Financial education driven by fear and ego doesn’t make us richer. Here’s an alternative.
The Rich Dad Poor Dad book is seen as the bible of personal finance.
I used to agree. Not anymore. The book is often quoted on social media. People bow down to the author Robert Kiyosaki. But the advice the book teaches doesn’t make most of us financially smarter. Or even wealthier so we can work less if we choose.
The Biggest Problem with Rich Dad Poor Dad
It’s Robert. There was a time where he used to be a teacher. He would roll out the portable flipchart and give amazing lessons in finance. He is one of the original people to point out the faults of government-issued currency, and to teach us how currency (like the US dollar) is created out of thin air. For that, I am grateful to Robert.
But things have changed. Fame has changed Robert. He’s now got an enormous ego.
I binge watch finance content because I’m still a banker at heart. I watched a video recently of him being interviewed. Robert sounded like a doomsdayer. He was literally telling people to invest money in guns. He told stories of going to restaurants with bags of bullets for sale. This is not a person we should still be getting investment advice from.
Robert continually uses the phrase “escape plan” like we’re living in a zombie apocalypse. It doesn’t stop there. During the pandemic he spread a lot of misinformation about viruses, vaccines and lockdowns. (I’m not linking to any of it because I don’t want to spread the lies further — you can google them.)
Robert is considered a finance expert. Mainstream news channels often ask him what advice he’d give investors. “I don’t give advice” he says. Then he spends the rest of the interview talking down to the audience and telling them they are stupid.
A 5000-year-old obsession gets old
My other gripe is Robert’s obsession with gold. It’s good to have a little gold in your investment portfolio, sure. 5% is the figure often quoted by experts as a hedge against 2008 style recessions. But Robert is aggressive with gold.
He worships gold and acts like it’s the answer to recessions and disasters in financial markets. Yet in the 2020 March Recession, gold didn’t do its job. It didn’t protect investors like Robert said it would.
It’s not just Robert either. Robert is part of a group of financial experts who bombard finance media outlets with advice to buy gold and warn of looming crashes. There’s Mike Maloney, Harry Dent, Peter Schiff, and James Rickards. They spread doomsday content. They make a living predicting the collapse of America. Some well-known writers do the same. I don’t buy it.
They’re constantly telling people the US dollar is finished and we’re heading for a huge crash. They sell books telling the same narrative and then offer gold as the solution to all our problems. Conveniently, many of them own companies that sell gold.
Gold has many flaws they ignore. More gold can be found (like oil). The gold supply goes up by roughly 2% per year. Gold is heavy, hard to store, easy to steal from you, and has very little use beyond being melted down for jewelry billionaires can wear in their bunkers.
Every investment book in history says something along the lines of diversify where you invest your money. It’s cliche advice. It’s good advice. It’s definitely better advice than put all your money in gold.
You don’t need to pay tax apparently
Pay your taxes. I don’t pay taxes!
Yep, rich people bragging about not paying tax is annoying. Society needs taxes so governments can run the economy. Robert says he doesn’t pay them. Bezos and Musk get away with paying next to nothing too.
Is More Debt the Answer?
Robert’s book and teachings encourage us to get into as much debt as we can and buy real estate. I played the Rich Dad Poor Dad board game with my partner and friends. The point of the game becomes painfully obvious after you play a few rounds. Get as much debt as you can and buy real estate.
This works for some people … but not for me.
I don’t want a mountain of debt to buy investment properties. The craze of treating residential properties as a business is annoying as hell. When did buying up all the homes from families and turning it into a business become okay? No wonder house prices have become ridiculous.
The Wall Street Journal reported that financial behemoth Blackrock has started bidding up house prices in some areas of America and renting them back out. Where I live, property is so expensive that a lot of millennials like me just rent — and plan to forever.
Or we go to the bank of mom and dad and borrow money from their retirement account with a promise to pay them back, knowing that day will probably be after they’ve passed away. (Assuming you have parents who have money, of course. I don’t have that privilege.)
Then there’s the stress of all this debt. If you follow Robert’s advice you end up feeling the weight of a lot of debt. If there’s a recession or a global health crisis that forces people to be locked in their homes, the stress levels go up. You’ve got to find ways to pay back all the debt. A gap in income can destroy many real estate investors.
Getting into loads of debt isn’t practical for everybody. I’m not ruining a good night’s sleep for real estate debt.
Who said we need to be filthy rich to be happy, anyway?
The Book Is Written Pre-Internet
Rich Dad Poor Dad wasn’t written during the digital age. It’s out of date. It’s based on old investment strategies. Most of all, the book is pre Web 3.0., where the entire rules of investing and finance are being rewritten.
To give Robert some credit, he does recommend that Bitcoin should be a small part of an investor’s portfolio, so he’s not totally bonkers. But still, recommending a book written so long ago as practical finance advice we can use today is flawed. We need a modern approach, without all the fear.
There Are Better Resources than Rich Dad Poor Dad
There are modern resources that can help you get a basic understanding of financial markets, diversify, take smart risks, and understand Web 3.0.
My go-to is Real Vision Finance on Youtube. They cover traditional markets — FX, bonds, stocks. They also cover Web 3.0 — NFTs (Non-Fungible Tokens), Bitcoin, Ethereum, DeFi (Decentralized Finance), and virtual land on platforms like Decentraland (the future of real estate).
There are other resources too that don’t contain all the fear:
- Stansberry Research
- Graham Stephan
- Nugget's News
- Andrei Jikh
- Ark Invest, led by Cathie Wood
- Future A16z Blog
These resources will help make you financially smarter. You don’t need to be a banker to understand them. Best of all, they don’t mess with your head for clicks that make them money.
What Does All of This Mean for You?
Rich Dad Poor Dad is an outdated book. It’s recommenced a lot because it was written by a man who is no longer recognizable because of success and greed. Getting finance advice from doomsdayers is a bad idea. Obviously investing in guns and bullets that fuel a personal arms race isn’t the answer either.
We’ve got to stop recommending Rich Dad Poor Dad as a good book on finance.
Getting into loads of debt can get you in trouble. Investing all your money in one asset is incredibly risky. Buying gold isn’t guaranteed to protect you from recessions as we learned in the 2020 stock market crash.
The best financial education you can get comes from multiple different outlets whose sole purpose isn’t to scare you or talk down to you.
Mix the old world of finance with the new world of finance. Invest in what makes sense for your situation and helps you sleep a night. The rest is noise driven by ego designed to make you fearful.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.
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