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The most recent finance book I have 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 will give you my point of view about this book and tell you what it is all about.
As you will see, my point of view in this book is a bit varied. Some things are really good. But some things are really bad about this book. Let’s directly see what I am talking about.
Overall, I did not think much Rich Dad Poor Dad. First of all, it is not well written. At least, the author is honest on that point and says he is not a great writer, he is 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 is a bit all over the place. The book lacks in organization and logic. I am a big reader, so I am 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 do not 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 has achieved this goal by investing in real estate. But he also gives a few other examples throughout the book. One important point here is that the rich do not 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 still encourages you to work, not for money, but to learn. Indeed, the knowledge you will 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 risks.
The point of the book can be stated as such: Work for yourself, have others work for you and make your money work 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 a 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 will 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 did not 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 of other examples. In the end, if you agree with this book, you know you should make your money work for you. But you do not really know how to do it. I believe in more practical advice than what this book provides.
Another thing I did not like in this book is that it almost only focuses on real estate. There is only a small part about the stock market, small-cap cap stocks. But there are very few details.
While I am not against real estate, it is 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. A 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 am talking here about crowd-funding for real estate for instance. You could invest with small available assets.
Finally, as said before, I did not like the writing style of the book. You can totally feel that it is not be written by a professional writer. This is highly subjective of course, but reviews are also subjective. For me, as an avid reader, books with poor style should not be published as books. I do not mind poor style on the internet (I do not think I have a good style either), but books should be well written.
While I do not 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 will not get rich by being frugal and saving most of your salary. You will 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 businessman. I do not want to start a business. I do not have a problem going to work and saving some part of my salary to retire earlier and be financially independent one day.
While it is not a great book, it offers a different perspective on money and getting rich. I think it is 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.
Also, if you already read that book, I would be glad to hear your point of view. Also, if you have more recommendations for books :)