Robert Kiyosaki: Increase your financial IQ

Robert Kiyosaki: Increase your financial IQ

The problem with the standard financial advice is that it's bad advice. You've been told to work hard, save money, get out of debt, live below your means, and invest in a well-diversified portfolio of mutual funds. But this advice is obsolete — so argues Robert Kiyosaki in his new book, Rich Dad's Increase Your Financial IQ.

Increase Your Financial IQ is the latest installment in Kiyosaki's tremendously popular “Rich Dad” series of books. These best-sellers have motivated many people (including me) to take control of their financial lives. But some (including me) have expressed concerns over the author's advice:

Kiyosaki loves to play the rogue, offering unconventional suggestions for building wealth. He's a vocal detractor of mutual funds, for example, and frequently seems to be pushing a new “hot” investment: real estate, oil, gold, silver. He likes to make provocative claims like “people should not live below their means”.

Yet if you dig a little deeper, it becomes clear that Kiyosaki is saying a lot of this just to get attention. It's a marketing ploy. He really does think it's important to spend less than you earn — he just thinks the best approach to a budget deficit is to raise your earning power instead of reducing spending. Armed with my own advice about how to read a personal finance book, I decided to give Increase Your Financial IQ a chance. I approached it with an open mind. Ultimately I read it three times. I'm still not sure what to think of it.

Financial Intelligence

“It is not real estate, stocks, mutual funds, businesses, or money that make a person rich,” Kiyosaki writes. “It is information, knowledge, wisdom, and know-how, a.k.a. financial intelligence, that makes one wealthy.” He notes that buying a new set of golf clubs won't improve your game, but paying for lessons will. It's his hope that Increase Your Financial IQ can help readers improve their money “game.”

Kiyosaki divides financial intelligence into five “Financial IQs”:

  1. Making more money. This is measured by how much money you earn. If you make $100,000 a year, you have a higher Financial IQ than someone earning $30,000 a year.
  2. Protecting your money. Once you earn your money, you need to hold onto it. Protecting your money, especially from taxes, is the second Financial IQ.
  3. Budgeting your money. “Being able to live well and still invest no matter how much you make requires a high level of financial intelligence,” Kiyosaki writes. This Financial IQ is measured by how much money you have left after expenses.
  4. Leveraging your money. This Financial IQ is measured by return on investment. How well do you make your budget surplus generate more money?
  5. Improving your financial information. Financial information doesn't just mean knowledge of basic financial concepts — it also means detailed knowledge of the investments you make.

Most of the book is devoted to exploring these five aspects of financial intelligence in detail.

Financial IQ #1: Making More Money

Many people fail to acquire wealth, Kiyosaki says, because they want the money without the work. “What many people do not realize,” he writes, “is that it's the process that makes them rich, not the money.” It's by learning to make money that you can continue to make money. For each person, the process will be different. We each have different goals, dreams, and ambitions. The important thing is to find the best way for you to make more money, and then to build your goals around this.

In order to make money, you must also learn to control your emotions. You must learn to defer gratification. Don't sacrifice your financial future for a few bucks today. Don't give up. The going can seem tough at times, but if you're confident in your course, you can learn to solve the problems. Keep your eyes on your goal and find a way to reach it.

According to Kiyosaki, the key to making money is learning to solve problems. “In order to grow wealthy,” he writes, “you must come to terms with the fact that problems will never go away.” Identify the problems preventing you from wealth, tackle them head-on, and the money will follow.

Financial IQ #2: Protecting Your Money

Once you've begun to make money, you need to protect it from “financial predators”. Kiyosaki says there are seven of them to beware:

  1. Bureaucrats — Kiyosaki acknowledges the need to pay taxes, but he argues that it's his job to (legally) pay as little as possible.
  2. Bankers — Banks are constantly trying to siphon bits of your money in the form of fees. It's important to watch out for and protect against this.
  3. Brokers — Similarly, fees from brokers can chip away at your wealth. He cites brokers who “churn” accounts, buying and selling stocks frequently in order to generate more commissions. (We had this happen to us once with the box factory's retirement account.)
  4. Businesses — “All businesses have something to sell,” Kiyosaki writes. Their job is to part you from your money; yours is to keep it. Kiyosaki suggests asking yourself whether any particular purchase will make you richer or poorer.
  5. Brides and beaus — Money plays an key role in any relationship. You must trust your partner, must reach an understanding about finances.
  6. Brothers-in-law — Here, Kiyosaki's “B” theme is stretched to its limit. His point is that in order to protect your estate from family members you don't intend to share it with, you need to plan for your death.
  7. Barristers — Finally, it's important to protect yourself from legal difficulties.

Though Kiyosaki lists seven possible pitfalls, he offers little practical advice for coping with them. How does one go about paying as little tax as possible? What is the best way to approach estate planning?

Financial IQ #3: Budgeting Your Money

There are two ways to solve a budget crunch: decrease your spending or increase your income. Either will erase a budget deficit, but Kiyosaki believes (as I do) that in the long run, increasing income is a better solution.

Kiyosaki explains that it's important to think of a budget surplus a fixed expense. If you decide to save 10% of your income, then make this ten percent a fixed item in your budget. Treat it just as you would any other bill. Pay yourself first. “You can tell a person's future by looking at what they spend their time and money on,” writes Kiyosaki (channeling the voice of Rich Dad). “Time and money are very important assets. Spend them wisely.”

Kiyosaki notes that when things get rough, people tend to cut back rather than spend. But if they'd simply prioritize spending, they could actually improve the situation. Spend less on beer and pretzels, sure, but spend more on continued education and self-promotion.

Refuse to live below your means, Kiyosaki writes. Instead, increase your means.

Financial IQ #4: Leveraging Your Money

This is the longest and most frustrating chapter of the entire book. It represents the core of Kiyosaki's financial philosophy, yet it's not presented in a way that makes it relevant to average people like you and me.

Leverage — borrowing money to increase the power of your own cash — is good, Kiyosaki says, if you have the financial intelligence to control the investment. But if you're not in control of the investment, then leverage is risky. “Most of the people being hurt by the real estate meltdown are people who were counting on the real estate market to keep going up and increasing their home's value,” he writes. They borrowed against their home's inflated value, but had no control over whether the housing market rose or fell. This is a lack of financial intelligence.

Instead, Kiyosaki argues, one should use leverage to make low-risk investments, investments in which you, as the investor, have control. This sounds great, but he doesn't provide any relevant examples. He discusses his recent purchase of a 300-unit, $17 million apartment complex in Tulsa, Oklahoma. “[This] is a good investment to use leverage with because I have control over the operations, and the operations…determine the value of the investment.”

But what if I don't have $17 million? What if I only have $17,000? Or $1,700? How does the average person make leverage work for her? (This is one of the interview questions I submitted to Kiyosaki — I still haven't received a reply.)

Financial IQ #5: Improving Your Financial Information

Warren Buffett is the most successful investor of all time, yet he never takes a gamble. Buffett (and his partner, Charlie Munger) conduct extensive research for every decision they make. Before they buy a company, they want to know everything about it. Obtaining this information allows them to invest with confidence.

By contrast, I've made some really dumb investments. I've purchased stocks on the hope that they would increase. These sorts of decisions are not based on information — they're based on emotion.

In order to improve your financial information, it's important to:

  • Separate fact from opinion. Many gurus are happy to offer their opinions — “gold is going up!” — but it's foolish to make financial decisions based on these. Base your decisions on facts.
  • Verify information. Don't trust just one source of information, but seek confirmation from other parties.
  • Know the rules. If you don't understand how an investment works, don't make it. “Rules provide a valuable source of information about how the game of money is played,” Kiyosaki writes.
  • Understand trends. Trends are historical facts. Smart investors can use trends to make informed decisions. However, it's important to note that trends do not project to future facts — only to opinions about possible futures. Still, trends are valuable sources of financial information.

“Ultimately,” Kiyosaki writes, “it is not the asset that makes you rich. Information makes you rich.”

Developing Your Financial Genius
Though an overview of the five Financial IQs forms the bulk of this 200 page book, it's actually the last fifty pages that hold the most value. It is in these three chapters that Kiyosaki discusses “the integrity of money” and explains how to develop your financial genius.

He offers interesting recommendations, such as the importance of producing personal financial statements. He writes about bringing your financial actions in line with your beliefs. He writes about the psychology of money, giving special attention to fear of failure. He writes about the power of financial environments. If you want to become richer and more successful, he says, it becomes critical that you find an environment that allows you to grow and develop.

Financial Integrity

I like the idea of Rich Dad's Increase Your Financial IQ. The book fills a niche about which little has been written. It's motivational. I love Kiyosaki's Big Ideas. They're a breath of fresh air, offering a perspective often missing in personal finance discussion. I also like that his writing always motivates me to action, pushing me to pursue my goals.

However — and this is a big however — I'm often frustrated by the specifics in his books. Increase Your Financial IQ is no exception. It's not just that I disagree with him; I actually believe he's wrong. Let's look at an example.

Kiyosaki does not believe in diversification. He spends a lot of time criticizing financial experts who recommend a well-diversified portfolio of mutual funds. “The problem with that advice is most advisors don't know if it will work over time,” he writes. “I want to ask the expert, ‘Will you guarantee that this financial strategy will work?'”

But then Kiyosaki admits that he cannot guarantee his own strategies. I'm puzzled. Why condemn the conventional wisdom for a weakness you admit your own methods possess? At least proponents of index funds have a long history of facts and trends to support their assertions. Isn't this one of the very components of financial intelligence this book purportedly praises?

Related >> Are Index Funds the Best Investment?

It's stuff like this that prevents me from recommending Kiyosaki's books without reservation. Diversification isn't a hoax. It isn't a scam. Other than Kiyosaki, it's embraced by almost every financial author I've ever read. Diversification is a central tenet of modern portfolio theory. It's backed by facts, not opinions.

Related >> An Introduction to Diversification

“The richest investor in the world, Warren Buffett, does not diversify,” Kiyosaki says. His implication is that you should not diversify either, but that's completely counter to what Buffett believes. Buffett does not diversify because he's a professional. His life work is investing. For 99% of all investors, Buffett recommends diversified index funds. (“Maybe more than 99%,” Buffet has said.) It's disingenuous of Kiyosaki to pretend otherwise.

There are other problems of the same nature in Kiyosaki's books. That doesn't mean they don't have value. They do. Many people (and I'm one of them) have found the Rich Dad series a powerful motivator. I just think it's important to read these books — and all personal finance books, for that matter — with an active filter, questioning what you read, picking the parts that apply to your life and discarding the rest. To me, that's real financial intelligence.

You can read other reviews of Increase Your Financial IQ at these sites:

  • Blueprint for Financial Prosperity (Jim likes it because it deals with high-level concepts.)
  • Zen Personal Finance (Justin likes the core of the book, though he feels it's recycled material.)
  • Million Dollar Journey (MDJ, too, thinks there's both good and bad here)
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Million Dollar Journey
Million Dollar Journey
12 years ago

Don’t forget me! I’ve also written a review on the book, and I too had mixed feelings. Kiyosaki is good at making one think like some of the wealthy, but he never explains “how” to do it.

Cap
Cap
12 years ago

Great review. The fact that it’s yet another Kiyosaki book almost made me dismissed it w/o a second thought, but the non-outright negative reviews from Jim and you made me think I should at least borrow it from the library to give it a go-over… from reading the reviews, it doesn’t seem like this particular book is Rich Dad, Poor Dad IV — I suppose that can be another reason to give the book a shot.

plonkee
plonkee
12 years ago

After traipsing through Rich Dad, Poor Dad, I’m not planning on reading any more Kiyosaki books for a long time. I think they’re dangerous for people that don’t know what they’re doing and buy into them too much, and I find the lack of detail frustrating.

I’m pretty sure I’ve got everything I need about the book from the summary you’ve given. Thanks.

Patrick
Patrick
12 years ago

I think you said it best, JD. People should read this book, and all other financial books, with an active filter, applying relevant sections to your situation and discarding the rest.

There are some good high level ideas, but also many contradictions and half truths. If Kiyosaki does one thing well, it is stir up controversy… just enough to sell a few more books and book more speaking engagements. 😉

Thanks for the mention. 🙂

Anne Keckler
Anne Keckler
12 years ago

“It is information, knowledge, wisdom, and know-how, a.k.a. financial intelligence, that makes one wealthy.”

In other words, he wants you to pay for the seminars he promotes! And buy more of his books, hoping that he’ll eventually give you some actual information on how to become wealthy, rather than just platitudes.

“The richest investor in the world, Warren Buffett, does not diversify,” Kiyosaki says.

Wait a minute. I’m not a financial genius or anything, but doesn’t Berkshire Hathaway invest in many different companies?

AJC @ 7million7years
AJC @ 7million7years
12 years ago

“The problem with the standard financial advice is that it’s bad advice. You’ve been told to work hard, save money, get out of debt, live below your means, and invest in a well-diversified portfolio of mutual funds.”

… I am not at all a RK “Groupie” but, I happen to live like this and write about this on my own blog; in my experience, it’s actually true!

B Smith @ Wealth and Wisdom
B Smith @ Wealth and Wisdom
12 years ago

JD-Great review. I haven’t read this book, but have read several by Kiyosaki. Personaly, I don’t plan on reading another.

I usually find them frustrating because he says so little. Some of the big ideas are great and inspiring. The challenge is that he provides no details to support them. And he also says things that are so off base. Some show his lack of real understanding. Some are just downright dangerous to the average investor.

Nathalie
Nathalie
8 years ago

B. Smith, I would suggest you keep reading RK’s books. See, this is what you have to understand. When people buy the “Rich Dad, Poor Dad” books, they think they’re going to get a step by step guide to become rich now. And that’s not what this does. RK is not going to tell much of how you can make money, because you can make money in many different ways. You can invest, you can open your own business, you can do whatever you want. People who think this book is going to provide something safe and guaranteed might as… Read more »

Darmesh
Darmesh
6 years ago
Reply to  Nathalie

Good Insight on Robert Kiyosaki and what he does. He does not tell others’ which business is going to succeed he tells smart ideas’ with wisdom will succeed. I’m currently reading Rich Dad Poor Dad it keeps me reading, registering in richdadnetwork, playing cash flow game, reading websites’ that informs about money(reuters.com). After reading Rich Dad Poor Dad I’m also planning to read Incorporate and Grow Rich by Robert Kiyosaki and Increase your financial IQ and other book of him. Definitely Robert Kiyosaki Rich Dad Poor Dad will make anyone rich if they follow what Robert Kiyosaki says. Definitely reading… Read more »

Wilson Reuben
Wilson Reuben
6 years ago
Reply to  Nathalie

Thank you once again for your insight into RK books… you see, many people out their are missing the point. He (RK) cannot direct you on what to do: but rather he gives insight into the business world and he also teaches you how to think and act like an investors. To me, this is a road map to success; their different investment one can do due to our personalities…and opportunities abound around us, all we need to do is to open our mind to ideas. this one require to success as an enterprenuer. what R.K. is trying to achieve… Read more »

The Financial Philosopher
The Financial Philosopher
12 years ago

Notice that all five of Kiyosaki’s “Financial IQ’s” contain the words, “money” or “financial.” He pretends to challenge conventional wisdom but he absolutely promotes it, albeit in a different way, and uses it as leverage to sell books. Conventional wisdom is that money brings happiness and Kiyosaki’s advice is rooted in this misleading idea. Financial success or any kind of success has nothing to do with money — it has to do with the degree to which an individual finds meaning and purpose in their life. “I do nothing but go about persuading you all, old and young alike, not… Read more »

Curt
Curt
12 years ago

I think you are misinterpreting Roberts’s advice. He can say Warren Buffett does not diversify, because Warren only invests in what he has created a system for finding good investments with. Nobody else has the system the Warren has developed. It only works for Warren and Warren never invests in something that is outside of this system which is based on his market knowledge. By this definition, Robert also does not diversify. He only invests in what he understands and he only uses his proven system. That’s why he says, everyone needs to find their own system and once you… Read more »

Trisha
Trisha
12 years ago

I believe that RK is light on the details because he doesn’t want to put his nest egg at risk. If he gave you specific how-to’s, then you went out and did them and lost a bunch of money, then came back to sue him–he could very well lose that case! Actually, it’d be more like a class action. As much as I wish he’d “put his money where his mouth is” and give actual advice rather than platitudes, I suspect he doesn’t have the integrity or know-how to do so. I don’t read Rich Dad books anymore–not even for… Read more »

Kenney
Kenney
12 years ago

“This is measured by how much money you earn. If you make $100,000 a year, you have a higher Financial IQ than someone earning $30,000 a year.” I think this is one of the most counter productive, and ignorant things I’ve read in regards to finance and managing your money. Sure, his financial IQ is an arbitrary term, and thus can have an arbitrary definition, but I think a better way to look at ones financial IQ is to look at what people do with the money they earn, not how much money they have. I am absolutely sure there… Read more »

Phill
Phill
7 years ago
Reply to  Kenney

I believe that it may be true that some guys with 35k a year have more theoretical knowledge than the guy with 85K but come on look at the numbers, if you cant pull it off into action than that knowledge is useless… would you recommend advice from a guy who is highly educated that makes only 100k a year or the guy that build his own company that makes 1,000K a year? Its a numbers game.

MonkeyMonk
MonkeyMonk
12 years ago

I kind of agree with plonkee on the issue of RK. He’s always gives a few basic good ideas but they’re often surround by self-promotion, boasting, and misleading information. He promises great financial wealth but always leaves things just vague enough to entice readers to either buy more books or attend his seminars. He’s about the closest thing this industry has to a snake oil salesman.

Sure, anyone can glean some good ideas from these books, but why would you bother when there are such better books out there.

Greg C.
Greg C.
12 years ago

I have long felt much the same about Kiyosaki. I think the premise ( and reevaluating how we approach money) can be motivational, but that’s about it. I have spent time at blogs and forums devoted to “Rich Dad” and much like happens with other “gurus” the fans come to resemble a cult around the personality of the guru. Everyone uses the code language and anything said/written by the leader is gospel. This goes for the extreme frugality gurus and well as the “money making” ones. With RK you end-up with a bunch of Casey Serins. People who think work… Read more »

Phil A.
Phil A.
12 years ago

I can’t take any finance author seriously who doesn’t believe in diversification. Diversification is absolutely essential.

sally
sally
12 years ago

I have no familiarity with this guy’s schtick, so I appreciated this review.

The idea that the average person should do what Warren Buffett does strikes me as dangerously irresponsible advice. It’s like me saying that because the world’s greatest aeronautical engineer is able to build himself an amazing and superior experimental plane and pilot himself across the country that the rest of you should do the same.

Phil A.
Phil A.
12 years ago

Kiyosaki’s comment regarding a person earning 100K a year automatically having more Financial IQ than a person earning 30K a year is completely moronic. The person earning 30K could actually have a higher net worth because he/she was responsible with money and followed the fundamentals of finance. The person earning 100K may have 50K in credit card debt or lost a great deal of money in an investment portfolio by not diversifying.

Steven Fisher
Steven Fisher
12 years ago

I would have thought it was obvious that diversification is a crutch for a lack of specific knowledge. That doesn’t mean you shouldn’t diversify, it only means you shouldn’t feel you have to if you have the specific knowledge you need. And that’s what I thought he was saying.

Me? I don’t know what I’m doing yet, so I do diversification.

Anne
Anne
12 years ago

Also, the person earning $30k/year might be loving life, while the person working his butt off to earn six figures is hating it. I would far rather live below my means and earn less if it meant I could enjoy working days, rather than working constantly just to amass a fortune. What is the point of having money if not to enjoy it?

Rick
Rick
12 years ago

Phil, Earning money is just part of the financial IQ that RK presents. Protecting it and budgeting it are other parts. So if the person earning 100K has 50K in debt, then this is a significant negative on his financial IQ. Thus, RK’s point still stands. Financial IQ is the big picture of things, and one’s ability to make money is certainly a part in improving this big picture. Now, where you can disagree is that money isn’t everything. The person earning 100K may not be happy with his job, whereas the person earning 30K is doing social work, making… Read more »

Rick
Rick
12 years ago

Also, I *mostly* agree with RK on diversification. If all you do is invest in the average market, the most you can expect is average returns. Now, for many, this may be perfectly acceptable. But for some, they may want higher returns which simply cannot be achieved by being “average”. Certainly, being non-diversified takes more work and knowledge (remember, one of RK’s aspects of financial IQ is knowledge). But if one is willing to do this work and learn this knowledge, he can certainly beat the market. For instance, in RK’s line of work, consider someone who invested in real… Read more »

Mike
Mike
12 years ago

I thought Warren Buffett DOES, in fact, diversify. From links on this site to interviews with him, it says he owns stock in Coca-Cola, Gillette, owns some furnature companies, and recently purchased alot of stock of Wrigley (or Cadbury? I can’t remember.), etc.

To me, if he wasn’t diversified, he would only own stock in one company.

Anne
Anne
12 years ago

@Steven Fisher: “I would have thought it was obvious that diversification is a crutch for a lack of specific knowledge. That doesn’t mean you shouldn’t diversify, it only means you shouldn’t feel you have to if you have the specific knowledge you need. And that’s what I thought he was saying.”

To me, the point of diversification is to invest in asset classes with low correlation. This reduces the overall volatility of your portfolio.

Phil A.
Phil A.
12 years ago

You can have all the knowledge in the world about a particular investment but that investment could still fail. That is why diversification is absolutely essential.

MonkeyMonk
MonkeyMonk
12 years ago

Diversity does reduce volatility and, IMO, that’s always a good thing to reduce in your long term investments.

I don’t remember where I saw it, but I once saw a chart that compared the volatility of two funds and over time a fund that has alternating annually returns of +10% and -10% handily beat a fund that has alternating annually returns of +30% and -30%.

42
42
12 years ago

Kiyosaki’s biggest success is writing books full of vague feel-good tripe that doesn’t really say much.

Making more money is a blindingly obvious goal but not if it means you’re going to spend more which happens to far too many people (it happened to me too). Instead of chasing a higher salary and all the nonsense that that entails (longer hours, kissing butts, expensive extra degrees etc) learn to be happy with what you have and live within that.

oh and easy leverage is what got us into the current housing disaster.

Teresa A
Teresa A
12 years ago

First, I’d like to thank you for continually bringing new thoughts to the table. Just reading your daily posts keeps me motivated and on track. More importantly, it gives me fresh perspectives and keeps my own pursuit of wealth and happiness from “going stale”. A key point of failure for me is boredom. I think Kiyosaki’s main point is that it may not be what you have that counts so much (like information), but rather, it is having the knowledge and wisdom to know how to use the resources available to you.

Rick Francis
Rick Francis
12 years ago

The only person who shouldn’t diversify is one that can accurately predict the future. Otherwise you are taking on a lot more risk. Companies can and do fail- I’ve bought stock in some! However, barring a cataclysmic event I can’t see all 500 of the S&P 500 going under. Buying in multiple sectors also prevents you from doing stupid things like putting all your money in real estate in 2007, or .COM stocks in 1999 or the bubble du jour as it is the hot investment. The down side to diversification is that you can’t make the stellar returns you… Read more »

Joe @ SimpleDebtFreeFinance
Joe @ SimpleDebtFreeFinance
12 years ago

I’ve read three of his books and thought his cash flow quadrant was a worth while read, but I’ve come to the conclusion that Robert Kiyosaki is only into making money off his books and speaking engagements. He’s following the hot trends because that’s what sells. That’s not advice, that’s just marketing and sales designed to separate people from their hard-earned cash or worse – take their money AND send them down the road to big losses!

Kristi Wachter
Kristi Wachter
12 years ago

“He discusses his recent purchase of a 300-unit, $17 million apartment complex in Tulsa, Oklahoma. ‘[This] is a good investment to use leverage with because I have control over the operations, and the operations … determine the value of the investment.'” This is a terrible example. (Or, actually, a good example of his poor advice.) He’s wrong about what “determines” the value of the investment. The value of that investment, when for sale, is determined by perceived value of that property in that location. What if he borrowed $17 million to buy the property, then needed to sell it two… Read more »

J.D.
J.D.
12 years ago

Kristi wrote: Kiyosaki’s books are an excellent lesson in opportunity cost. Sure, there’s SOME value in them, somewhere, if you really dig. But waste ten hours digging for something useful from one of his books, when I could be reading Bogle or David Allen or Socrates? No thanks. My time is worth more than that.

And that’s where your friendly neighborhood blogger comes to the rescue. I read (and summarize) the books so you don’t have to! 🙂

Saravanan
Saravanan
12 years ago

I always felt after reading any Kiyosaki book that “He knows how to make a product sell and he does it”. I do agree that some of his books are good but it never tells you how to become rich or sustain rich or what path to follow to become rich. He preaches to buy Stocks but he prefers investing in Mutual Funds. I just feel that this new book in this series is just another product from him to make sure he takes away some of “OUR MONEY” to his bank account. I have not yet read this book… Read more »

Matt
Matt
12 years ago

I think that most Kiyosaki books and advice have their merit and I agree that when it comes to any form of financial advice you have to use your own inteligence and question everything. From your review I’m curious to see what the book has to offer and the fact that he says knowledge is one of the most important aspects to your financial literacy is encouraging. Personally I’ve liked RK because he was one of my initial inspirations in this field because he made me think. If this book does the same then it will be worth the read.… Read more »

Kristi Wachter
Kristi Wachter
12 years ago

“I read (and summarize) the books so you don’t have to!”

Heh! And don’t think I don’t appreciate it!

Appreciatively,

Kristi

Justin McHenry
Justin McHenry
12 years ago

Hey J.D., Thanks for pointing out my review of this book. One of the interesting things Kiyosaki says in the book is that when he needs more money, he writes a book, because it gives him ongoing royalties (which means he’s not trading hours for dollars, but getting an ongoing stream of income). The sort of sad thing about this admission is that his book reads as if was written to get a new stream of income started. It’s really all over the place in terms of structure and which ideas fit into which chapters. Doesn’t seem to have had… Read more »

Liz
Liz
12 years ago

Thank you for saving me the time J.D.

Vake
Vake
12 years ago

I read Rich Dad, Poor Dad and found it mostly vague, and generally wrong. It’s not just Kiyosaki’s anti-diversification views that are dangerous- it’s his stance against higher education, his belief that it’s better know “a little bit about a lot of subjects” than in-depth understanding of any one area, etc. For anyone who believes in Kiyosaki, the following website busts the myth about this man:

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

Eden
Eden
12 years ago

“Many people (and I’m one of them) have found the Rich Dad series a powerful motivator.”

I’ve been back and forth on Kiyosaki many times. Ultimately, I don’t really trust him, yet I have found value in some of his books.

I think the above quote is what it all comes down to with this guy. He sells you a little bit of inspiration and motivation , which isn’t a bad thing, but there is no ‘meat’ behind it.

shaun
shaun
12 years ago

I always liked Robert Kiyosaki’s books. I don’t believe 100% that financial IQ is determined just on how moch money you make. It should also be how you make it.

If 2 men both make $100,000 a year then according to that they would both have the same financial IQ. But if one man works 50 hours a week for it while another spends 2 hours a week to do that through a bussiness or investment they do not have the same financial IQ.

JerichoHill
JerichoHill
12 years ago

A few points to the Kiyosaki enthusiasts. Diversification reduces risk, which ultimately increases returns. There is no system developed by any mathemetician or anyone that perfectly predicts the market. There is no mutual fund with a 20 year track record of beating the market year end and year out. Investing in commodoties now when interest rates have hit their floor would be not very smart. Commodity prices have an inverse relationship to interest rates. Once rates start to rise, commodities will get cheaper. Kiyosaki believes in leverage and doesnt teach his students, who are average folks, the pitfalls. I can… Read more »

Aleks
Aleks
12 years ago

I always try to look at how someone makes their money before accepting advice at face value. Who was it that said “A financial advisor is someone who takes the bus to work and tells people who show up in Rolls Royces how to invest”, maybe Kiyosaki himself? Therefor, Warren Buffett’s advice on investing is worth a heck of a lot. He actually got rich by investing. He says that 99% of people should diversify as much as possible, and that you should concentrate on learning about what earns you the majority of your income, which for most people is… Read more »

b-bo
b-bo
12 years ago

hasn’t work proving that diversification reduces risk won a nobel prize?

This guy is a mastermind of some monster pyramid scheme isn’t he?…no thanks

Walter
Walter
12 years ago

I have never read the guy, but he sounds like a charlatan and a snake oil salesman. IMHO, if a guy has a lot of books out about finance or any other subject, he didn’t do a good job presenting his information in the first book. At best it’s just rehashing the same topic with a slightly different spin on it. While I am a big proponent of commodities, especially precious metals, I really haven’t heard too many financial industry advocates of commodities totally disregard the effectiveness of having mutual funds in one’s portfolio. They are all a part of… Read more »

Dave
Dave
12 years ago

JD, thanks for the summary! I too have never lifted a RK book, but have heard much about them. I don’t think I will be convinced to part with my hard earned money to “learn” from a guy who makes his money selling his books, and not from his own investments… Financial IQ is all good, but what about LIFE IQ? Being wealthy is ok, but wealth in Health, Family, and Life are equally, if not more important than just Financial IQ (Trust me on this one, I’m a high six figure income earner…and money is NOT the most important… Read more »

Chris
Chris
12 years ago

Great article. I have been reading your RSS feed for some weeks now, but this article made me want to come on here and thank you.

Narinda
Narinda
12 years ago

I love these book summaries. Thank you so much.

On personal financial statements: I completely agree that these are very helpful. For the past few months, I’ve taken a snapshot of my financial situation on the 5th of each month, listing my checking, savings, and debt balances in an Excel spreadsheet. I created a formula that shows the percentage change of my debt-to-assets ratio from month to month. Slowly, as my spending and saving habits improve, I’ve seen the positive percentage change grow– it does wonders for my sense of where I’m going and the progress I’m making.

AJC @ 7million7years
AJC @ 7million7years
12 years ago

RK says plenty that is worth listening to … he’s the first person that I recall reading that taught me the difference b/w an Asset and a Liability (if you don’t know, buy Rich Dad, Poor Dad) .. if that’s not worth $24 what is???

Now, the fact that his Net Worth was approx. $1 Mill. before he wrote the book and $26 Mill. after … well, good luck to him. 🙂

Meg
Meg
12 years ago

I appreciate RK’s opinions, and this book sounds like it has a little more substance than a few of his others (though it seems like every one of his books could be easily summarized in about one tenth of the space). I do think his advice is dangerous for many because – let’s face it – America is largely made up of those with ZERO Financial IQ and no desire/ability to increase it. Which is why, as Buffet understands, most of us are best off with diversified index funds. FirstI agree with his thoughts about diversification, though. The vast majority… Read more »

Paul
Paul
12 years ago

I think Robert Kiyosaki’s RICH DAD,POOR DAD book can be a great motivator for someone that has absolutely no previous financial experience other than debt. HOWEVER, it should be used as a steping stone, not a map! When I turned 17, I good friend that lived the “Rich Dad” lifestyle gave me RDPD as a gift and that is perhaps the single greatest book that opened my eyes to living a life without debt. My parents are the embodiment of the “Poor Dad” lifestyle, and had I not read this book, I most likely would be in debt up to… Read more »

Writer's Coin
Writer's Coin
12 years ago

Kiyosaki’s bright side is that he gets people talking about this stuff. His advice is pretty out there and not for most folks but he’s a firestarter, and sometimes that’s the only way people pay attention, so there’s something to be said about that.

Does he annoy the hell out of me? Hell yeah he does. I wish I could sell millions of books filled with my soapbox rantings.

Curt
Curt
12 years ago

@Meg – I’m glad to see someone who understands Roberts reasoning behind his ideas.

After further reading this post, I have decided to post a rebuttal in defense of Robert on my blog.

http://www.pennyjobs.com//pp/public/Articles.aspx?aid=76

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