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Rich Dad Poor Dad is a best-selling book on personal finance by Robert Kiyosaki that advocates investing in distressed real estate with a positive cash flow, as well as entrepreneurship and education in financial matters, especially small stock returns. The book contrasts his real father, who was a highly educated school teacher on a salary but “poor,” and a “rich” dad who was allegedly a friend’s father who went on to become one of the richest men in Hawai’i, where Kiyosaki grew up.
Kiyosaki has, virtually single-handedly, challenged and changed the way tens of millions of people around the world think about money. In communicating his point of view on why “old” advice—get a good job, save money, get out of debt, invest for the long term, and diversify—is “bad” (both obsolete and flawed) advice, Kiyosaki has earned a reputation for straight talk, irreverence, and courage.
Rich Dad Poor Dad was initially self-published in 1997 and was an international best seller that has held a top spot on The New York Times bestsellers list for more than 6 years. This book ranks as the longest-running best seller on all four lists that report to Publisher’s Weekly—The New York Times, Business Week, The Wall Street Journal, and USA Today—and was named USA Today’s “#1 Money Book” 2 years in a row. It is the third longest-running “how-to” best seller of all time. Translated into 51 languages and available in 109 countries, the Rich Dad series has sold more than 27 million copies worldwide and has dominated the best-sellers lists across Asia, Australia, South America, Mexico, and Europe. In 2005, Kiyosaki was inducted into the Amazon.com Hall of Fame as one of that book seller’s Top 25 Authors. There are currently 26 books in the Rich Dad series.
In 2006, Kiyosaki teamed with Donald Trump to coauthor Why We Want You to Be Rich: Two Men—One Message. It debuted as Number 1 on The New York Times’ best-seller list. Kiyosaki writes a biweekly column—“Why the Rich Are Getting Richer”—for Yahoo! Finance and a monthly column titled “Rich Returns” for Entrepreneur magazine. Prior to writing Rich Dad Poor Dad, Kiyosaki created the educational board game CASHFLOW 101 to teach individuals the financial and investment strategies that his rich dad spent years teaching him. Today, there are more than 2,100 CASHFLOW Clubs—game groups independent of the Rich Dad Company—in cities throughout the world.
Kiyosaki’s elevation to financial “guru” prompted criticisms by the established financial press, such as The Wall Street Journal and The New York Times. Some criticize Kiyosaki for his underestimation of the risk to personal wealth caused by starting a new company as opposed to working as an employee for an established company. Although The Wall Street Journal does not mention it explicitly, other sources report that Kiyosaki got his start as a representative of Amway, which enables people with little personal capital to start selling Amway products door to door. But this conception of being able to start without risking personal capital is unrealistic and potentially dangerous. In a later book with Donald Trump, he admits that 95 percent of new companies go bankrupt, but Kiyosaki argues that this risk can be overcome by financial education, which he advocates.
Furthermore, Kiyosaki advocates the superiority of investing in real estate to investing in mutual funds. He attributes this aversion to John Bogle, the founder of the low-cost mutual fund company Vanguard, who pointed out that in a traditional mutual fund company with annual expenses of 2 percent and an annual return of 8 percent, then with compound growth, then a person’s return after 65 years on an initial investment of $1,000 would be $32,465, as opposed to $148,780, or 70 percent less because of the expenses. Kiyosaki ignores the possibility that investors could avoid these costs by investing with Vanguard or through exchange-traded funds, which are low-cost investments in stock indices that follow the philosophy of Vanguard. Furthermore, mutual funds are much more liquid than is real estate, and real estate requires much more time to manage.
Still controversial are Kiyosaki’s attitudes toward the risk of becoming an entrepreneur. The ability of venture capital firms to earn a return of about 14 percent in high-tech companies in Silicon Valley seems to indicate that the risks of entrepreneurship can, as Kiyosaki suggested, be approached better with greater knowledge.
In January 2013, Kiyosaki filed bankruptcy for one of his companies, Rich Global LLC, which had a $24 million verdict handed down against it because the company Learning Annex had promoted lectures and seminars by Kiyosaki that allegedly increased sales of products related to Rich Dad Poor Dad by a claimed $438 million. But the court found that Rich Global LLC did not pay $24 million in royalties to Learning Annex. Kiyosaki, whose personal net worth is estimated to be $80 million, said that he would not pay the judgment from his personal wealth.
- Kiyosaki, Robert Rich Dad Poor Dad: What the Rich Teach Their Kids About Money—That the Poor and Middle Class Do Not! New York: Warner Books, 2001.
- Ouchi, William G. Theory Z: How American Business Can Meet the Japanese Challenge. Reading, MA: Addison-Wesley, 1981.
- Schiller, Robert Irrational Exuberance, 2nd ed., rev. and expanded. New York: Broadway Books, 2005.
- Trump, Donald and Robert Kiyosaki. Why We Want You to Be Rich: Two Men—One Message. Scottsdale, AZ: Rich Publishing, 2006.