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Am I being too harsh? I don’t think so. I’m not saying that you can’t learn anything from these people or that they aren’t successful and rich, I’m just saying that they aren’t telling the whole truth.
Robert Kiyosaki and Donald Trump’s new book (I can’t believe they teamed up) is called “Why We Want You To Be Rich.” Well that’s awfully nice of them but what it should really be called is “Why This Title And Your Search For Easy Money Will Make Us Richer.”
Robert Kiyosaki has written and lent his name to many many books (I stopped counting at 22 on Amazon.com) so maybe his advice should be to write books. He also writes a colmn on Yahoo! Finance which I've periodically written about (Kiyosaki, Kiyosaki 2, and Kiyosaki 3). His advice doesn’t seem to change from book to book yet he can fill all these pages and people continue buying. This particular book is already number 4 on the Amazon.com bestsellers list.
The basic theme Mr. Kiyosaki repeats in his books and in interviews is that the old way of thinking, save money, invest in mutual funds and work hard, doesn’t make you rich. He says that people like himself and Donald Trump don’t invest in mutual funds because that’s playing it safe. This sounds like the joke advice I gave in my book (not worth buying either). “Safe is the enemy of rich” I write in a section which I poke fun at other financial books I’ve read in the past.
There is some truth to that statement, however, since the greater the risk, the greater the potential return but you must be mindful that the greater the risk the greater chance for loss, too - that’s why it’s called risk.
Let me put it this way. The entrepreneur that becomes successful and rich after starting his own company didn’t get that way simply because he took the risk. He became rich and successful because of his passion, the quality of his work, the attention to detail, the single minded focus, long hours, luck and many other factors. Listening to Mr. Kiyosaki it seems the only thing you need to be rich is the desire to be rich and to work for yourself. Oh, if only that were true.
As Jonathan Clements, in a WSJ article (paid subscription required), says, "My entire career has been a pathetic waste of time. Or so I gather from Robert Kiyosaki and Donald Trump."
Which brings me to another reality that can’t be avoided and that is not everyone can be an entrepreneur. Even if everyone had the passion to work for themselves, imagine a world where every lawyer had his own practice, unable to hire any lawyers to work for him since they were all starting their own firms. Imagine if every person who works in a supermarket set out on their own and opened a store. There would be supermarkets everywhere. Simplistic logic? Yeah and so is the “you’ll be rich if you just stop playing it safe” advice.
And Donald Trump is successful if you judge success by the size of a man’s bank account but how many times has he personally been close to bankruptcy? And how many times have his businesses gone bankrupt? Well once in the early 90s his business was very close to bankruptcy but he “restructured” his debt. In 2004 his casino business filed for Chapter 11. Is this the successful person you want advice from?
I’m tired of these books that don’t offer anything new, recycling the same tired cheerleading for wealth while putting down people like you and me who work hard, save, invest and are doing just fine. I’m an entrepreneurial person and have started many businesses myself, but I’m not going to say that’s the only path to success. Sure I want to be richer than I am but I also know I’ll never be Bill Gates rich. I’ll fall somewhere between the two extremes and I’ll be happy wherever I end up.
I'm going to continue working hard and that means changing careers, and continuing to improve my rental property and maybe even starting a new venture. But I'm also going to continue saving, investing and working for someone else because so far that's worked extremely well for me. How about you?
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