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November 28, 2007

Review: Rich Dad, Poor Dad

by Dan

The book Rich Dad, Poor Dad, written by Robert Kiyosaki, was the first book I read on the subject of investing. I’ve never thought of it as an incredibly well-written book, but it did get me thinking about money.

The three most valuable lessons I learned from reading Rich Dad, Poor Dad are:

  1. Assets make you money. Liabilities cost you money. To be rich, buy assets and avoid liabilities.
  2. Most decisions about money are driven by the emotions of fear and desire. Learn to make rational decisions.
  3. The more I know about something, the less risky my decisions become.

I believe these are incredibly valuable lessons to have learned. Notice, however, that I didn’t say anything about real estate. There is quite a bit about real estate and owning your own business in the book, but there isn’t really enough to act on. In fact, this was somewhat frustrating. I purchased two more of his books and his CashFlow 101 game, which I really like. The books started to get repetitive, so I stopped buying them.

Today, I stumbled on a thoroughly researched criticism of the book and it’s author by John Reed. Reed argues extensively that Kiyosaki is making up some of the major stories in the book and giving dangerous advice in others. I found his arguments and evidence pretty convincing.

However, I needed to learn those lessons. And it was better to do it by reading someone else’s experiences than to learn it myself the hard way. I still like the book, but would like to find a better one to recommend — one that doesn’t have ethical issues.

In the meantime, Rich Dad, Poor Dad is still one of the best books on higher-level thinking about finances and money. When I find a better book, I’ll be sure to mention it.

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