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Rich Dad Poor Dad

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Shortform Introduction

Rich Dad, Poor Dad is one of the best-selling financial books in history, selling over 35 million copies since its publication in 1997.

The book doesn’t teach the tactics of getting rich as much as it does the principles: the mindset and high-level strategies that distinguish the wealthy from the hapless.

Unfortunately, as many critics have commented, much of Rich Dad, Poor Dad is flawed. It’s not clear exactly how and when to apply the principles, and less discerning readers can follow the advice and get into trouble. Here are some caveats to set the advice in context.

Rich Dad, Poor Dad doesn’t engage on tactical details that would help people apply the decisions. Kiyosaki says these are out of scope of the book, and maybe details would alienate the popular reader, but it’s a poor excuse. Examples of useful questions to cover:

• When does it make sense to rent vs buy a house? What will end up being a better financial decision in the long run?
• How do you assess the risk and return of an investment? How do you compare different investment opportunities to each other?
• What do the data show on how higher education affects one’s income?

Kiyosaki includes pretty outlandish examples of fantastic investment opportunities. These aren’t necessary for understanding the principles (and we omit most of them from this summary), but they are misleading for the more gullible reader. Here they are, for your understanding:

• He mentions foreclosed houses worth $75k that he bought at $20k and flipped for $60k within 5 hours of work.
• He mentions turning an investment on the order of $5,000 into a million dollars while waving away the details.
• In the most optimistic case, these were cherry-picked, best-case-scenario examples. In a pessimistic case, they were fabrications.

Rich Dad, Poor Dad has some advice that can be interpreted irresponsibly and lead to disaster.

• Robert Kiyosaki advises people to start their own corporations and pay for expenses pre-tax. He implies that they should be legitimate business expenses, but doesn’t clearly define this. A novice can get easily
• He likes the Texan attitude: “if you’re going to broke, go big.” This can provoke disproportionate risk-taking for the uninformed.