A number of people asked me about Robert T. Kiyosaki and his book Rich Dad, Poor Dad. When I said I didn’t think he was a real-estate guru, they insisted he was. Several told me I would like him, that he preaches a message like mine. Eager to find such a guru, I bought his book, Rich Dad, Poor Dad, in a bookstore.

I was unpleasantly surprised. I do not like his book at all. Over time, I have received numerous reports that Kiyosaki is primarily a creature of Amway (now Quixtar) and other multi-level marketing organizations. Reportedly, his books were not selling until he allied himself with that crowd. Then the volume of sales to those MLM guys made him a “best-selling author,” which caused normal non-MLM people to think the book must be good. Click here for an email I received along those lines. There is an unauthorized Web site about Amway at www.amquix.info.

Some readers have said that if I am going to criticize Kiyosaki’s book, I must offer a version of how to better yourself that does not have the flaws of Rich Dad Poor Dad. No problem. That would be my book Succeeding, which, somewhat to my surprise, is my top seller of the 30+ different books I sell.

In the summer of 2007, the Ohio state government Division of Real Estate and Professional Licensing published an extraordinary statement by a consumer of Robert Kiyosaki’s book Rich Dad Poor Dad and Cash Flow game. Be sure to read it at www.johntreed.com/Ohioaction.html.

Selected emails from visitors to this page

Collection of age-old clichés about money

A reader suggested that Rich Dad Poor Dad is nothing but a collection of clichés about money. Old clichés. Clichés that have been around since way before Kiyosaki claims “rich dad” originated them. The reader further said that Kiyosaki then appears to have simply made up a bunch of accompanying phony stories to fill the cliché collection out to the length of a book. She may be right. For example, Kiyosaki’s fear-and-greed advice (see below) is an age-old Wall Street cliché about securities prices.

Another reader put it this way,

But you have to admire a guy who can spin two or three paragraphs of very ordinary financial platitudes into such a range of books.

Now admits 'fictionalizing'

On 8/15/01, a reader told me Kiyosaki now has the words “Although based on a true story, certain events in this book have been fictionalized for educational content and impact,” in the fine print on the copyright page of Rich Kid Poor Kid. I had not previously been aware that “educational content and impact” justified lying. Also, I am now confused as to why Kiyosaki’s books are on the nonfiction best seller list if they are fictionalized. Probably because as A Million Little Pieces author James Frey discovered, it’s a lot easier to be a “best-selling author” with a fictional book labeled non-fiction than with a novel.

'Poor dad'

The idea behind Kiyosaki’s title is that his real father was upper middle class. He graduated from Stanford, Chicago, and Northwestern Universities, all on full scholarship, ultimately earning a Ph.D. He pursued a career in education and became the head of the education department of the State of Hawaii. He owned the home in which the Kiyosaki family lived. Kiyosaki calls him his “poor dad.”

'Rich dad'

One day, he asked his father how to make money. His father said he had not made much money and did not know how to make it. He suggested that Robert ask the father of his next-door playmate, Mike. That boy's father was a successful local businessman. He was also an eighth-grade dropout and ultimately a multimillionaire with a bunch of small businesses like construction, restaurants, and convenience stores. Kiyosaki developed a father-son relationship with the neighbor. That is who he is referring to when he uses the phrase “rich dad.”

One visitor to this site asked me if I was sure “Rich Dad” really exists. No, I’m not. In fact, I now lean to believing that there never was a “Rich Dad,” that Kiyosaki made the whole thing up. If I had written such a book, I would have named him in the book, if only out of gratitude. It is noteworthy that Kiyosaki refuses to identify “Rich Dad” and the Honolulu Star-Bulletin was unable to figure out who it was, in spite of the rather obvious “next-door neighbor Mike whose father owns convenience stores, restaurants, and a construction company” clues. The man was purportedly around 30 to 45 years old in 1955. So he would be 83 to 98 now. How many people on that one street in Honolulu could possibly fit that description?

As I recall, the first convenience store was 7-11 and I believe they became widespread around the 1960s. It’s possible Kiyosaki is using the phrase “convenience store” loosely and really means corner groceries, which did exist in the 1950’s.

But I also find the mix of business unlikely. The guy owns “convenience stores, restaurants, and a construction company.” I guess I can imagine a guy who owns convenience stores and a construction company. It’s odd, but not impossible. However, I have less ability to picture a restaurateur who also owns a construction company. I knew one. His restaurant went out of business. For one thing, the restaurant business is extremely management-intensive. At good restaurants, the owner is usually there almost all of the time. Same is true of construction. Plus restaurateurs that I’ve known are very different kinds of people from construction guys.

Kiyosaki’s real father (“Poor Dad”) was named Ralph Kiyosaki. I encourage readers in Hawaii to try to research Ralph’s home ownership when Kiyosaki was nine years old (1955) and try to figure out which adjacent or nearby homeowner might have been “Rich Dad.” If we can find a person who fits the description, and he is either a public person or dead, I will publish the identity.

A bunch of people have told me “Rich Dad” was a now-dead guy named Kim or Kimi. Fine. Get Kiyosaki to say that. Or get Kim’s surviving relatives, like Kiyosaki’s friend Mike, to say it. A bunch of yahoos on the Internet saying it means nothing. People on the Internet see Elvis at their 7-11.

1992 book versus 1997

In 1992, Kiyosaki wrote a book called If You Want to Be Rich and Happy, Don’t Go To School? It is “dedicated to Ralph H. Kiyosaki, former Superintendent of Education, State of Hawaii, the best teacher I ever had.” This would be “Poor Dad.” But Rich Dad Poor Dad, which came out in 1997, says quite emphatically that Rich Dad was the best teacher he ever had.

So maybe “Rich Dad” was the second best teacher he ever had. No. Actually, the 1992 book also identifies the second best teacher Kiyosaki ever had: F. Marshall Thurber.

OK. So maybe “Rich Dad” was third. No. Kiyosaki’s 1992 book has an unusually long acknowledgment section. It lists 111 people, none of whom appears to be “Rich Dad.” That is, none are singled out except for his “Poor Dad” parents, in-laws, business partner, and editors.

Mind you, according to the 1997 book Rich Dad Poor Dad, “Rich Dad” supposedly became central to Kiyosaki’s life starting in 1955 when he was nine. So where was “Rich Dad” in 1992 when Kiyosaki was so diligent at identifying the people who had been important in his life?

In a 4/18/06 Yahoo! column, Kiyosaki now says the best teacher he ever had was Buckminster Fuller. It would be a bit of an understatement to say that Fuller was not an eighth-grade dropout who owned convenience stores.

“Getch yer programs right here! Ya can’t keep track of Kiyosaki’s best teacher he ever had without a program!”

EST then Money and You

A man who says he has known Kiyosaki since the military in Hawaii says Kiyosaki got his start in the “tell other people how to live their lives” business as a result of taking then becoming a speaker in the Money and You organization.

Money and You was a seminar company started by Marshall Thurber, an est graduate. Est was a notorious seminar company in northern California run by Werner Erhard. Werner Erhard is apparently one of many aliases used by John Paul (Jack) Rosenberg, a Philadelphian who started in life as a car salesman and who then moved through a series of aliases, sales careers, and wives before coming up with the name Erhard and the est seminars. They were famous for not letting participants go to the bathroom and for maddeningly vague advice. For a while, they were going to cure world hunger by getting a lot of people just to think about it.

Money and You was reportedly a useful seminar. Shortly after Kiyosaki went to mainland U.S. from Hawaii to run away with Thurber’s circus, Thurber decided to shut it down. Thurber let Kiyosaki and some other speakers take over the business. They promptly emphasized the Australian and New Zealand markets which have, at times in their history, overvalued products and services from the U.S.

Their run in Australia ended when the Australian equivalent of 60 Minutes did an exposé about Money and You.

Basically, it appears that Kiyosaki is a good salesman, although we sort of have to take his word for it pending confirmation from Xerox. Good salesman is the universal description of all the expensive so-called real estate investment gurus. They are sales guys, not real estate guys. Apparently Kiyosaki is yet another example.

This caller also said that Kiyosaki’s wife Kim appears to be the one who invested in Phoenix real estate. “Bob” appears to be the Ralph Kramden (main character of the Honeymooners TV series) of the family, perennially hatching one-hare-brained get-rich-quick scheme after another (like Kiyosaki’s Money and you, velcro surfer wallets, and Rock T-shirt businesses) while his wife invests in basic stuff. I am not ready to anoint her a financial genius. One would have to inquire as to whether their real estate investments in Phoenix appreciated more than those owned by the average person. Most likely, they made the same return on their properties as Joe and Jean Average Phoenix homeowner. If so, they would be as qualified as Joe and Jean homeowner to write a book about it. As I have said in many articles in my newsletter Real Estate Investor’s Monthly, extraordinary performance in real estate is measured by the degree to which your returns exceed those of ordinary homeowners who claim no expertise. In fact, in most periods since World War II, ordinary homeowners have done great return-wise just because they were in the right place at the right time. On Wall Street, they say that in a bull market, everyone thinks he a genius. And some, like Kiyosaki, who are merely married to people who invested in real estate during a bull market, claim that they (the non-investing spouse) are geniuses as a result.

Reportedly, Kim got the idea to invest in Phoenix real estate from a female fellow employee of Money and You who said the Phoenix market was going to be good. That female Money and You employee is the one who should have written us a book on real estate investment. She may be the brains of the outfit if Kim did not add any value to her advice. (Actually, the employee probably was just guessing and her having guessed right is meaningless. In fact, predicting marketwide appreciation in real estate values is impossible to do. Decisions can only be evaluated based on what the decisionmaker knew at the time, not on results. You can get good results from bad decisions, e.g., a winning lottery ticket; and vice versa, e.g., attempting a 25-yard field goal that goes wide right when you are down by two points with three seconds left in the game.)

If Kiyosaki claims to be a competent real estate investor, he needs to show addresses of properties he bought that reveal greater returns on those properties than were earned on similar properties at the same time by persons who claim no extraordinary expertise. I suspect an examination of properties he or his wife owned will show that he earned that same returns as local homeowners and that the only thing extraordinary about his purchases is that he had a large amount of book royalties to use to buy them.

The guy who called me has the impression that Kiyosaki’s tortured psyche and insecurities stem from growing up as an obese kid in Hilo in the 1950s. Since he did not know Kiyosaki until the military, that information must have come from Kiyosaki.

No more Bob

Kiyosaki went by Bob for most of his life. Since he became the famous author, he insists that everyone call him “Robert.” Sure, Bob.

20/20 investigation of Kiyosaki

ABC 20/20 did a program about Kiyosaki who has now written 18 books. You can read their story about it at http://abcnews.go.com/2020/story?id=1982669&page=1. The date on the Internet story is May 19, 2006 so the story must have been aired on 20/20 around then. Basically, they gave three people $1,000 each and told them to try to start a business that would show a profit within 20 days. One lost all he money. Another made zero. The third made $243.

Kiyosaki was brought in to coach them and to advise them during the 20 days. Based on the article, it sounds like about all he did was whine about the three would-be entrepreneurs, the short time frame, and so forth. He also pronounced their failures a success—typical Kiyosaki logic—because they learned from them. The ABC 20/20 story ends with,

“Which begs the question: Does anyone really need 18 books to learn to fail?”

Obviously, Kiyosaki has sold 26 million books on the promise that they would help you succeed. Then, when people who have been personally coached by him fail, he blames them and, like the Queen in Alice in Wonderland, declares their failures to be successes.

I guess it would be too much to ask for him to admit, “Gee, I guess my advice was of no value to these three.”

If I had been asked to participate in such a challenge, I would have said I have no expertise in telling anyone how to make a profit with $1,000 in 20 days. I do not know how I would have done that if I had been given the money. Probably write a short book and use the $1,000 to print it and create a series of Web pages about it. See my book How to Write, Publish, and Sell Your Own How-To Book for the details on how to do that.

It would be interesting for 20/20 or a similar program to give $1,000 to Kiyosaki himself and let he himself show how to turn it into a profit using some method open to his readers. You would have to have a microscope on him every second and prohibit any undisclosed actions or conversations to prevent him from using methods not available to his readers.

What business has Kiyosaki ever made a profit in? With regard to his 26 million books, he is not a businessman. He is only an author. The businessmen generating those sales and profits are his publishers.

'Couldn't put my finger on it...'

I have received numerous emails about this analysis by me that you are currently reading of Rich Dad Poor Dad. There have been several recurring themes in those emails. One is people saying that they liked Kiyosaki’s book, but that it caused them some discomfort or second thoughts or unease. They often say they could not put their finger on what was bothering them—or words to that effect—until they read this analysis.

'Made me think about my finances'

The most common favorable comment I get about Kiyosaki from those who generally agree with my analysis is that “At least he got me to think about my finances.” That’s pretty lame.

The IRS makes you think about your finances every April 15th. You have to think about your finances whenever you fill out a loan or credit-card application. I also think about my finances frequently when I pay bills or receive income. People who are unhappy with their financial lives—which is the typical Kiyosaki fan—probably think about their finances every time they get into their shabby car or return to their unsatisfactory home (e.g., living with parents, bad neighborhood, too small, etc.).

There are lots of books that do a better job of getting you to think about your finances. I suggest my Succeeding and How to Get Started in Real Estate Investment as well as The Little Book of Common Sense Investing by John C. Bogle and Jane Bryant Quinn’s Smart and Simple Financial Strategies for Busy People. These are books that actually have what Kiyosaki falsely claims to provide.

I think these “made me think about finances” comments are inarticulate at best and dishonest at worst. What is really going on is a lot of people are schlepping along doing a half-ass job of managing the financial aspects of their lives. Rich Dad Poor Dad slaps them up side the head and tells them to clean up their acts. That’s good, but the book goes on to deliver a pack of lies that make getting rich seem much easier than it really is and make education sound much less valuable than it really is. Basically, people want to get rich quick without effort or risk. Kiyosaki is just the latest in a long line of con men who pander to that fantasy.

Can the ordinary person get rich? Yes
Is it as easy as Kiyosaki makes it sound? Not even close.
Can it be done as fast as Kiyosaki says? Nope.
Is education as worthless as Kiyosaki says? Every pertinent study has shown that the more education you have, the higher your net worth and income. Also, educated people live longer, have fewer divorces, better health, and so forth.

Here are U.S. Bureau of Labor Statistics figures on education that were released on 8/17/07:

Weekly earnings by amount of education

amount of education	median weekly earnings
doctoral degree	$1,441
professional degree	$1,474
master’s degree	$1,140
bachelor’s degree	$962
associate degree	$721
college dropout	$674
high school grad	$595
high school dropout	$419

Unemployment rate by amount of education

amount of education	unemployment rate
doctoral degree	1.4%
professional degree	1.1%
master’s degree	1.7%
bachelor’s degree	2.3%
associate degree	3.0%
college dropout	3.9%
high school grad	4.3%
high school dropout	6.8%

On the other hand, the public-school system is an easy target for criticism. It is generally run by union bureaucrats who graduated at the bottom of their college classes. Colleges are also subject to criticism for letting students spend five or more years getting low-income educations in subjects like philosophy and social work. Wisely-chosen education—defined broadly as reading books, talking to successful people in the field you are interested in, attending courses, and subscribing to trade publications—generally provides the highest return you can earn on your money and time.

Kiyosaki is just telling lazy and/or stupid students a line of bull that lets them avoid responsibility for their poor academic performance and gives them a convenient scapegoat to blame for their lousy financial situations. There is also more value to education than just its financial rewards. If you like philosophy and are willing to take a vow of poverty, you ought to study philosophy. Not everyone suffers from Kiyosaki’s need to impress people with how much money he has made (or claims to have made from sources other than selling books to Amway distributors).

…most people want to believe rather than to know, to take for granted rather than to find out
James Thurber

Motivation

Another compliment readers often pay Kiyosaki is along the lines of, “Well, at least he motivated me.”

Yeah, by lying to you. That’s like me telling you I buried $100,000 in your backyard which is yours for the taking. Would that motivate you? No question. You would probably spend the next two weeks digging up your backyard. After you found out it was a lie, would you think I was a great guy for having thus motivated you to get all that healthy exercise? I doubt it.

‘Missing the point’

Since I posted this analysis, a number of Kiyosaki “cult members” have contacted me to denounce me for “missing the point” of Kiyosaki’s book. “OK, Please tell me the point.” The odd thing is that each person has a different version of what the point of Kiyosaki’s book is—and it is never something I recall reading in the book. In fact, if a book has a point, multiple readers ought to come up with the same answer when asked what that point is. If they come up with different answers, it is either because the author was incompetent at communicating his point, or because the book has no point, or because the author deliberately obfuscated the point.

From now on, if you think I missed the point, don’t paraphrase Kiyosaki’s point to me. Give me an exact quote and the page number in Rich Dad, Poor Dad where it appears. I suspect everyone who is tempted to send me the point of Rich Dad will be unable to find in the book any of the wonderful advice they imagined was in there. It has been several years since I first said this and I have yet to get my first quote of “the point.”

On 7/18/06, I finally got a quote from someone who says I missed the point. Here it is.

Please open your copy of Rich Dad Poor Dad and turn to page 77. Look half way down the page. You will see this:

"Rule one:You must the know the difference between an asset and a liability, and buy assets. If you want to be rich, this is all you need to know. Its rule No. 1. It is the only rule. This may sound absurdly simple, but most people have no idea how profound this this rule is. Most people struggle financially because they do not know the difference between an asset and a liability."

I did not miss that at all. In fact, I discussed the matter of his definitions of assets and liabilities squarely and repeatedly in this review. Furthermore, the vast majority of the book has nothing to do with that point and some of the book contradicts that point, like Kiyosaki bragging about his Rolex. I also note that in eight years, this is the only person who thought that was the point of the book.

The only time different people look at the same thing and come up with different answers as to what it is they are looking at is when the thing they are looking at is amorphous, like a cloud or a Rorschach inkblot—or a politician. Politicians try to be all things to all people. That requires them to say nothing (amorphousness), but to sound like they are saying something (“the point”). They toss in a little spin to try to get all those people with those different views to see in the politician things that they like. Kiyosaki slogans like “Don’t work for money. Make money work for you,” are amorphous in their actual meaning, but have the effect of “spinning” the reader into thinking he has just gotten good advice.

Here’s a pertinent passage from Temple University professor John Allen Poulos’s book A Mathematician Reads the Newspaper.

A similar argument helps clarify why inane I Ching sayings or ambiguous horoscopes seem to many to be so apt. Their aptness is self-provided. In effect, their cryptic obscurity provides a random set of ‘answers’ that the devotee fabricates into something seemingly appropriate and useful.…psychologists count on the amorphousness of Rorschach ink blots to elicit evidence of a person’s core concerns.

My own supporters occasionally commit the mistake of reading things into my writings. I once got an email complimenting me on my writings. The writer’s favorite quote by me was, “When everyone is digging for gold, sell shovels.” I thanked him for his compliments, but said, “I never said that.” He then wrote back that he searched all over my Web site, but could not find it.

Cult

What Kiyosaki is really doing is operating a cult of personality. Anna Quindlen had an excellent article about such cults in the 8/14/00 Newsweek. She was talking about politicians and said they seek to elicit the words, “I don’t know why. I just like the guy.” Politicians want to be judged by their personalities, not their character or policies. To members of Kiyosaki’s cult, it matters not how many false or probably-false statements I find in Kiyosaki’s writings. They just like the guy. Personality is an appropriate criterion for selecting someone to hang around with. But it is a highly inappropriate criterion for evaluating Kiyosaki’s advice, because he’s not going to let you hang around with him and your family’s finances are serious business.

I am not a politician. When I write something, I want to make sure everyone gets the point—the same point. Here is the point of this analysis:

Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.

The 48 Laws of Power

Here’s an interesting letter I got from a reader:

“I'm glad I found your Web site on Kiyosaki, and all the other snake oil salesmen. I was deluding myself into believing him, even though I had that little voice in the back of my mind sending me warning signals (not to mention my wife)... Anyway, thanks for the info. Every once in a while, I do a search on Google and come up with a gem like your Web site. This is living proof that the Internet can be used for good purposes by people who are TRULY generous. Once again thanks for your work.

A few years ago I read a book by Robert Greene and Joost Elffers called "The 48 Laws of Power" (Viking, 1998). It is a "Machiavellian approach to the systematic study of power." Basically, it is written as a how-to book. It gives the cynical lowdown on increasing and maintaining one's power over others. It is truly an interesting and thought-provoking study in human nature. I thought you might be interested in the following quote, which I feel is particularly apt in describing the power strategy that gurus like Kiyosaki like to follow:

"Law 27 - PLAY ON PEOPLE'S NEED TO BELIEVE TO CREATE A CULTLIKE FOLLOWING. Judgment - People have an overwhelming desire to believe in something. Become the focal point of such desire by offering them a cause, a new faith to follow. Keep your words vague but full of promise; emphasize enthusiasm over rationality and clear thinking.

Give your new disciples rituals to perform, ask them to make sacrifices on your behalf. In the absence of organized religion and grand causes, your new belief system will bring you untold power." (p. 215)

Keep up the good work,”

Another reader said Law of Power 32 is pertinent too.

Law 32—Play to People’s Fantasies

“The truth is often avoided because it is ugly and unpleasant. Never appeal to truth and reality unless you are prepared for the anger that comes from disenchantment. Life is so harsh and distressing that people who can manufacture romance or conjure up fantasy are like oases in the desert: Everyone flocks to them. There is great power in tapping into the fantasies of the masses.”

You can see all the laws at http://www2.tech.purdue.edu/cgt/courses/cgt411/covey/48_laws_of_power.htm.

Short on specifics

About every third email I get about this analysis me that they agree with me that Kiyosaki is short on specifics about how to get rich. In the first week of February, 2008, yet another woman told me she “agreed with my saying he is short on specifics,” I said Kiyosaki had made her blind to he statement I made is hugh letters (below after this sentence) and she switched subjects to my ungentlemanly behavior in making such a comment. Although she did not deny that I had pointed out in huge letters that I never said any such thing.

I never said Kiyosaki was short on specifics!

Not only does Kiyosaki’s hypnotic effect on many people result in their seeing things in his book that are not there, now they are seeing things in my analysis that are not here. Amazing! No wonder the guy can sell 26 million copies of nothing.

I would say that Rich Dad covers an overly broad array of financial subjects—real estate investment, stock market investment, note investment, and going into business for yourself. No one could adequately cover all those areas in such a short book. On the other hand, Rich Dad has a lot of specifics—as you will see below in this analysis. The problem is not that he is short on specifics, it is that the book is a bunch of bull, including when he gets specific. To say that the only fault of the book is that it lacks specifics is ridiculous.

Since I posted this item with huge letters saying I did not say he was short on specifics, the quantity of emails I get “agreeing” with me that he was short on specifics is unabated. Have these people all had lobotomies? Actually, yes. Rich Dad Poor Dad is a lobotomy by book reading.

Money is all that matters

On page 14 he approvingly quotes “rich dad” as saying, “Money is power.” [Since I wrote this analysis, Kiyosaki has changed the layout of the book making these page numbers wrong for subsequent editions. They are correct for my edition, which says published by TechPress, Inc. and has 1997 and 1998 copyrights.] On page 92, he tells of his “rich dad” keeping him waiting for long periods—when he was nine years old!! “He was ignoring me on purpose. He wanted me to recognize his power and desire to have that power for myself one day.” On page 172, he says, “I have found the principles of finding value are the same regardless if it’s real estate, stocks,...or a new spouse...”

On page 154, Kiyosaki says “the reason you want to have rich friends” is to get inside stock market information that you can make low-risk profits. He ends that discussion with the sentence, “That is what friends are for.” That is the narrowest, most mercenary definition of friendship I have ever seen. I doubt Kiyosaki is the only person who feels this way about his friends, but he may be the only one dumb enough to say it in a book.

My Succeeding book tries to get you to always keep in mind the paramount importance of living a balanced life with emphasis on friends and family and doing the things that you find rewarding for reasons other than mere monetary income.

Although his family was not rich, he attended a predominantly wealthy elementary school because of an anomaly in the school-district boundaries. The wealthy kids had newer toys and refused to invite Kiyosaki and his friend to parties, telling Kiyosaki it was because they were “poor kids.” Sounds like he was scarred deeply by that humiliation and has lived his whole life since trying to prove to some rude nine-year olds from the 1950s that he now has the money to be worthy of their party invitations. He told Meet the Street that he has never been back to Hawaii. I suspect such a visit would rid him of these demons from his childhood.

How much money does Kiyosaki have?

A number of people have accused me of being jealous of Kiyosaki—I guess because they think he has more money than I have. Others have said they are going to follow him because he is fabulously wealthy and that’s what they want to be.

How do we know this?

I know approximately what my net worth is. But I have no idea of what Robert Kiyosaki’s net worth is. Neither does anyone else.

He implies he has money. He has had four books about how to get rich on the business best-seller list. He brags about owning a Porsche, Mercedes, Rolex watch, $400 golf club. The Honolulu Star Bulletin—the newspaper where Kiyosaki grew up—wrote a puff piece about him. You can see it at http://starbulletin.com/2000/07/10/features/story1.html. In it, Kiyosaki says a number of things that imply he is rich. For example,

I’m free to do exactly what I want, when I want, where I want. I can stop working if I want to. Money buys me freedom.

I once investigated best-selling real-estate author Robert Allen who wrote Nothing Down. At first, he claimed to own his home. But when I checked the address which appeared on IRS liens filed against him, it was nonexistent—no house at that address. When I again asked where he owned his home, he admitted, “I rent.” I have the conversation on tape.

One of my MBA classmates, Paul Bilzerian, became a very successful corporate raider for a time. He stood silent while others claimed he was a wiz who had made $150 million in Florida real estate before age 30. I called him up to ask if that were true. He said I should read the article in the Wall Street Journal carefully. Indeed, it said he was “reported” to have made that much and all Paul would say in the article was, “That’s a good guess.” In other words, Paul was pointing out to me that it was not he who said he had made all that money. Paul subsequently was the subject of a Forbes story. They said they investigated his purported Florida real-estate profits and could not find a “trace” of him in Florida real estate. He later got into trouble with the law and was the subject of a 60 Minutes segment about his mansion in Florida that creditors could not get at after he declared bankruptcy.

According to the Honolulu Star-Bulletin, “Kiyosaki won’t say how much he is worth or in what he’s invested.” Kiyosaki claims, “I own companies. I’m a major shareholder in oil and mining companies, plus real estate companies. I have intellectual property companies.” But he won’t identify any of them. Why? As you will read below, one of my readers checked Kiyosaki’s claim that he was a major shareholder out in a securities industry data base and found not a trace of him in spite of the fact that major shareholders are required by law to be identified. If he is a “major” shareholder, it is in minor corporations so small that their shares are not traded publicly.

A book editor unrelated to Kiyosaki used industry statistics to tell me he figures Kiyosaki has netted at least $11 million from his book royalties since 2000.

With regard to Kiyosaki’s “Money buys me freedom” statement, my Succeeding book has a chapter on Wealth that discusses both the advantages and disadvantages of being rich. Yes, there are disadvantages, like making your family members kidnap targets or making yourself a lawsuit target. Last I heard, Kiyosaki was being sued by the co-author of Rich Dad Poor Dad, Sharon Lechter.

Mr. Privacy

Kiyosaki says, “I keep my holdings private. You know why that is? Lawsuits. If you have money, you get sued.”

Let me get this straight. Kiyosaki says he is rich, that he “makes millions of dollars,” and is about as high profile about his wealth as you can get about it—best-selling how-to-get-rich books, appearances on TV shows like Oprah, interviews to daily papers and national magazines. Yet he won't disclose any details because he doesn't want people to know he has money.

Not only is the guy a B.S. artist, he insults our intelligence.

Somebody needs to give Kiyosaki a book on how to be low profile. I’m sure it has a chapter that says going on Oprah to discuss your best-selling book on getting rich is not a good way to prevent would-be litigants from knowing you have money. Kiyosaki is, in fact, shouting from the rooftops that he has money. He just refuses to prove it. Or to let anyone investigate how he got it if he does have it.

I have always felt that implying you have money was worse than revealing your net worth. When I was in grad school, I took a labor relations course where actual union leaders were in every other seat with us MBAs. One said that one of the things they love about employers is when they keep earnings secret. That allows the union to tell the employees that the company is “getting rich on their backs.” That, in turn, causes the employees to vote for the union. Kiyosaki’s implying he is wealthy, but refusing to disclose how wealthy, will almost certainly cause would-be litigants and others to overestimate his net worth, thereby increasing the chances of his being sued over what they would be if he were more forthcoming.

Many small businesspeople adopt grandiose company names, like Pritchco Interplanetary, that make them sound much larger than they really are. I tell my readers not to do that because such names encourage lawsuits. I encourage small real-estate investors to use their own name, because people are more inclined to sue big-sounding corporations than an individual. I recommend that you read an article I wrote on how to take title with regard to privacy and other aspects of money.

I suspect the real reason Kiyosaki refuses to disclose any evidence of his purported wealth is either

• It was much smaller before he got rich from his book than his followers imagine
• He did not get it the way he implies—for example, his wealth may come almost entirely from telling people how to get wealthy and he may not have been wealthy himself until he told people how to get wealthy
• He achieved wealth in an unethical or illegal way
• All of the above

For the record, I created another page to address the jealousy issue. Click here to see it.

On 1/14/02, a reader told me Kiyosaki was more forthcoming about his wealth at http://www.thestreet.com/funds/meetthestreet/10006507.html. Indeed, in an interview at that Web site, he says his net worth is “between $50,000,000 and $100,000,000 depending on the day.” (I don’t believe that. He also says he was bankrupt and homeless in 1985. More about that later.) So which is it—Kiyosaki will not talk about his wealth because he doesn’t want to be sued or he will give figures, locations of his properties, and the nature of his corporations as he does in the Meet the Street interview? What happened to the lawsuit threat?

There were a number of points in that Meet the Street interview that deserve a response

Kiyosaki said	Reed comment
avoid mutual funds and 401(k)s because they are too risky	Mutual funds vary in their risk. Some are very low risk. 401(k)s have tax benefits that are hard to ignore. Also, you can invest them in almost anything you want in many cases. If they are invested in broad-based, low-cost index funds, like Vanguard 500 Index, they have no risk other than the risk that the entire market will collapse. Bogus gurus like to give extremely simple rules. Ignorant readers love them. That’s fine when the subject permits. But this is an extremely simple rule that is not valid because of the complexity of the subject.
says his net worth is “$50 million to $100 million depending on the day”	I don’t believe that. He was bankrupt and homeless in 1985 by his own admission. Although a lawyer who searched the federal case management system on line says he could find no bankruptcy filing for Kiyosaki. He claims to have sold 26 million books. The highly successful book What Color is Your Parachute? has only sold seven million copies since it first came out in 1970. But even if you accept the 26 million figure, Kiyosaki’s co-author royalty would appear to be about 72¢—not enough to get you anywhere near $50 million even if you had no living expenses. He claims to make money in other businesses, but will not disclose enough detail that anyone can check that. Also, what’s this “depending on the day” nonsense? I presume that’s a shameless effort to impress people who are really ignorant about the world of finance. What he is saying is that his net worth doubles or halves within 24 hours. He implies that causes him not the least bit concern. Gimme a break! If my net worth dropped in half in one day, I would be pretty upset about it. What must he be invested in to enable his net worth to double or halve in 24 hours? Pork belly futures? No one in his right mind would invest his entire net worth in an investment vehicle that could double or halve in 24 hours. In the 2/03 Smart Money magazine article, he said his net worth was $35 million. Must have been a really bad day in pork belly futures. Actually, his book-selling success notwithstanding, I would guess his net worth is more like $3 million, virtually all of it from book and related sales.
the investments of the wealthy are managed well	Laymen think that. I don’t. The main thing in managing an investment is stock picking. That is impossible to do well on purpose except for a few alpha money managers who are excruciatingly hard to identify before the fact. Otherwise, it’s a crap shoot. If anybody ever figured it out, he would not need to work—for the wealthy or anyone else. There have been numerous studies proving this, most notably the classic book, a Random Walk Down Wall Street by Burton G. Malkiel. The wealthy do get good advice on legal implications of their portfolios, but not on how to earn a high return. The notion that anyone gets good advice on how to earn a high return in securities is a laymen’s myth. The truth is there are extremely few money managers who can beat the market consistently over the long run and who they are changes from time to time. Essentially, only a few institutions have been lucky enough to find them. Not, as Kiyosaki says, all the rich.
says he was able to retire at 47	So why didn’t he? He’s still hustling his butt off to sell stuff.
there are three different types of income: earned, portfolio, and passive	This is primarily an income-tax-rate distinction as Kiyosaki explains it. He says these types of income are taxed at 50%, 20%, and 0% respectively. The phrases “passive income” and “portfolio income” do appear in the Internal Revenue Code. I have used “earned income” to describe money you make from your salary or business. In fact, Kiyosaki is spouting nonsense. The federal income tax rates on earned income, passive income, and portfolio income are the same—not 50%—but your overall rate can get to that level when you add state income taxes. The distinction between the different types of income involves whether the losses from one category can be deducted from income of another category. The 20% tax rate of which Kiyosaki speaks only applies to long-term capital gains. Those come from selling assets at a profit after holding them for a specified number of months. You can have such 20%-tax-rate gains in both the passive and portfolio categories. The only income that is taxed at a 0% rate are special things like municipal bonds and gains of less than $250,000 per spouse from the sale of certain personal residences. It is possible to do transactions where there is no tax due at present, like IRC §1031 exchanges, but the tax-free nature of such transactions stems from the fact that you received no income. Rather you put the proceeds from the sale of one rental property into the purchase of another rental property. If and when you eventually take out your profit by selling your rental property, you will be taxed on the gain that you had when you exchanged. See my books Aggressive Tax Avoidance for Real Estate Investors and How to Do a Delayed Exchange.
I own 10 rental buildings in Miami, Austin, and Phoenix.	Most investors use more specific terminology like “apartment complex” or “office building” or “shopping center.” Investors usually use the phrase “rental building” to hide the fact that their properties are mere rental houses. You should not own rental property in three states unless you have a specific reason for doing so. Why not own all ten rental properties in Phoenix, where he lives? With Kiyosaki, I suspect he thinks having property in three states makes him sound like more of a tycoon. To experienced investors, it makes him sound like more of a dilettante. You want the property in the same region—preferably where you live—so you can use the same people to work on all the properties and save on air fares, hotels, and so forth. Actually, I believe I have the only books on absentee management: How To Manage Residential Property For Maximum Cash Flow and Resale Value and absentee purchasing: Residential Property Acquisition Handbook. One reader said investing in three different regions gives you diversification benefits. Only against regional economic downturns and possibly rent control if the buildings are bigger than one family. But rent-control risk is better dealt with by staying out of multifamily and states that do not have a rent-control preemption in state law. The risk of regional economic downturns is not great enough to overcome the disadvantages of spreading yourself that thin in terms of travel, personnel, need to learn different laws and markets, etc.

If the advice of “Rich Dad” back in 1955 was so great, how come Kiyosaki says he was homeless and bankrupt 30 years later? (A lawyer checked the federal court records and said no one named Kiyosaki ever went bankrupt. So he apparently is “bragging” about a non-existent bankruptcy. I’m not ready to declare him nuts, but that would be evidence if I were.)

What kind of financial genius does it take to be homeless and bankrupt when you are a college graduate who had no student loans and were trained as a helicopter pilot by the military. With all those advantages, and “Rich Dad’s” brilliant financial advice, the guy still ends up homeless at age 38? And if “Rich Dad’s” advice wasn’t good enough to keep Kiyosaki from becoming homeless in 1985, how did it suddenly become something the rest of us should be following in 1997?

I suspect Kiyosaki has done well from his books with the help of Oprah and Amway et al. A reader who refused to let me use his name said he attended an Amway meeting where Kiyosaki spoke and that Kiyosaki said his book was unknown until an Amway “Diamond Distributor” started buying it in quantity. He further said that Kiyosaki urged the audience to focus on their Amway distribution business, not on buying duplexes and such.

I further suspect that his secrecy has nothing to do with avoiding attracting lawsuits and everything to do with preventing the public from finding out how much he really made and how he made it.

Clever life plan?

Kiyosaki would have us believe that he followed a coherent life plan laid out with the help of “rich dad.”

He says he went to the U.S. Merchant Marine Academy because he wanted to learn international business. People who want to learn international business while in college should go overseas to school, like to the London School of Economics or to a U.S. college with a strong international business or international relations department. The U.S. Merchant Marine Academy is a grueling ordeal that prepares its students to operate oceangoing ships. Going there to study international business is like studying construction and building maintenance to become a school teacher because teachers work in buildings.

U.S. Naval Academy

I did not put my suspicion that Kiyosaki was rejected by a major service academy in this analysis originally because I had no evidence of it. Now I do. A reporter for People magazine interviewed me about Kiyosaki. In the course of the interview, he mentioned that Kiyosaki admitted to him that he had applied to the U.S. Naval Academy at Annapolis, but was rejected for academic reasons. So if he went to the Merchant Marine Academy to learn international business, why did he apply to the Naval Academy? Let me guess. To study oceanography? And I guess if we are to believe that he went to the Merchant Marine Academy to study international business, he must have deliberately flunked admission to the Naval Academy because going there would have interfered with his plan to learn international business. What international-business purpose was served by applying to the Naval Academy is a part of Kiyosaki’s tangled web that I have no clue about.

In his 1993 book …Don’t Go To School?, he said, “In 1964, I received two nominations: one to the U.S. Merchant Marine Academy in Kings Point, NY, another to the U.S. Naval Academy in Annapolis, MD. I accepted the Kings Point nomination.”

The Naval, Military, and Air Force Academies are part of the Department of Defense. Their students are salaried, active-duty U.S. military personnel. I believe the Merchant Marine Academy comes under the Department of Transportation. They seem to have mandatory Naval ROTC at the Merchant Marine Academy which comes with some sort of military reserve commission and status. The USMMA students seem to have a sort of scholarship as opposed to the salaried, active-duty status of the Department of Defense academies.

‘Nomination’

I am a West Point graduate, so I am familiar with the terminology and procedure associated with admission to service academies. Kiyosaki says he received two “nominations.” Admission to the U.S. Naval Academy, like admission to my alma mater, the U.S. Military Academy at West Point, is a multi-step process.

His statement, “I accepted the Kings Point nomination,” is extremely misleading.

The first step is to obtain a nomination from a Congressman or Senator. A nomination is not an admission. Rather it just lets you begin the rest of the application process. Furthermore, there are two kinds of nomination: principal and alternate. I got a principal nomination from Congressman William T. Cahill. That meant that I would be admitted if I passed the three categories of criteria. Those who receive alternate nominations, which are ranked first, second, third, fourth, and so forth, only get admitted if the principal and alternates above them fail to gain admission. The detailed facts about Kiyosaki’s nominations, if any, were almost certainly listed in his hometown newspaper in late 1964 or 1965.

During the post-nomination application process, you undergo an extensive physical exam more demanding than to enlist in the military—and a physical aptitude test of your athletic ability. I had to go to Fort Dix, NJ for those two tests. Simultaneously, you send your high school transcript and test scores to the service academy and they decide whether you meet their standards academically. If you pass all three tests, and you were the principal nominee, you get an appointment from the President of the United States. That means you are admitted. It is only then that you can claim to have turned down the opportunity to attend that academy.

Kiyosaki seems to imply that he was admitted to the Naval Academy, but turned it down. However, the use of the word “nomination” and the admission to People seem to indicate that he was, in fact, never accepted by the Naval Academy and therefore could not have chosen the Merchant Marine Academy over the Naval Academy.

A midshipman at Kiyosaki’s alma mater said that in Kiyosaki’s 5th book, he does not mention the Merchant Marine Academy by name. Rather he says only that he went to “the military academy in New York.” You gotta be kidding me! To 99% of the people, “the military academy in New York” is West Point. If his book Rich Dad Poor Dad is any indication, Kiyosaki would have lasted about two weeks at West Point before they threw him out for violating the cadet honor code. For chrissake, he’s even lying about having lived by the West Point honor code for four years.

Pilot

Taking an indirect and barely relevant route to an educational goal is a recurring theme in Kiyosaki's book. He seems to have a fascination with extremely roundabout, “reverse psychology” methods of teaching or learning. Kiyosaki states that he became a U.S. Marine Corps helicopter pilot so he could learn how to lead men. Pilots fly helicopters. A pilot may lead his copilot and door gunner, but no one else when they are airborne. Furthermore, the actions of a copilot and door gunner are largely standard operating procedure. They do not need to be led much. And if they did, the pilot would be in a poor position to lead them because flying a helicopter is a task that consumes 100% of your attention. Only if he stayed in the service for many years would a pilot be put in charge of a group of helicopters and then be a leadership position. Kiyosaki did not stay in the military. If you want to lead men in the military, you become a platoon leader and company commander.

Also, in the 1993 book, he says, “…I…became a fighter pilot and went to Vietnam…and probably enjoyed combat more than most pilots ever do.” A Marine fighter is a fixed-wing jet aircraft that generally operates off an aircraft carrier. Helicopters sometimes operate off carriers, too, but no military person would call a helicopter a fighter.

‘Never returned to my ship’

The 1993 book contains a very strange discussion. He says that he found a “little boy in my helicopter one day and “had the right, if not the duty, to shoot and kill him on the spot. This was the code of war we were taught as military officers.”

I am aware of no such right, duty, or “Code of War.” The Third and Fourth Geneva Convention, to which the U.S. is a signatory, prohibits shooting a surrendering enemy soldier, as does the U.S. Uniform Code of Military Justice. Furthermore, a child would generally not be considered a soldier at all. To be sure, in Vietnam, children sometimes attacked U.S. soldiers with deadly weapons like mines, grenades, or guns. They brazenly stole from our moving vehicles—engineer stakes and gas cans—when we were in convoy, because they knew we would not harm them. I suspect a Vietnamese child in a helicopter would be trying to steal something—although he could be just fascinated by the aircraft like any kid.

Kiyosaki then melodramatically describes that after aiming and starting to pull the trigger, that he “put my gun away that day forever. I committed myself to finding new ways of doing things, instead of simply responding to what I’d been told to do by a person who supposedly had more authority than I.”

Murder

In the absence of an immediate threat from the boy—and he mentions no such threat—shooting the boy would be murder, not obedience to any U.S. military authority. Indeed, it would be gross disobedience.

The “supposedly had more authority” line is rather weird for a U.S. Marine officer. A member of the U.S. military is required to carry out all lawful orders of his superiors and there is no ambiguity about authority in the military.

He then says that three weeks later, when his aircraft carrier was in Hong Kong harbor, they were ordered to return to Vietnam. “We were about to engage in a large military operation near the DMZ” It would be unlikely that the details of an operation would be revealed to military personnel who were ashore in Hong Kong—a British colony surrounded by Communist China at the time. For secrecy, such details are usually only revealed once the ship leaves the shore. Plus, by the time Kiyosaki got to Vietnam, virtually all U.S. combat troops had been withdrawn from the country.

“I never returned to my ship. To this day, that was one of the hardest decisions I had to make. I trembled for hours as I walked the streets with my mind screaming. I was called a coward and a traitor by some of the other pilots. I realized it was not the most honorable way to handle my refusal to fight any more. But I also knew I could not fight and kill simply because I had been ordered to do so. What the other pilots never understood was that for me to fly and kill again would have been the coward’s way out.”

Well! Now that’s a heck of a passage! Not returning to your ship when ordered to do so is desertion. One of my readers said Kiyosaki appeared to be trying to claim that he was a “conscientious deserter.”

I hesitate to say that he is confessing to that. It is one of the most serious crimes in the military. The punishment can be death. But it is hard to find any other explanation in this passage. The fact that his peers called him a coward and a traitor suggests that explanation or possibly turning into a conscientious objector while on the streets of Hong Kong. I requested his military records from the National Archives.

‘Once a Marine…’

Kiyosaki makes much of his Marine background—at least when he’s not claiming to be an anti-war protestor. The Marine Corps, to their discredit, bragged about him on their official Web site, apparently without checking out what he told them.

How do you get to be a Marine? On cable TV, I learned that you have to go through Marine Corps boot camp culminating in a multi-day test called “The Crucible.” If you successfully complete it, you are awarded the right to wear the coveted “eagle, globe, and anchor” badge of the Marine Corps.

Did Kiyosaki go through Marine boot camp? Nope.

He did go through the U.S, Merchant Marine Academy plebe year which is arguably harder and longer. But that makes you a Merchant Marine Academy cadet, not a Marine.

Marine officers generally do not go through boot camp. That’s for enlisted men. Officers typically graduate from the U.S. Naval Academy—the one that rejected Kiyosaki for not being smart enough. Or they graduate from a college ROTC program. The Merchant Marine Academy probably had that. But even then, I believe you have to go through something called Marine Platoon Leader Class after college. I would expect that they may not wear the “eagle, globe, and anchor” badge until they successfully complete that Marine training.

Did Kiyosaki go through Marine Platoon Leader School? Nope.

So how did he get to be a Marine?

He was a Navy officer in helicopter school. The Vietnam war was winding down, so the Navy decided they had too many pilots and decided to stop training Kiyosaki and his fight-school classmates to save money. The Marines, on the other hand, still wanted more helicopter pilots. By letting Kiyosaki and his helicopter classmates make a lateral transfer to the Marine Corps, the Marines could save the amount of money the Navy had already spent training them. In other words, to the Marine Corps, Kiyosaki was a pilot trainee who was “on sale” for half price or “overstock.”

In World War II, officers who graduated from Officer Candidate School were called “90-day wonders.” By that standard, Kiyosaki is a “zero-day wonder” in terms of Marine training—an instant Marine. He passed no “crucible” or its predecessor tests. He just filled out some paperwork and made a wardrobe change.

Did he serve in the Marine Corps? Yes.

I have no problem with him claiming he served in the Marine Corps. But in his interview on the Marine Corps Web site and elsewhere, he has laid on the “Marine Corps made me what I am today” stuff pretty thick for a guy who came through the Marine Corps’ “back door,” skipping the notoriously difficult training that virtually all other Marines had to complete successfully before they could “claim the title of United States Marines.” (a line from the U.S. Corps Marine Corps Hymn)

If any military training made Kiyosaki what he is today, it is the Merchant Marine Academy, not the Marine Corps. The U.S. Marine Corps has a magnificent reputation. Unlike a relatively unknown institution like the Merchant Marine Academy, they do not need the likes of Kiyosaki to add to their name recognition. The Marine Corps should be eager to make sure that the Merchant Marine Academy gets all the “credit” for making Kiyosaki what he is today.

Are the Marines that proud of a ‘conscientious deserter?’

So let me get this straight. The U.S. Marine Corps’s official Web site is bragging about Robert Kiyosaki and touting him as an exemplary Marine in spite of the facts that:

• he libels the Navy and Marines by accusing them of teaching him a “code of war” that required him to shoot an unarmed child in Vietnam
• he says he committed, during his services as a Marine Officer in Vietnam to “finding new ways of doing things, instead of simply responding to what I’d been told to do by a person who supposedly had more authority than I.” In other words, he was going to refuse to follow the officers of his Marine superiors to kill enemy soldiers in combat. (“I also knew I could not fight and kill simply because I had been ordered to do so.”)
• he says his fellow Marine pilots called him a “coward and a traitor” because of his “refusal to fight anymore”
• he says he refused to return to his ship which sailed without him to Vietnam

The fact that these seem to be a pack of lies designed to make himself a hero to the anti-war crowd ameliorates them somewhat, but why would the U.S. Marine Corps brag about a former Marine officer who told such lies for such a purpose?

Kiyosaki military records

Robert Toru Kiyosaki was a US Naval Reserve officer from 6/4/69 to 10/3/70 reaching the rank of lieutenant j.g. Then he switched to the Marine Corps from 10/4/70 to 6/30/74 and was honorably discharged as a first lieutenant.

He was awarded an air medal for “courage and devotion to duty in the face of hazardous flying conditions” during combat support missions in Vietnam from 6/16/72 to 10/19/72, as well as several other medals which appear to be merely for being in the military or being in Vietnam. I have several such medals myself. For example, you get the Vietnam Service Medal for setting foot in the country. Kiyosaki has that with 2 Bronze Battle Stars. Bronze battle stars are for being in country during certain campaign time periods. See my article on whether military people deserve all the medals they get and whether those medals mean what civilians think they mean.

Also, civilians should know that all military medals have criteria and citations that make them sound very heroic. In fact, the vast majority of medals with subjective criteria are probably awarded to guys who did little more than serve at a particular place and time. For example, in 1965, when I was a West Point cadet, I and everyone else in the military at the time was suddenly awarded the National Defense Service medal. We called it the “I was alive in ’65” medal. We also had a joke about its colors: “The red is for the blood we never shed. The blue is for the oceans we never crossed and the yellow is the reason why.”

A Vietnam-era Marine fighter pilot told me an air medal means twenty missions (flights) in a combat area (like the entire country of Vietnam and environs) Really!? Then I think the Army owes me an air medal or two. My jobs in Vietnam required me to travel around to widely scattered bases—which I did in Hueys, Loches, Chinooks, Piper Cub-type planes, and C-130’s. It never occurred to me that I should get a medal for it and I will not be trying to get any now.

The air medal citation says “The Numeral ‘1’ to represent One Strike/Flight Award is authorized.” The meaning of this varied from unit to unit and time to time. In some units, it could be merely for a guy taking a ride in an aircraft with minimal duties, especially in 1972. Almost all U.S. military personnel were removed from Vietnam on 3/28/73. The last major combat units left in the summer of 1972. Kiyosaki’s Air Medal was for the period June to October, 1972. The Air Medal Citation was signed by Louis H. Wilson, Lieutenant General, U.S. Marine Corps, Commanding General, Fleet Marine Force, Pacific. Perhaps he or a member of his staff at that time could clarify what this medal really involved.

His military records show that in 1972, his unit HMM-164 was on board the USS Okinawa, a helicopter carrier.

I am a little surprised that I have not heard from anyone in his unit.

Now that we know the name of the ship, we can obtain its log through the Freedom of Information Act, but I am not that interested because Kiyosaki came back off his conscientious deserter story in the Smart Money Magazine article. He now admits he was just one of hundreds of sailors and Marines who missed the boat when it unexpectedly left early.

His military records also contain the following “Combat History—Expeditions.”

From	To	Details
5/24/72	5/25/72	OP SONG THANH 6-72
6/29/72	7/1/72	OP LOMSON 72 Phase-1 RVN This was a major operation by the South Vietnamese military with some U.S. air power support.
7/11/72	7/12/72	OP LOMSON 72 Phase-2 RVN This was a major operation by the South Vietnamese military with some U.S. air power support.
7/11/72	7/12/72	OP SONG THAN 9A-72 RVN
7/24/72	8/29/72	Participated in special search and rescue operations with 31st MAU in the contiguous waters of RVN
9/29/72	10/21/72	Participated in special search and rescue operations with 31st MAU in the contiguous waters of RVN

OP = Operation?
RVN = Republic of Vietnam
contiguous waters of RVN = ocean off the coast
SONG THANH and LOMSON = probably Vietnamese villages or provinces

The Marines often listed combat expeditions on a serviceman’s military record even though he had nothing to do directly with the operation in question. It may only mean that some other members of his unit were involved. These combat expeditions could appear on your record even if you were on R&R in Hawaii during the whole operation.

I would not have looked into his military records at all were it not for the strange story about not shooting a boy and refusing to return to his ship. Now I am trying to figure out whether his accounts in his books jibe with his military records. My preliminary conclusion is that the whole melodramatic story of not going back to the ship seems not to be supported by his military records. He also appears to have had a Vietnam tour, but without either distinction or misconduct. His decorations, including the air medal, are all analogous to the gold stars kids get in school for attendance. That is, they are for being somewhere or for being somewhere for a certain period of time.

Here’s is an email I got from a former Marine:

“I couldn’t help but notice that he was attached to H&MS-24 (Headquarters and Maintenance Squadron-24) Marine Air Group 24, 1st Marine Brigade. MAG-24 was the entire air group with H&MS-24 as maintenance support efforts. They include support such as airframes, avionics, ordinance, which was my military occupational specialty (#6541). [Kiyosaki] also said that he was 1st Marine Brigade. Brigade was ground side. Grunts, infantry, artillery. There is no way for him to have been both airwing and ground at the same time without changing M.O.S.

[Reed note: I do not know Marine procedures during Vietnam, but Kiyosaki seems to have been trained as a forward observer to direct artillery and/or air support at ground targets. Forward observers are typically attached to infantry or artillery units.]

A Marine major said this M.O.S. is for an enlisted man and that he did not believe the man’s comments would apply to officers.

The making of a financial genius

There are probably many ways to became a financial genius, but Kiyosaki has certainly chosen an unlikely route:

• flunked sophomore year of high school and had to repeat
• U.S. Merchant Marine Academy
• 3rd mate oil tanker (or was it “Love Boat” type cruise ship as he said in one of his books?)
• Marine helicopter pilot (or was it fighters?)
• refused to return to ship when it was ordered to return to combat (or just missed the boat)
• Xerox salesman
• failed businessman (nylon surfer wallets)
• failed businessman (rock and roll memorabilia)
• failed author (1993 book If You Want to Be Rich & Happy, Don’t Go To School?)
• failed MBA applicant
• homeless person
• bankruptcy (or maybe not)

Kiyosaki tries to make a virtue from all his failures and false starts—saying that’s how you learn and you have to get back up and all that. Fine. But couldn’t we see a little more actual success after all these great lessons were learned? And how did all this screwed-up stuff happen to a guy who had the benefit of “Rich Dad’s” brilliant wisdom back at age nine?

What is his background really? I am impressed by Xerox salesmen as a general rule, but that aspect of his background sure stands out from the rest. Did he really do that? He claims he was a “top-five” guy at Xerox—one of the nation’s most well-managed companies at the time. Really? And this after being something like a bottom-five guy everywhere else! (A man who called me said he understood Kiyosaki was a top salesman at Xerox, but since he is a friend of Kiyosaki rather than a Xerox guy, his knowledge may come entirely from Kiyosaki.)

College grad?

I was so skeptical that a college graduate could have written this book that I took the unusual step of calling his college to confirm that he really attended and graduated. He did. If I were a Merchant Marine Academy graduate, I would request that they do a recount of Kiyosaki’s college grades. This book is an embarrassment to the U.S. Merchant Marine Academy.

I have heard from two USMMA guys who generally agreed with my analysis. One noted that USMMA grads have an obligation to stay in the merchant marine for a certain amount of time, because taxpayers pay for their education, but that serving in the military either reduces or eliminates the remainder of that obligation. Maybe getting rid of that obligation, not “learning how to lead men,” was Kiyosaki’s real motive for joining the Navy then Marines.

Archie Bunker on Wealth

Archie Bunker on Wealth would be a more accurate title for Rich Dad Poor Dad. The overall high-school-dropout tone of the book is likely the influence of “rich dad.” To be sure, “rich dad” as depicted by Kiyosaki is street smart and has entrepreneur’s genes and energy. But like most high-school dropouts, “rich dad” has not done his homework on many of the opinions he passed on to Kiyosaki. For example, Kiyosaki says, “Prices go up because of greed and fear caused by ignorance.” In fact, prices are determined by supply and demand, as anyone who is reasonably well read knows. The “fear and greed” line is a common old saying about the prices of publicly-traded stocks, bonds, and commodities.

Real estate expert?

On pages 106 and 107, he brags of taking back $190,000 worth of 30-year notes at 10%. Competent note investors would never agree to such long terms. One expert I consulted called it a “nutty note.” I asked Bill Mencarow, owner of Paper Source if he knows of any note investors who routinely take back 30-year notes. He said, “To paraphrase Eisenhower speaking about Nixon’s vice-presidential accomplishments, give me a week and I might think of one.” Mencarow further states that 30-year self-amortizing notes, at best, would sell at about a 50% discount for cash. He actually asked around for me and found three guys who would pay only $90,000 to $120,000 for Kiyosaki's “$190,000” face-value notes.

If the notes are interest-only with a balloon of $190,000 at the end of the 30 years, they would sell for even less. Trading $190,000 worth of real estate for paper that is only worth $90,000 to $120,000 does not get you a financial genius secret decoder ring.

Kiyosaki says “much of [the $19,000 a year interest income is] sheltered through our private corporation.” In fact, corporations do not shelter income. The corporation’s income is taxed when received at corporate tax rates. When that income is subsequently distributed to Kiyosaki, it will be taxed again at individual rates. Real estate investors generally do not incorporate. Accountant Bob Baldassari of McLean, VA says he and his colleagues almost never advise a small real-estate investor to incorporate because the disadvantages far outweigh the advantages.

Smart note investors generally buy notes through their pension fund, which is not a corporation. Apparently Kiyosaki is not a smart note investor.

He says he hopes they never pay off the $190,000 because he would have to pay taxes on the principal and because $19,000 paid over 30 years is $500,000. In fact, taxes must be paid whenever any principal payment is made, partial or complete payoff. Taxes must also be paid whenever any interest is paid. There is no way to avoid paying the taxes. And the only way to defer paying the taxes is to defer receiving the income, which is cutting off your income to spite the IRS.

If he did these deals, which involve buying and selling six houses, in a short enough period of time, he would almost certainly be considered a dealer for tax purposes. Dealers are not allowed to use installment-sale treatment. That means he has to pay all the tax on the gain with the next quarterly income tax return after the closing, even though he has not received a penny of principal from the deal.

If the borrowers literally never paid the $190,000 off, Kiyosaki would be out $190,000. Wanting to lose $190,000 is insane. Measuring your return on a 30-year note by multiplying the annual interest by the term of the loan is extremely misleading. The only way to measure payments received over a period of years is in terms of interest rate or present value. Bragging about cumulative interest paid on a 30-year note indicates that either Kiyosaki does not understand the first thing about finance, or he thinks you don't.

A reader and I got into a dialogue about these notes and I came to the conclusion that the typical Kiyosaki follower literally does not know the first thing about finance. The people that guys like Kiyosaki and Sheets target are sort of the Thomson’s gazelles of real estate—people who are the weakest and most vulnerable because of their ignorance of real-estate-investment principles. Click here for a quick overview of some basic principles.

On page 108, Kiyosaki brags that “$190,000 was created in the asset column and no taxes were paid.” Not paying taxes in this case is hardly an accomplishment. The reason he has not yet paid any taxes is he has not received any money. He will start paying taxes the moment he receives any interest or principal payments on the $190,000.

On page 24, Kiyosaki speaks of “building a track [sic] of houses.” This does not demonstrate the command of real-estate terminology one would expect of a real-estate expert. (He means “tract.”)

Kiyosaki recommends various financial books, but only two real estate books: Donald Trump’s Art of the Deal and Robert Allen’s Creating Wealth. I think it’s safe to say that no other experienced real-estate investor in history ever gave a list of recommended books that included only those two. Trump is a publicity-hungry, New York City high-rise developer whose book is only somewhat useful to the typical real-estate investor. It would rank very low on most lists aimed at individual investors. For a discussion of Allen, see the guru rating page of my Web site.

There is a lot of incorrect conventional wisdom in this book.

Kiyosaki book	The whole truth about the subject in question
The rich get richer.	Sometimes, they get poorer.
It’s not how much money you make, it’s how much money you keep.	The more you make, the more you keep. Only a tax rate greater than 100% would change that. There is no such rate.
By working harder, you simply increase the amount of taxes taken by the government.	Working harder increases both your before-tax income and your after-tax income, as well your tax liability. What Kiyosaki says would only be true if the tax rate were 100%, which it never is.
An intelligent person hires people who are more intelligent than they are.	As a general rule, people who are smarter than you will not apply to work for you until you have reached a rather high level of success. On 8/21/00, the comic strip “Dilbert” made fun of this old platitude by having it uttered by the pointy-haired boss. His subordinates then gleefully pointed out that each boss in the company must therefore be dumber than his subordinates and that the CEO must be the dumbest person in the corporation. Here is an email I got from a reader of this page: “I have a friend that is following the Kiyosaki mentality.  He wants to hire/partner with me cause I have more skills and talents than he does.  He wants me to come up with the business idea, come up with the business plan, the capital, the investors, the operations, and etc...  I asked him, so what is your contribution to the business then.  He tells me that he is going find people smarter than him to make this business work.  This logic is so nonsensical. If I'm smarter than the entrepreneur than why should he even be an entrepreneur?  I could keep all the profits to myself. “I told my friend that it takes many hours of sweat and late night candle burning to run a business.  I know because I've started one before.  Unfortunately, he refuses to understand my message, instead he continues on with this Kiyosaki talk about starting a corporation!?  Without a business idea, business plan, he requested me to incorporate first.  This is exactly the crap that Kiyosaki is preaching in his books. “Then we had a huge argument about who should write up the business plan once he comes up with an idea.  He comes up with some ideas, then he wants me to write the business plan.  I ask him a few details about the target customers, SWOT, and financial forecast.  He's response was classic, ‘You figure it out.’  Gotta love the Kiyosaki mentality.” Cheng
Most people work all their lives paying for a home they will never own.	With each payment, their equity increases—as long as the property value does not fall. Many people pay off their mortgage in full before they die. Almost all thoroughly enjoy their home both during and after the mortgage.
Most people, working for a paycheck, are making the owner, or the shareholders richer.	Irrelevant. You should choose what you do only according to how it relates to your goals. You should not resent others benefiting from your efforts. Indeed, you will prosper most when you help others achieve their goals.
You work for the bank. After taxes your next largest expense is usually your mortgage and credit-card debt.	Irrelevant. You should use mortgage and credit card financing whenever they will help you achieve your goals. Resenting bank profits is childish.
The rich do not play by the same set of rules.	Yes, they do. This is sour grapes less successful people use to rationalize their inability to succeed. They lack the character to simply admit that they got beat fair and square in the economic aspects of the game of life.
It is the knowledge of the power of the legal structure of the corporation that really gives the rich a vast advantage over the poor and middle class.	None of my rich friends make any use of corporations. I became a millionaire in 1983 and never used a corporation. Corporations have both advantages and disadvantages. Most real estate investors do not use corporations. Note investors use IRAs and such. Kiyosaki claims to be mainly a real-estate investor. See my discussion below on corporation advantages and disadvantages.
The reason I minimize my income is because I don’t want to pay it to the government.	Minimizing one’s income is idiotic. You are always better off with more income. His advice would only make sense if the tax rate were 100%.
You should have a corporation and a board of directors.	One of my graduate-business-school professors called this, “Managing the company from the fiftieth floor when you only have a one-story building.” Having an outside board of directors when you are an individual real-estate investor, with or without a corporation, is a silly affectation. Corporations are costly, time-consuming, and complicated and have many disadvantages like preventing you from employing your minor children and deducting the wages without having to pay social security, withholding and so forth. Corporations cannot escape those taxes or paperwork on minor employees. In some states, the owner of an incorporated company cannot represent himself in small claims court and must hire an attorney for every little legal matter.
I love it when my real estate broker or stockbroker makes a lot of money. Because it usually means I made a lot of money.	It means no such thing. Brokers profit strictly from transactions, regardless of whether they are also ultimately profitable for the clients. “Where are the clients’ yachts?” is an old question that points up the fact that the stock brokers make money while their clients lose money.
I only play with money I can afford to lose.	A loss is a loss. All losses make you worse off. There is no line which separates losses that matter from those that do not. You should not invest in something unless you have a reasonable degree of confidence that you will not lose. There are several books, like Innumeracy and Why Smart People Make Big Money Mistakes, that condemn this kind of thinking, which is a form of erroneous financial thinking known as “mental accounting.”
Action always beats inaction.	Sometimes inaction is the best course, like when you are thinking about selling real estate or a stock that subsequently goes up.

Contempt for traditional education and the educated

The book is almost entirely contemptuous of formal education and those who have graduated from universities. He wrote another book called If you want to be rich and happy, don't go to school? On page 64, he delights in the fact that “educated people” now “came at [rich dad’s] beck and call, and cringed when he did not approve of them.”

This is a bit sick. To borrow a phrase that is now a common sitcom punch line, I think Kiyosaki has “some issues” regarding educated people and his relationship with his highly educated “poor dad.” He seems to have some psychological need to dominate and demean people like his father. At my guru-rating page, I said Dave Del Dotto was the dumbest of the real-estate gurus. Kiyosaki takes the prize for the real-estate guru with the most tangled psyche.

He says, “...the main reason people struggle financially is because they have spent years in school but have learned nothing about money.” I disagree. The main reason people struggle financially is bad decisions about getting an education, bad luck, too much spending, too little savings and investing, too much reliance on organizations for their livelihood, and not enough reliance on themselves.

Kiyosaki says that our schools focus on “preparing today’s youth to get good jobs by developing scholastic skills.” He thinks that’s a bad thing. It’s probably the right thing. Only a small percentage of people are suited to entrepreneurship. Even future entrepreneurs usually need to begin as employees to get their starting capital and to learn while they work.

I would be among the first to agree that traditional formal education is lacking in many ways. I attended Catholic and public schools, graduated from college and got an M.B.A. But I also attended the School of Hard Knocks for thirty-five years, and that’s not such a hot educational experience either. As someone said, in the School of Hard Knocks they give the test first, then the lesson. That is a slow, costly, painful way to learn. Unfortunately, it’s the only “school” that teaches many things you need to know. Obviously, the best way to prepare for life is a combination of formal traditional education, reading, seminars, experience, and asking more experienced people for advice.

Want to know what ‘the rich’ REALLY teach their children?

Rich Dad, Poor Dad’s subtitle is “What the rich teach their kids about money—that the poor and middle class do not!” Unfortunately, you will not learn that in Kiyosaki’s book. Fortunately, the real version of what “the rich” teach their kids, or ought to, was the subject of a cover story (“Rich, but not spoiled—How to raise your kids in an age of wealth”) in the 6/12/00 issue of Forbes. Forbes knows rich. (
http://www.forbes.com/premium/archives/purchase.jhtml?storyURL=/forbes/2000/0612/6514266a.html&_requestid=27740)They publish the annual “Forbes 400,” which is a list of the richest people in the world. If you have money and kids, that article and its bibliography are worth a trip to a library. The article bears no resemblance to Kiyosaki’s advice, never mentions his best-selling book in spite of its obviously related subtitle, nor is his book listed in their list of five recommended books on the subject of “Advice for the affluent parent.”

The main issue for wealthy parents is finding a way to motivate their kids to not coast because of their parents’ affluence. Also, the vast majority of parents, wealthy or otherwise, will tell you that kids are not big on listening to their parents. Kiyosaki’s naiveté about raising kids is to be expected considering that he has never had or adopted any kids. Why he feels qualified to tell those of us who do have kids how to raise them is a mystery.

More to life than money

Also, there is more to life than making money. Traditional, formal education has opened up tens of millions of new, non-wealth-building horizons for students. But Kiyosaki seems to judge all educational experiences by the single criterion: does this tell me how to get rich?

Kiyosaki talks like a politician

Kiyosaki uses phrases like “the rich” and “the poor” a lot. If you ran a Nexis computer search to see how and where those phrases have been used in the news media, I predict you would find they are almost exclusively used by leftist politicians and quasi-politicians.

A number of Democrats have complained that the Republicans are no angels either. I know. I agree. But with regard to Kiyosaki, the politicians who are most comparable are on the left because both Kiyosaki and the left pander to “the poor.” While use of Republican demagoguery might work in some cons, it certainly would not fit the get-rich-quick-in-real-estate con. Even among get-rich-quick gurus who try to rip off “the poor,” Kiyosaki is unique in using political tricks as heavily as he does. I come closest to being a Libertarian so I could not care less about either the Democrats or the Republicans.

The way politicians talk is intellectually dishonest. They stereotype (e.g., “the rich”). They engage in name calling. (e.g., Kiyosaki dismisses cost-conscious accountants as “bean counters” and critics as “Chicken Littles.”) They change the subject. They scapegoat. They try to arouse envy. There should be no politicking in a how-to real-estate book like Rich Dad, Poor Dad. See my article on intellectually-dishonest debate tactics.

Meaningless slogans

Politicians also use meaningless slogans. Kiyosaki’s book has many of those. He even adopts Jesse-Jackson-like one-of-these, one-of-those, pep-rally cadences. For example, Jackson says, “Up with hope. Down with dope.” Kiyosaki says, “Don’t work for money; make money work for you.”

“Don’t work for money; make money work for you,” sounds smart, but what does it really mean? Quit your job and live off your investments? Most of his readers are not yet in a position to do that. And when they are, they do not need his book. Obviously, the correct advice is work hard at a job or your own business, save, and invest. Kiyosaki’s version is muddled and risks giving people a dangerous wrong impression, but, like a politician, he seems more interested in sweeping the audience along to his selfish ends than in teaching them what they need to learn. A Thomas Sowell column that appeared in the 9/25/00 edition of my local paper contained several phrases that reminded me of Kiyosaki’s book:

• “…political demagogues who exploit the voters’ ignorance to gain power”
• “…people whose chief talent has been the emotional manipulation of the public for political purposes”
• “Sound bites are usually very unsound.”
• [people who] “…can’t see beyond a media image or some catchy phrases and emotional attitudes”
• “There are people out there whose job it is to manipulate your emotions for political purposes—and they get paid big bucks.”

Here are some other meaningless slogans in Kiyosaki’s book: “Learn to use your emotions to think, not think with your emotions” (page 42), “It’s not the numbers, but what the numbers are telling you” (page 53), “I’d rather welcome change than cling to the past.” (page 110), “Winners are not afraid of losing, but losers are.” (page 114) The 6/28/01 Dilbert comic strip had an employee saying, “work smarter while broadening our focus.” The pointy-haired boss responds, “That doesn’t mean anything.” The spouting of catchy, meaningless slogans is widespread. The habit of stopping and thinking about whether they really mean anything is not.

Here is a pertinent email I got on 3/17/06:

John --

For several days I've skimmed Kiyosaki's book "Rich Dad's Guide to Investing" at my local Barnes & Noble, and found the experience mesmerizing. My wife and I own a professionally managed portfolio of stocks, thanks to a modest inheritance, but apart from keeping a worried eye on the financial pages we really take little action to grow our nest egg. I'm increasingly interested in my alternatives, and I am potentially a prime candidate for Kiyosaki's mantra of "Don't work for money; make money work for you." (I'm just that lazy.)

I would have bought the book but for its poor writing. As a newspaper reporter and former copy editor, I can spot padded prose and logical fallacies a mile off. Inexperienced writers, or those who do not understand their subject, usually go on at great length to say almost nothing. I seldom see even inexperienced writers try to bog the reader down, or avoid a clear "so what," as I saw in Kiyosaki. And it didn't help that his writing style is lifeless, his characterization unconvincing.

In any event, I thought I'd Google around for expert reactions to Kiyosaki's books, as they are generally compelling in the way that infomercials and seances are compelling. I read two things: his Web site, in which he promotes board games and a $2,500-per-head weekend seminar targeted at people who, on average, likely can ill-afford the expense, and your analysis. I have to say I found your site refreshingly thorough and public-minded, and I'm glad I ran across it. Another thing I know as a reporter is when someone has done his homework. You have clearly done yours, and I'll be sure not to put any stock in Kiyosaki.

Incidentally for your readers who have seen the movie Mystery Men (1999), a tongue-in-cheek spoof of comic book super heroes, this exchange may feel apt in considering Rich Dad, Poor Dad:

Mr. Furious: Okay. Am I the only one who finds these sayings just a bit formulaic? "If you wanna put something down, you gotta pick it up". "If you wanna go left, you gotta go right". It's...
Sphinx: Your temper is very quick, my friend. But until you learn to master your rage —
Mr. Furious: Your rage will become your master? That's what you were gonna say, right? Right?
Sphinx: Not necessarily.

With gratitude,

John Snyder
Western Massachusetts

Robert Blake

In this, Kiyosaki also reminds me of Robert Blake, the movie and TV actor best known for starring in the late-70’s TV series Baretta. Blake’s TV-talk-show appearances were invariably interrupted by audience applause. Why? Like Kiyosaki, he was given to spouting platitudes so grandly and self-confidently that the audience assumed he must have had said something great. He didn’t.

[Oddly, long after I posted this comment about Kiyosaki reminding me of Blake, Blake emerged from obscurity when his wife was shot to death as he returned to a restaurant to get the gun that he forgot there. My comparing Kiyosaki to Blake had nothing to do with guns and murdered wives. Also, a Los Angeles Times article about Blake’s murdered wife, Bonny Lee Bakely, said she told friends that she wanted to marry a celebrity like Blake “to show up kids who made fun of her in school.” That is reminiscent of my analysis of Kiyosaki’s lifelong pursuit of money and status as an overreaction to insults he received in elementary school.]

Redefining words

Politicians also give new, bogus meanings to established words and phrases in order to mislead people. For example, Democrats refer to almost all spending of taxpayer’s money on government programs as “investments.” They call abortion “choice” and Republicans call opposition to abortion being “pro-life.” Kiyosaki does this, too. For example, he says, his book will “challenge the belief that your house is an asset” and “Define once and for all an asset and a liability.” His quibble with the notion that your house is an asset is the mortgage and other carrying costs and lack of rent income.

Trust me, your house is an asset. The mortgage on your house is a liability. As they accrue, carrying costs of your house like taxes and insurance are also liabilities. Once again, Kiyosaki may hurt some people with this sort of rhetoric if he discourages people from owning a home. Maybe what he is trying to say in his muddled way is that it is wise to live beneath your means, that is, buy a smaller home than you can afford, so that you have a smaller carrying costs and therefore have more money to invest. I agree. But you can learn that lesson in a non-muddled way from the book, The Millionaire Next Door.

Some have ordered me to be “fair and balanced” by attacking Republicans every time I attack Democrats. I am not trying to be Fox News. They, like politicians, are trying to please masses of people for ratings. I am stating my views honestly, not twisting them to make them fit into some equal-time formula.

I wrote an article listing the various intellectually-dishonest debate tactics at www.johntreed.com/debate.html.

Taking both sides

Another thing politicians do is take both sides of an issue. Kiyosaki is on both sides of many issues.

Issue	Kiyosaki takes one side...	...then the other
Fear	On page 31 “...it's fear that keeps most people working at a job.”	Page 37 “...many rich people are rich not because of desire but because of fear.” On page 40, “rich people with lots of money often have more fear the richer they get.”
Timing markets	on page 109, Kiyosaki brags about timing real estate markets “Wise investors buy an investment when it's not popular.” (page 154)	Also on page 154. “Smart investors don't time markets.”
Federal income tax law	On page 95, he tells you to write off car expenses, vacations to Hawaii, health club memberships	On page 109 he says, “I recommend playing within the rules.” The advice on page 95 is tax fraud.
Main reason people do not get rich	“the main reason people struggle financially is because they have spent years in school, but have learned nothing about money” (back cover)	...the main reason most people are not rich is because they are terrified of losing (page 114)
The wisdom of joining a union	Page 126. “Personally, I take no sides because I can see the need for and benefits of both sides.” (“Rich dad” was extremely antiunion.)	Same page. Highly specialized people should join a union. (“Poor dad” was a union organizer.)
Good credit	“When I occasionally come up short. I still pay myself first. I let the creditors and even the government scream.” Page 159	“My wife and I have excellent credit.” Same page
Use of inside information in securities trading	The reason you want to have rich friends who are close to the inside is because that is where the money is made. It’s made on information. ...the sooner you know, the better your chances are for profits with minimal risk. That is what friends are for. (page 154)	I’m not saying do it illegally. Same page [see below]
Treatment of real-estate brokers	Pay your brokers well (page 160)	Has an agent show him six properties then says he wants to make half-price offers on all six, which the agent refused to do. (page 170)

Extravagance

Kiyosaki says his “poor dad” frequently said, “I can’t afford it,” while his “rich dad” said, “How can I afford it?” There’s another one of those Jesse Jacksonisms. I agree that a knee jerk “I can’t afford it” is a bad habit. I also agree that asking, “how can I afford it?” is a good habit. However, this little yin-and-yang platitude leaves off the question of whether the expenditure represents good value for the money? Kiyosaki buys extravagant things like a Mercedes and a Porsche and a Rolex watch and seems to regard the “How can I afford it?” question as the only appropriate response to any conspicuous-consumption impulse.

This puts him at odds with the behavior pattern depicted in the book The Millionaire Next Door. That book, which is based on a study of many real millionaires, found that actual millionaires generally buy used American cars. “How do you think a man like me got to be a man like me?” Think about it. One of the keys to success in business is holding your costs down and getting good value for every dollar spent. How could the same person be in the habit of spending money on extravagant items for which a large show-off premium must be paid? (Note: The Millionaire Next Door book, although written by college professors, has been criticized by other college professors as illogical. For example, they found that real millionaires had taken more risks than the average person and concluded that risk-taking leads to millionaire status. That’s an error called “winner bias”—concluding that characteristics of winners caused them to be winners. Most likely a study of the bankrupt persons next door would find that they, too, took more-than-average risk. If so, the proper conclusion would be that risk-taking leads to extraordinary results, which can be positive or negative. I do not recommend the Millionaire Mind book written by one of the Millionaire Next Door authors, although it makes a few good points.)

Conspicuous consumption is for pretend millionaires

The authors of The Millionaire Next Door found conspicuous consumption was typically a sign of a non-millionaire who was trying to impersonate a millionaire. Ostentation is item number one in my real estate B.S. artist detection check list. The fact that Kiyosaki goes out of his way to talk about his Porsche; his wife’s Mercedes; travel to Peru, Norway, Malaysia, and the Philippines; his “expensive attorneys, accountants, real estate brokers and stockbrokers,” and his $400 titanium driver, makes me wonder whether he is really a financial success or a walking (driving?) Potemkin Village.

Kiyosaki likes Texans. They have a saying: “All hat and no cattle.” Kiyosaki has a big “hat” (showy displays of wealth) and he talks about it a lot.

The millionaire real-estate investors I know generally try to do their own legal and accounting work. They often buy through agents, but try to sell without agents. Kiyosaki is the first real-estate investor I ever heard of who was eager to employ expensive accountants, attorneys, and to use brokers always.

One woman who responded to my “OK, What’s the point?” question said Kiyosaki’s point was that you should not waste money on expensive toys. I wrote back, “Huh?! The guy who brags about his Porsche, Rolex watch, and $400 titanium golf club taught you not to buy expensive toys?!!!” She admitted that I had a point.

I also have an article on how wealthy people real ought to spend their money.

Risk management

Kiyosaki’s advice on risk taking borders on thrill seeking. He approvingly quotes a Texas saying, “If you’re going to go broke, go broke big.” This is dangerous, adolescent-level advice and may be why he has a bankruptcy (or not depending upon whom you believe) on his resume.

Taking calculated risks is a prerequisite for a successful life. Thrill seeking is taking risks for their own sake without calculating. On page 13, he says, “Learn to manage risk,” but the book gives no indication of how to do that. Nor does it give any indication that Kiyosaki knows how to manage risk or ever cared about the subject. Indeed, risk management is a rather sophisticated skill that would not be the forte of an eighth-grade dropout like “rich dad.” I recommend the following books which discuss risk management. Kiyosaki’s head would explode if he tried to understand them.

Against the Gods, Capital Ideas, and Capital Ideas Evolving by Peter Bernstein
The Little Book of Common Sense Investing by John Bogle
Winning the Loser’s Game by Charles D. Ellis
The Four Pillars of Investing by William J. Bernstein
Fooled by Randomness by Nicholas Taleb

Kiyosaki says he buys stock in small-cap companies that are just about to go public in Rich Dad Poor Dad. That’s rather unlikely. How do you buy stock in a company before it goes public? In theory, you could buy stock in closely-held corporations from the founder or his family or associates, but just before they go public seems like an extremely unlikely time for the owners of closely-held stock to be selling. He refuses to name any such stock that he bought.

Ethics

His recommendations on using inside information in securities trading and deducting vacations in Hawaii are not likely to get him appointed professor of ethics.

Factual errors

This book has many important factual errors.

Error	Correct version
One of the main reasons net worth is not accurate is simply because the moment you begin selling your assets, you are taxed for any gains. (page 80)	About the only asset you would sell at a gain would be real estate. All other assets like personal cars, golf clubs, furniture would sell at a loss for tax purposes. You don’t have to pay tax on up to $500,000 of gain (married couple filing jointly) on your residence because of Section 121 of the Internal Revenue Code. You would have to pay tax on the sale of a rental property, but that’s why most investors do Section 1031 tax-free exchanges. I have three books about tax-free exchanges: Aggressive Tax Avoidance for Real Estate Investors, How to Do a Delayed Exchange, and Reverse Delayed Exchanges. Kiyosaki himself mentions tax-free exchanges two pages later.
the income-tax rate of the corporation was less than the individual income-tax rates An individual with the knowledge of the tax advantages and protection provided by a corporation can get rich so much faster than someone who is an employee or a small-business sole proprietor.	Sole proprietors are only taxed once. Corporation owners are taxed twice on corporate profits: once at the corporate level and again on dividends that leave the corporation to its stockholders. Even if the corporate tax rate were just 1% you would be worse off because it is added to your individual rate, not instead of it as Kiyosaki implies. It’s true that you can receive a reasonable salary from the corporation and that will only be taxed once, but Kiyosaki disdains mere salaries as highly-taxed “earned” income. The only tax benefits of a corporation are the following: A corporation can deduct various forms of employee insurance. Sole proprietors can also deduct their health insurance premiums. Corporations can also create “cafeteria plans” to deduct limited amounts of child care and some medical expenses that are not normally covered by insurance. In a one-man or mom-and-pop operation, these small savings would probably not give you a net benefit after paying the extra setup and annual costs of incorporation.
my [corporation] bought me my first Porsche	He implies that you can deduct a Porsche if you simply have your corporation buy it instead of buying it as an individual. In fact, only “ordinary and necessary” (IRC§162) expenses are deductible and whether a corporation is involved is irrelevant. Furthermore, the tax law contains explicit limits that prevent full deductions for new luxury cars. He says all his Porsches are used. This one could have cost $100.
A corporation can do so many things that an individual cannot. Like pay for expenses before it pays taxes.	Both corporations and sole proprietors pay expenses before they pay taxes. Sole proprietors pay taxes only on the net income of their businesses, which means after expenses.
“by owning your own corporation—vacations are board meetings in Hawaii. Car payments, insurance, repairs are company expenses. Health club membership is a company expense. Most restaurant meals are partial expenses.”	There is no difference between the ability of a corporation to deduct these expenses compared to a sole proprietor's ability to deduct them. Furthermore, it would often be fraud to deduct these items. For example, a trip to Hawaii is only deductible if the principal purpose of the trip were business and it was “ordinary and necessary.” IRS would look carefully at a business trip to a popular vacation destination like Hawaii. Even if the trip were predominantly for business, only the airfare and meals and hotels during the business days of the trip would be deductible. Hotel and meal expenses for the purely vacation days would not be deductible. Business-related car expenses are deductible for both corporations and sole proprietors. Health-club memberships are never deductible for either corporations or sole proprietors. In order for a meal to be deductible or partially deductible, you must be away from home overnight on business or you must entertain a client or customer at the meal and you must discuss business or negotiate immediately before, during, or immediately after the meal. Since entertaining forces you to buy somebody else a meal, and you can only deduct half the cost, at best, you are no better off than if you had eaten a totally nondeductible meal alone in the restaurant.
“I earn 16% from the state government.”	No, he doesn’t. He is referring to tax lien certificates which can pay interest rates that high. They are secured by real estate, but payments are not guaranteed by any government entity.
There are forms of insider trading that are legal	It is generally illegal to buy or sell stock when you are in possession of material, non-public information about the corporation in question. The only legal insider trading is non-short-sale trading which is done by an insider who is registered with the SEC, reports his trades within ten days after the end of the month in which the trades occurred, and who did not have material, non-public information at the time of the trades.
Says friend did a tax-free exchange from a sole-proprietorship rental house to a mini-storage limited partnership. (Page 176)	That is explicitly prohibited by Internal Revenue Code Section 1031(a)(2)(B,C,D). Errors like this cause me to marvel at the fact that Kiyosaki's co-author is a CPA. In 2008, she was suing Kiyosaki for some reason.

Kiyosaki, like many other successful politicians, has been able to get people to stay loyal to him even after they find out he has lied to them. I find this fascinating and have created a page where various Kiyosaki dupes explain why they still love him even though he has given them false information.

“People do not believe lies because they have to, but because they want to.” Malcolm Muggeridge

The Rolex watch

A reader tells me that Kiyosaki’s corporation course says that he bought a $4,000 Rolex watch through his own corporation. He had them deduct it as a bonus to him for his sales that year.

1. Rolex watches are not a good value. They are an extravagance whose main purpose is to enable their owner to show off.
2. A bonus from your employer, whether in the form of cash or goods or services, is taxable income at the federal level, at the state level in most states, and at the municipal level in some areas. If Kiyosaki received a $4,000 Rolex watch from his corporation, he would have to pay tax on that $4,000 of income on his next quarterly income tax return. In other words, from an income-tax standpoint, purchasing the watch through the corporation is a completely meaningless exercise. Whether Kiyosaki buys the watch from his own funds or receives it from his corporation, he is out $4,000 (either as owner of a corporation that now has $4,000 less in its bank account or as an individual who now has $4,000 less in his bank account) and he gets no personal tax deduction whatsoever from it. While it is a deduction for his corporation, so is just paying him $4,000 in cash, and it is also ordinary income to him individually, so it’s a complete wash.
3. I surmise that Kiyosaki is implying this is a clever way to get a Rolex watch for free or at a discount by making it deductible. It is neither. If Kiyosaki does not know what I have just said about this transaction, he is too ignorant of this subject to be writing and lecturing about it. If he does know, then he has a rather low opinion of the intelligence of his readers and an equally low regard for their best interests.

Not likely

Kiyosaki’s book also contains many stories which I cannot say for sure are not true, but I can say I am familiar with the subjec