Robert Kiyosaki

Author of the best selling books Rich Dad Poor Dad, CASHFLOW Quadrant, Rich Dad's Guide to Investing, and Rich Kid, Smart Kid. In addition to his books, he is a sought-after speaker on the topic of financial literacy.

Kiyosaki grew up in Hawaii, where his father (his poor dad) was the head of the Department of Education. His best friend's dad (his rich dad), was a multi-million dollar business owner and investor. Kiyosaki's poor dad was well-educated on all topics, but not on financial literacy. On the other hand, Kiyosaki's rich dad was not educated beyond high school, but understood how to make money work for him. The main focus of Kiyosaki's books is on the mentoring he received from his rich dad.

Despite being a recent Businessweek best seller, Robert Kiyosaki is regarded by many to be a classic real estate scam artist.

Each and every one of his real estate books contains faulty and misguided advice. His latest real estate book, Rich Dad's "Prophecy" is based on speculation and unsound economic principles.

In the book, Kiyosaki predicts a huge stock market crash in 2016. He says this crash will be caused by the liquidation of 401(k)s at the federal mandated age of 70 1/2 at which time baby boomers must start removing money from their nest eggs. Although this idea raises some interesting concepts on market devaluation, the overall concept is lined with faulty logic, and the conclusion is absurd.

Firstly, the liquidation of 401(k) assets will be done slowly, on a per month basis, preventing a mass liquidation and panic.

Secondly, the number of baby boomers that Kiyosaki states in his novel is grossly overstated, possibly by a number as large as 40 million.

Third, most competent brokers encourage senior citizens to move their mutual fund assets into bonds years before the federally mandated age, as a safeguard to prevent sudden losses from riskier securities.

Lastly, if the stock market crash is worse than 1929 (as Kiyosaki has predicted), huge devaluation would occur in all sectors of the economy. This would include asset classes such as real estate and small businesses.

Nevertheless, Kiyosaki recommends that capital be invested in real estate as a "safeguard". He argues a traditional real estate "buy and hold" strategy, recommending that properties be acquired through various methods of leverage. He goes into little detail about these methods, but rather suggests that the reader invest in his expensive tapes.

Kiyosaki is selling his books on fear and ignorance. The popularity of his books is dangerous, because it discourages pursuing such fundamental asset producing qualities such as education and savings in favor of more dangerous measures. There is also a great deal of evidence that "Rich Dad" never existed, as was reported in an article by Smart Money Magazine (Feb 2003). Kiyosaki still affirms that Rich Dad is a real figure who served as a mentor for him when he was a starting businesman.

Those looking to Kiyosaki's books for pracical real estate knowledge will be sorely disappointed.

It's true! Kiyosaki has been pretty thoroughly debunked. And he is way into self-aggrandizing behavior. And he's definitely more interested in making himself rich than making you rich. All in all he seems like kind of a sleazeball.

But I owe him a debt of gratitude.

I was ready for his message. Or it wouldn't have worked. I was ready to leave the rat-race. I'm a wage slave just like most of you. I have two cars and a house on acreage. And a lot of my monthly income is sunk in credit debt. Life is good, right?

Wrong.

I knew I was just treading water. We were staying in the free and clear, we had all the toys and everything looked great. But if I or my wife lost our job things would turn very ugly, very fast. Our 401(k)s and our mutual funds and the kids' college account were doing well and we could fall back on those for many months, but it would suck. So I read Rich Dad Poor Dad. I'd read some other pop-financials but they didn't really click for me. Kiyosaki was overly simplistic and his writing is worse than mine. But it got me thinking.

And then came the work.

I didn't do what Kiyosaki said, but I did get to thinking. I too, decided that real estate is better/safer than securities instruments. For me this is largely because I understand property -- but securities are really complicated. But also because everyone will always need a place to live. So I did my year of research. I bought used books on real estate. I interviewed realtors. I took them to lunch just to talk. I read CREOnline.com for hours on end. I bought a few of the "courses" that the real-estate charlatans sell. My wife got really sick of hearing about it.

And then came...more work.

To make a long story short, I now own rental properties. It's not all peaches and cream. I've had to get a furnace fixed when I'd rather be sleeping. And I'm preparing to evict a tenant. But I've also put $10K into a house and sold it sixty days later for a profit of $15K (including holding costs) -- that's a pretty sweet cash on cash return. And it's not just the cash. I'm helping first time buyers while making money. I hope to quit employment forever in the next year or so. It's a lot of work managing my properties. And it's a hell of a lot of work doing that and working 40-50 hours for someone else. But I see the ladder out of the pool now. I get to stop treading water without going down.

The future doesn't scare me.

Even if Kiyosaki is right about the crash, I'm good. People will need a place to stay. Maybe they'll pay less in rent then. Maybe more of them will default. But my loans will be paid off and I'll get by. And if there is no crash, as yaar predicts? That's fine too! My houses are making more than your mutuals. You can't buy stocks with 10% down. (Well, not normally.)

Thank you Robert Kiyosaki. You suck. But for me, that's OK