Tuesday, May 02, 2006

Rich Dad, Poor Dad

Has anyone read or considered reading "Rich Dad, Poor Dad" by Kiyosaki? This book was a #1 New York Times bestseller, and I think it is enjoying a recent resurgence and has a following with some of my friends/associates. It is the story of the author who was raised by two dads, his own highly educated but "poor" father, and the multimillionaire eighth-grade dropout father of his best friend. His poor dad was a highly ranked government official in Hawaii's department of education, who died broke and left behind severe debt because, according to Kiyosaki, he never spent time to make his money work for him. The rich dad left behind tens of millions of dollars to his family, his charities, and his church. The book describes habits and ways of thinking of poor vs rich.

Personally, I didn't find much value in the book, or in his "CashFlow 101" game. The main point of the book is to invest in assets (assets are those items that put money in your pocket) that generate positive cash flow. To me this is pretty obvious. What I was interested in were ideas and techniques, but his book is short on concrete realistic examples. His writing style is simplistic, and he repeats the same basic concepts over and over again with different wording. He takes whole chapters to explain concepts that could have taken a few paragraphs. Also from reading his book, the reader gets the impression that the only way to make money is through real estate. With over-inflated real estate prices all across the country, this looks like a risky investment to me except in select areas.

CashFlow 101 game is worthless. It plays like a board game that has never been play-tested, but costs $199. Real estate investment in the game generates ridiculous, out-sized returns that dwarf any other numbers in the game (hmmm, maybe this DOES model real-life for many people haha). My brother-in-law started out as a janitor in the game, and finished it in 1 1/2 hours at the first sitting by leveraging heavily on real estate opportunities with no risk. After exiting the "Rat Race" which is supposed to be just the start of the game, and entering the "Fast Track", it takes only a few turns to accomplish your dreams on the "Fast Track" because the goals are set too low. Pretty disappointing, anti-climactic ending.

The game was marketed as a realistic, difficult-to-learn, educational product that would take 8+ hours at the first sitting. Gameplay was nothing like that.


Anonymous said...

Couldn't agree with you more. Rich Dad is extremely repetitive and not real world. Yes real estate will pay decent returns when you are investing in rental properties, but what else does Rich Dad offer? Not much!

Taryn said...

Not that I have read the book- but i don't think you were impressed by it because it wasn't written for you. From reading your profile it is obvious that you have a good grasp of money and how it works. It might be hard for you to understand- but there are lots of people out there who have no idea how money works. I was one of those. I had a checking account with all my money that earned no interest. None. I didn't even understand I needed to keep up with inflation. But now I am starting to learn- so I guess what I am saying is that you were reading a book that wasn't aimed for you- it was written for those of us without our first 1 million. = ) But good luck in your endeavors. Hopefully we will be able to join you in the years to come!