Book Review: Rich Dad Poor Dad

Posted on Categories Books, Investment
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Rich Dad Poor Dad Book Cover

The most recent finance book I’ve read is “Rich Dad Poor Dad” by Robert T. Kiyosaki. This is my short review of the book. This book is very different from the others, in several ways. Generally, the personal finance community does not rate this book very high. In this post, I’ll give you my point of view about this book and tell you what it’s all about.

 

 

The book

Overall, I didn’t think much of this book. First, it’s not well written. At least, the author is honest on that point and says he’s not a great writer, he’s only a great seller. Which makes sense. The organization of the book is a bit hard to follow. The author tells us the story of his two dads but it’s a bit all over the place. I’m a big reader, so I’m generally quite critical on the writing style and organization of a book.

Moreover, the point of the book is very different from other books in personal finance. And a lot of people in the FIRE (Financial Independence Retire Early) dislike the book for this. Most books and blogs encourage you to save as much as possible of your salary and invest what you are able to save in the stock market (and bond market). But, Rich Dad Poor Dad wants you to stop working for other people and get your own business going. Something, he calls getting out of the rat race. The idea is that you don’t want to spend your whole life working for other people and spend most of what you gain in taxes. But you want others to work for you and generate more money and get more assets.

The author’s achieved this goal by investing into real estate. But he also gives a few other examples throughout the book. One important point here is that the rich don’t work for money, the money works for the rich.

Another important point in the book is that the education system is not adapted at all for people to get rich. The education system forces you to spend a lot of years in school to then make you work a lot of years in a company, for others. Moreover, he also states that the system does not teach some basic, but very useful, skills like accounting that you should master. A point that was quite interesting is that the author encourages you to work, not for money, but to learn. Indeed, the knowledge you’ll gain by working on a company or on a project or on your own business is very valuable. You can then use this knowledge to improve yourself and do even better for your next project. Moreover, you should never be afraid of failure and losses, they will make you learn, you need to take some ricks.

The point of the book can be stated as such: Work for yourself, have others work for you and make your money works for you as well.

What I liked

The book makes some very good finance points. First, it teaches you to invest and that is a good thing. You should not let all your money sleeps in a bank account with 0.1% interest. Make your money works for you! Then, it also makes you pay yourself first and then worry about paying the others. Of course, you should always pay the others as well, but by paying yourself first, you’ll have to think of how to pay the others. This could mean increasing your income or decreasing your expenses. And either way is good for your finances.

What I didn’t like

The main thing missing with these books for me is more examples and advice on how to achieve goals. Indeed, the author mainly describes his experience, but it should broaden the context on other examples. In the end, if you agree with this book, you know you should make your money work for you, but you don’t really know how.

Another thing I didn’t like in this book is that it almost only focuses on real estate. There is a small part on the stock market, with small cap stocks, but very little details. While I am not against real estate, it’s not a good idea to have all its eggs in the same basket. Moreover, not everybody wants to invest in real estate. It also encourages you to use debts to purchase real estate. Mortgage is not necessarily a bad thing, but you should avoid having too much and leverage only for profit is not a good thing for me. And today, there are easier ways to invest in the real estate market than directly buying houses and reselling them. I’m talking here about crowd-funding for real estate for instance. You could invest with small available assets.

Finally, as said before, I didn’t like the writing style of the book. This is highly subjective of course (but so are reviews 😉 ). For me, as an avid reader, books with poor style should not be published as books. I don’t mind poor style on the internet (I don’t think I have a good style either), but books should be well written.

Summary

While I don’t completely agree with the book, it makes some very good point. One thing is important to understand with this book, its goal is not to make you financially independent. Its goal is to make you rich. The difference is very important. You’ll not get rich by being frugal and saving most of your salary. You’ll get rich only by taking on risks and try to get your own business going on. I think this is true. But, not everybody wants to be rich and not everybody wants to be a business man. I don’t want to start a business. I don’t have a problem going to work and saving some part of my salary to retire earlier and be financially independent one day.

While it’s not a great book, it offers a different perspective on money and getting rich. I think it’s interesting. If you only focus on FIRE and are not interested in getting rich, you should not consider this book. But if you want to have a broader perspective, you could take a look at this book.

If you are interested, you can get it from Amazon: Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not!

If you already read that book, I’d be glad to hear your point of view. Also, if you have more recommendations for books 🙂

5 thoughts on “Book Review: Rich Dad Poor Dad”

  1. Hellooo poor Swiss! You have a great review yourself and the points you make are accurate.

    The only difference is that I’m in love with the book and you may not be as much hehe. But that’s okay because everyone is different!

    You’re definitely right that he’s not the best or sophisticated writer, but I love how it’s easy to read his book. You’re also on point for saying there’s a difference between rich and “FIRE.” I don’t think people who are achieving FIRE will like it very much but I’m sure they will still agree with some of his points such as the ones you mentioned. Always focus on building assets!

    Those who want inspiration from the rich will definitely enjoy this book. They will notice that he has many characteristics of the rich such as thinking big and taking risks. Of course, that’s not for everyone.

    In the end, everyone has different ways to achieving wealth. Whatever makes them happy is all that matters!

    Great review here! 🙂

    1. Hello panda,

      Thank you very much 🙂

      I liked your review very much too. Much more in depth than mine. In fact, after seeing your review, I updated mine to add more matter to it 😛

      Yes, it’s normal that a book is not liked by everyone. If I wanted to get rich, I may probably have liked the book more. For FIRE, it’s not as useful, but even I liked to have a different point of view. And I’m starting to believe that some level of personal finance education in school would be great.

      Thanks for stopping by.

  2. I’m about 2/3 the way through another of his books “Rich Dad’s Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not!” and I feel very similar to your review above. There are occasional good bits of info, and obviously making people aware of the importance of personal finance early on is a great thing…but most of it is vague comments, blatent adverts for his other books, very repetitive and not very readable.

    Comments that stick in mind like “the main difference between the rich and the poor is vocabulary. Rich people know more words about finance and words make money”. Sorry…but no. Knowing what the words mean doesn’t make you rich. A willingness to learn the sometimes complex world of finance may be what he means, but that’s a lot more than vocab.

    At 2/3 in it feels like he is contantly telling me “and in the next chapter I’ll give you an example to back up my fables…” but it never happens and we go back into what often is quite patronising discourse like “I don’t know why more people don’t choose to be rich”, then telling me “only when you’re rich can you take advantage of the investment opportunities for the rich”…but also reminding me “it isn’t true that it takes money to make money”. Well…let me know, which is it because you seem to be telling me two different things.

    I don’t think I’ll be “investing” in another of his books…I’m a little annoyed he’s made himself richer from my purchase really.

    1. Hi Simon,

      Thanks for your point of view!

      Yes, I completely agree. Even on this book, I feel he’s really in it for the money. At least he doesn’t try to sell other books in Rich Dad Poor Dad.

      It’s crazy that he’s looping around like this. In general, he’s quite patronizing. But he promises the earth to people and that’s enough for most.

      I really wish his books were more advice-based than story based and promises.

      I’m not sure it’s true, but I’ve read several times that without his books and games and conferences he would have been bankrupt at least once.

      I won’t be investing in any other of his books either I think.

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