousness), but to sound like they are saying something
(the point). They toss in a little spin to try to get all those people with
those different views to see in the politician things that they like. Kiyosaki
slogans like Dont work for money. Make money work for you, are
amorphous in their actual meaning, but have the effect of spinning the
reader into thinking he has just gotten good advice.
Heres a pertinent passage from Temple University professor John Allen
Pouloss book A Mathematician Reads the Newspaper.
A similar argument helps clarify why inane I Ching sayings or ambiguous
horoscopes seem to many to be so apt. Their aptness is self-provided. In
effect, their cryptic obscurity provides a random set of answers that the
devotee fabricates into something seemingly appropriate and useful.
psychologists count on the amorphousness of Rorschach ink blots to elicit
evidence of a persons core concerns.
My own supporters occasionally commit the mistake of reading things into
my writings. I once got an email complimenting me on my writings. The
writers favorite quote by me was, When everyone is digging for gold, sell
shovels. I thanked him for his compliments, but said, I never said that.
He then wrote back that he searched all over my Web site, but could not
find it.

Cult
What Kiyosaki is really doing is operating a cult of personality. Anna
Quindlen had an excellent article about such cults in the 8/14/00
Newsweek. She was talking about politicians and said they seek to elicit
the words, I dont know why. I just like the guy. Politicians want to be
judged by their personalities, not their character or policies. To members
of Kiyosakis cult, it matters not how many false or probably-false
statements I find in Kiyosakis writings. They just like the guy. Personality
is an appropriate criterion for selecting someone to hang around with. But
it is a highly inappropriate criterion for evaluating Kiyosakis advice,
because hes not going to let you hang around with him and your familys
finances are serious business.
I am not a politician. When I write something, I want to make sure
everyone gets the pointthe same point. Here is the point of this
analysis:
Rich Dad, Poor Dad contains much wrong advice, much bad advice, some
dangerous advice, and virtually no good advice.

The 48 Laws of Power


Heres an interesting letter I got from a reader:
I'm glad I found your Web site on Kiyosaki, and all the other snake oil
salesmen. I was deluding myself into believing him, even though I had
that little voice in the back of my mind sending me warning signals (not
to mention my wife)... Anyway, thanks for the info. Every once in a
while, I do a search on Google and come up with a gem like your Web
site. This is living proof that the Internet can be used for good
purposes by people who are TRULY generous. Once again thanks for
your work.
A few years ago I read a book by Robert Greene and Joost Elffers
called "The 48 Laws of Power" (Viking, 1998). It is a "Machiavellian
approach to the systematic study of power." Basically, it is written as a

how-to book. It gives the cynical lowdown on increasing and


maintaining one's power over others. It is truly an interesting and
thought-provoking study in human nature. I thought you might be
interested in the following quote, which I feel is particularly apt in
describing the power strategy that gurus like Kiyosaki like to follow:
"Law 27 - PLAY ON PEOPLE'S NEED TO BELIEVE TO CREATE A
CULTLIKE FOLLOWING. Judgment - People have an overwhelming
desire to believe in something. Become the focal point of such desire
by offering them a cause, a new faith to follow. Keep your words vague
but full of promise; emphasize enthusiasm over rationality and clear
thinking.
Give your new disciples rituals to perform, ask them to make sacrifices
on your behalf. In the absence of organized religion and grand causes,
your new belief system will bring you untold power." (p. 215)
Keep up the good work,
Another reader said Law of Power 32 is pertinent too.
Law 32Play to Peoples Fantasies
The truth is often avoided because it is ugly and unpleasant. Never
appeal to truth and reality unless you are prepared for the anger that
comes from disenchantment. Life is so harsh and distressing that
people who can manufacture romance or conjure up fantasy are like
oases in the desert: Everyone flocks to them. There is great power in
tapping into the fantasies of the masses.
You can see all the laws at
http://www2.tech.purdue.edu/cgt/courses/cgt411/covey/48_laws_of_powe
r.htm.

Short on specifics
About every third email I get about this analysis tells me that they agree

with me that Kiyosaki is short on specifics about how to get rich. In the
first week of February, 2008, yet another woman told me she agreed with
my saying he is short on specifics, I said Kiyosaki had made her blind to
the statement I made in huge letters (below after this sentence) and she
switched subjects to my ungentlemanly behavior in making such a
comment. Although she did not deny that I had pointed out in huge letters
that I never said any such thing.

I never said Kiyosaki was short on specifics!


Not only does Kiyosakis hypnotic effect on many people result in their
seeing things in his book that are not there, now they are seeing things in
my analysis that are not here. Amazing! No wonder the guy can sell 26
million copies of nothing.
I would say that Rich Dad covers an overly broad array of financial
subjectsreal estate investment, stock market investment, note
investment, and going into business for yourself. No one could adequately
cover all those areas in such a short book. On the other hand, Rich Dad
has a lot of specificsas you will see below in this analysis. The problem
is not that he is short on specifics, it is that the book is a bunch of bull,
including when he gets specific. To say that the only fault of the book is
that it lacks specifics is ridiculous.
Since I posted this item with huge letters saying I did not say he was short
on specifics, the quantity of emails I get agreeing with me that he was
short on specifics is unabated. Have these people all had lobotomies?
Actually, yes. Rich Dad Poor Dad is a lobotomy by book reading.

Money is all that matters


On page 14, he approvingly quotes rich dad as saying, Money is
power. [Since I wrote this analysis, Kiyosaki has changed the layout of the
book making these page numbers wrong for subsequent editions. They
are correct for my edition, which says published by TechPress, Inc. and
has 1997 and 1998 copyrights.]

On page 92, he tells of his rich dad keeping him waiting for long periods
when he was nine years old!! He was ignoring me on purpose. He
wanted me to recognize his power and desire to have that power for
myself one day. On page 172, he says, I have found the principles of
finding value are the same regardless if its real estate, stocks,...or a new
spouse...
On page 154, Kiyosaki says the reason you want to have rich friends is
to get inside stock market information that you can make low-risk profits.
He ends that discussion with the sentence, That is what friends are
for. That is the narrowest, most mercenary definition of friendship I have
ever seen. I doubt Kiyosaki is the only person who feels this way about his
friends, but he may be the only one dumb enough to say it in a book.
My Succeeding book tries to get you to always keep in mind the
paramount importance of living a balanced life with emphasis on friends
and family and doing the things that you find rewarding for reasons other
than mere monetary income.

Although his family was not rich, he attended a


predominantly wealthy elementary school
because of an anomaly in the school-district
boundaries. The wealthy kids had newer toys
and refused to invite Kiyosaki and his friend to
parties, telling Kiyosaki it was because they
were poor kids. Sounds like he was scarred
deeply by that humiliation and has lived his
whole life since trying to prove to some rude nine-year olds from the
1950s that he now has the money to be worthy of their party invitations.
He told Meet the Street that he has never been back to Hawaii. I suspect
such a visit would rid him of these demons from his childhood.

How much money does Kiyosaki have?

A number of people have accused me of being jealous of KiyosakiI


guess because they think he has more money than I have. Others have
said they are going to follow him because he is fabulously wealthy and
thats what they want to be.
How do we know this?
I know approximately what my net worth is. But I have no idea of what
Robert Kiyosakis net worth is. Neither does anyone else.
He implies he has money. He has had four books about how to get rich on
the business best-seller list. He brags about owning a Porsche, Mercedes,
Rolex watch, $400 golf club. The Honolulu Star Bulletinthe newspaper
where Kiyosaki grew upwrote a puff piece about him. You can see it at
http://starbulletin.com/2000/07/10/features/story1.html. In it, Kiyosaki
says a number of things that imply he is rich. For example,
Im free to do exactly what I want, when I want, where I want. I can stop
working if I want to. Money buys me freedom.
I once investigated best-selling real-estate author Robert Allen who wrote
Nothing Down. At first, he claimed to own his home. But when I checked
the address which appeared on IRS liens filed against him, it was
nonexistentno house at that address. When I again asked where he
owned his home, he admitted, I rent. I have the conversation on tape.
One of my MBA classmates, Paul Bilzerian, became a very successful
corporate raider for a time. He stood silent while others claimed he was a
wiz who had made $150 million in Florida real estate before age 30. I
called him up to ask if that were true. He said I should read the article in
the Wall Street Journal carefully. Indeed, it said he was reported to
have made that much and all Paul would say in the article was, Thats a
good guess. In other words, Paul was pointing out to me that it was not
he who said he had made all that money. Paul subsequently was the
subject of a Forbes story. They said they investigated his purported
Florida real-estate profits and could not find a trace of him in Florida

real estate. He later got into trouble with the law and was the subject of a
60 Minutes segment about his mansion in Florida that creditors could not
get at after he declared bankruptcy.
According to the Honolulu Star-Bulletin, Kiyosaki wont say how much he
is worth or in what hes invested. Kiyosaki claims, I own companies. Im a
major shareholder in oil and mining companies, plus real estate
companies. I have intellectual property companies. But he wont identify
any of them. Why? As you will read below, one of my readers checked
Kiyosakis claim that he was a major shareholder out in a securities
industry data base and found not a trace of him in spite of the fact that
major shareholders are required by law to be identified. If he is a major
shareholder, it is in minor corporations so small that their shares are not
traded publicly.
A book editor unrelated to Kiyosaki used industry statistics to tell me he
figures Kiyosaki has netted at least $11 million from his book royalties
since 2000.
With regard to Kiyosakis Money buys me freedom statement, my
Succeeding
book has a chapter on wealth that discusses both the advantages and
disadvantages of being rich. Yes, there are disadvantages, like making
your family members kidnap targets or making yourself a lawsuit target.
Last I heard, Kiyosaki was being sued by the co-author of Rich Dad Poor
Dad, Sharon Lechter.

Mr. Privacy
Kiyosaki says, I keep my holdings private. You know why that is?
Lawsuits. If you have money, you get sued.
Let me get this straight. Kiyosaki says he is rich, that he makes millions of
dollars, and is about as high profile about his wealth as you can get about
itbest-selling how-to-get-rich books, appearances on TV shows like
Oprah, interviews to daily papers and national magazines. Yet he won't

disclose any details because he doesn't want people to know he has


money.
Not only is the guy a B.S. artist, he insults our intelligence.
Somebody needs to give Kiyosaki a book on how to be low profile. Im
sure it has a chapter that says going on Oprah to discuss your best-selling
book on getting rich is not a good way to prevent would-be litigants from
knowing you have money. Kiyosaki is, in fact, shouting from the rooftops
that he has money. He just refuses to prove it. Or to let anyone investigate
how he got it if he does have it.
I have always felt that implying you have money was worse than revealing
your net worth. When I was in grad school, I took a labor relations course
where actual union leaders were in every other seat with us MBAs. One
said that one of the things they love about employers is when they keep
earnings secret. That allows the union to tell the employees that the
company is getting rich on their backs. That, in turn, causes the
employees to vote for the union. Kiyosakis implying he is wealthy, but
refusing to disclose how wealthy, will almost certainly cause would-be
litigants and others to overestimate his net worth, thereby increasing
the chances of his being sued over what they would be if he were more
forthcoming.
Many small businesspeople adopt grandiose company names, like
Pritchco Interplanetary, that make them sound much larger than they
really are. I tell my readers not to do that because such names encourage
lawsuits. I encourage small real-estate investors to use their own name,
because people are more inclined to sue big-sounding corporations than
an individual. I recommend that you read an article I wrote on how to take
title with regard to privacy and other aspects of money.
I suspect the real reason Kiyosaki refuses to disclose any evidence of his
purported wealth is either
It was much smaller before he got rich from his book than his

followers imagine
He did not get it the way he impliesfor example, his wealth may
come almost entirely from telling people how to get wealthy and he
may not have been wealthy himself until he told people how to get
wealthy
He achieved wealth in an unethical or illegal way
All of the above
For the record, I created another page to address the jealousy issue. Click
here to see it.

Meet the Street interview


On 1/14/02, a reader told me Kiyosaki was more forthcoming about his
wealth at http://www.thestreet.com/funds/meetthestreet/10006507.html.
Indeed, in an interview at that Web site, he says his net worth is between
$50,000,000 and $100,000,000 depending on the day. (I dont believe
that. He also says he was bankrupt and homeless in 1985. More about
that later.) So which is itKiyosaki will not talk about his wealth because
he doesnt want to be sued or he will give figures, locations of his
properties, and the nature of his corporations as he does in the Meet the
Street interview? What happened to the lawsuit threat?
There were a number of points in that Meet the Street interview that
deserve a response
Kiyosaki
said

avoid
mutual
funds and
401(k)s
because
they are too
risky

Reed comment
Mutual funds vary in their risk. Some are very low risk. 401(k)s
have tax benefits that are hard to ignore. Also, you can invest
them in almost anything you want in many cases. If they are
invested in broad-based, low-cost index funds, like Vanguard
500 Index, they have no risk other than the risk that the entire
market will collapse.
Bogus gurus like to give extremely simple rules. Ignorant readers
love them. Thats fine when the subject permits. But this is an
extremely simple rule that is not valid because of the complexity

of the subject.
I dont believe that. He was bankrupt and homeless in 1985 by
his own admission. Although a lawyer who searched the federal
case management system on line says he could find no
bankruptcy filing for Kiyosaki. He claims to have sold 26 million
books. The highly successful book What Color is Your
Parachute? has only sold seven million copies since it first came
out in 1970. But even if you accept the 26 million figure,
Kiyosakis co-author royalty would appear to be about 72not
enough to get you anywhere near $50 million even if you had no
living expenses. He claims to make money in other businesses,
but will not disclose enough detail that anyone can check that.
says his net
worth is
$50
million to
$100 million
depending
on the day

Also, whats this depending on the day nonsense? I presume


thats a shameless effort to impress people who are really
ignorant about the world of finance. What he is saying is that his
net worth doubles or halves within 24 hours. He implies that
causes him not the least bit concern. Gimme a break! If my net
worth dropped in half in one day, I would be pretty upset about
it.
What must he be invested in to enable his net worth to double or
halve in 24 hours? Pork belly futures? No one in his right mind
would invest his entire net worth in an investment vehicle that
could double or halve in 24 hours.
In the 2/03 Smart Money magazine article, he said his net worth
was $35 million. Must have been a really bad day in pork belly
futures. Actually, his book-selling success notwithstanding, I
would guess his net worth is more like $3 million, virtually all of it
from book and related sales.

the
investments
of the
wealthy are
managed
well

Laymen think that. I dont. The main thing in managing an


investment is stock picking. That is impossible to do well on
purpose except for a few alpha money managers who are
excruciatingly hard to identify before the fact. Otherwise, its a
crap shoot. If anybody ever figured it out, he would not need to
workfor the wealthy or anyone else. There have been
numerous studies proving this, most notably the classic book, a
Random Walk Down Wall Street by Burton G. Malkiel. The
wealthy do get good advice on legal implications of their
portfolios, but not on how to earn a high return. The notion that
anyone gets good advice on how to earn a high return in
securities is a laymens myth. The truth is there are extremely
few money managers who can beat the market consistently over
the long run and who they are changes from time to time.
Essentially, only a few institutions have been lucky enough to
find them. Not, as Kiyosaki says, all the rich.

says he was
able to
retire at 47

So why didnt he? Hes still hustling his butt off to sell stuff.
This is primarily an income-tax-rate distinction as Kiyosaki
explains it. He says these types of income are taxed at 50%,
20%, and 0% respectively.
The phrases passive income and portfolio income do appear
in the Internal Revenue Code. I have used earned income to
describe money you make from your salary or business.

there are
three
different
types of
income:
earned,
portfolio,
and passive

In fact, Kiyosaki is spouting nonsense. The federal income tax


rates on earned income, passive income, and portfolio income
are the samenot 50%but your overall rate can get to that
level when you add state income taxes. The distinction between
the different types of income involves whether the losses from
one category can be deducted from income of another category.
The 20% tax rate of which Kiyosaki speaks only applies to longterm capital gains. Those come from selling assets at a profit
after holding them for a specified number of months. You can
have such 20%-tax-rate gains in both the passive and portfolio
categories.
The only income that is taxed at a 0% rate are special things like
municipal bonds and gains of less than $250,000 per spouse
from the sale of certain personal residences.
It is possible to do transactions where there is no tax due at
present, like IRC 1031 exchanges, but the tax-free nature of
such transactions stems from the fact that you received no
income. Rather you put the proceeds from the sale of one rental
property into the purchase of another rental property. If and
when you eventually take out your profit by selling your rental
property, you will be taxed on the gain that you had when you
exchanged. See my books Aggressive Tax Avoidance for Real
Estate Investors and How to Do a Delayed Exchange.

Most investors use more specific terminology like apartment


complex or office building or shopping center. Investors
usually use the phrase rental building to hide the fact that their
properties are mere rental houses.
You should not own rental property in three states unless you
have a specific reason for doing so. Why not own all ten rental
properties in Phoenix, where he lives? With Kiyosaki, I suspect
he thinks having property in three states makes him sound like

I own 10
rental
buildings in
Miami,
Austin, and
Phoenix.

more of a tycoon. To experienced investors, it makes him sound


like more of a dilettante. You want the property in the same
regionpreferably where you liveso you can use the same
people to work on all the properties and save on air fares, hotels,
and so forth. Actually, I believe I have the only books on
absentee management: How To Manage Residential Property
For Maximum Cash Flow and Resale Value and absentee
purchasing: Checklists for Buying Rental Houses and Apartment
Buildings.

One reader said investing in three different regions gives you


diversification benefits. Only against regional economic
downturns and possibly rent control if the buildings are bigger
than one family. But rent-control risk is better dealt with by
staying out of multifamily and states that do not have a rentcontrol preemption in state law. The risk of regional economic
downturns is not great enough to overcome the disadvantages
of spreading yourself that thin in terms of travel, personnel, need
to learn different laws and markets, etc.

Click here to go to Part 2