Thursday, 21 June 2012

Book Review: Rich Dad Poor Dad by Robert Kiyosaki

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money - That the Poor and Middle Class Do Not! Rich Dad Poor Dad is a book by Robert Kiyosaki that attempts to teach the reader the strategies learned from his ‘rich dad’ on his journey to riches.  On the front cover of the book he makes a big promise – he promises to teach the reader “What the rich teach their kids about money – that the poor and middle class do not”.   For a book that had reached the number 1 position on the NY Times Bestseller list, I found that this book did not achieve what it set out to do and there were very few (if any) strategies or lessons that the reader could take away from reading the book.  I would rate this book 0.5 / 5.0.

Normally when I summarise a book at the start of my review I try and identify the overarching theme of the author and then bullet the supporting topics they use to discuss this.  I found this exceptionally hard to do with Rich Dad Poor Dad.  The general idea throughout the book seems to be that it’s not the readers’ fault that they are not rich – the government, employers and bad education system are all biased against them.

I started writing specific examples of what I thought this book did wrong but then I kept finding more so instead I have summarised the thing that I found most distasteful about this book.  Instead of dealing with facts, figures, strategies, studies and investment techniques (as any book on investing should), Kiyosaki preys on the readers inherent biases and misconceptions (that the government, employers and a lack of education is the reason they can’t get ahead).   While this rhetoric is certainly appealing it is not what a book about investing and personal finance should contain.
ü  The book seems to motivate some people to go out and get further education in order to improve their financial well being.   This seems rather strange given that most people would have bought this book for the very same reason
ü  Has basic tips like ‘spend less than you earn’ and ‘pay yourself first’ which are great ideas but certainly not ones that you would buy a book on
û  Does not do what it sets out to – this book does not teach an average person a single lesson that the rich would teach their children
û  Not a single investment strategy in the whole book.  While the book is full of anecdotes of how Kiyosaki purportedly has made
money for himself and others in the past he does not lay out a step by step guide as to how the reader can do it (unlike many other excellent personal investment books)
û  Significantly undervalues risk.  Kiyosaki acknowledges that a large percentage of businesses fail in the first 5 years of existence but then says that business is the most certain way to make money
û  Often contradictory – see above example (note there are many more in the book)
û  Some of his information is just plain wrong.  An example of this is when he talks about the tax benefits of owning your investments through a corporation.  In the US income flowing from a corporation to a shareholder (you) is double taxed – first corporate tax is paid on it and then the individual has to pay tax on it.  There are many reasons to own a corporation (e.g. limited liability) however tax is not one of them.
û  I could go on about the failings of this book however if you do a simple Google search you will find others have done a much more thorough job
·         Do not buy this book
·         Quite simply this book will not teach you anything that you do not already know or add value beyond what other books can teach you
·         There are too many inconsistencies, bad information and poor advice to make this a worthwhile read
·         If you are an experienced investor this book will not add to your stock of knowledge.  If you are a new investor and know nothing at all about investing please please please do not read this book as it will not teach you how to invest or what you should invest in.

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