The Robert Kiyosaki fraud will take you down the deepest of rabbit holes and leave you scratching your head in disbelief. The man has valid points, but he extorts his vague (and general) advice for financial gain.
If you’ve ever wondered throughout the personal finance realm, you have certainly come across his work and teachings. Is all his financial advice bad or fraudulent? No! In fact, some of it is quite reasonable.
Kiyosaki has always been a huge proponent of owning gold, silver, and now Bitcoin.
His interaction with a young journalist sums up his entire persona into one, quick story. The journalist mocked one of his books for being poorly written and lacking any clear guidance.
Kiyosaki responded, “The cover says NYT Best Seller, not Best Written“. Robert is a walking charlatan, snake oil salesman, and hoodwinker!
Rich Dad Poor Dad
Rich Dad Poor Dad is on the list of my 5 must-read personal finance books. I think everyone (no matter their interest in personal finance) should read this book.
It’s a wonderful introduction to “accounting for dummies” and distinguishes between assets and liabilities. Kiyosaki notes that “assets put money into your pocket” and “liabilities take money from your pocket”.
If your stuck in determining whether something is an asset or liability, check which way the cash is flowing. These are some of the assets mentioned in the book.
- Rental Property
Notice how all these assets produce cash flow (dividends, interest payments, or rent). Contrarily, Kiyosaki says the middle class is doomed because they accumulate liabilities instead.
- Depreciating Vehicles
I read this book during my freshman year of high school and again during my senior year of college. It fundamentally altered my mindset regarding assets and passive income.
Thus, I could ultimately use my actively earned income (salary at work) to buy assets that earned passive income, so I could make money while I sleep.
I saved as much as possible, acquired dividend paying index funds that were always reinvested, and have been on a journey to financial independence ever since.
Now, here’s the dilemma. I don’t think Robert Kiyosaki ever expected his book to become the best selling personal finance novel of all-time! I mean c’mon, it has sold over 20 million copies.
He notes he merely wrote the book to promote his (bluntly put) boring board game, Cashflow. The book was written in the 1990’s, and I think he actually wanted to help his readers achieve financial freedom.
The four quadrant picture is embedded in personal finance greatness! It’s a rough sketch of tax planning advice to minimize your total tax liability.
It’s actually fairly decent advice for tax novices, and it’s the reason billionaires don’t pay taxes. In my article “How to Never Pay Taxes Again“, I provide a further break down between the four quadrants.
Nevertheless, here’s the quick and dirty explanation of tax rates for various groups.
- Employee (40%)
- Self-Employed (50%)
- Business Owner (20%)
- Investor (0%)
Kiyosaki urges his followers to alter their mindset and work towards becoming business owners and investors (rather than employees or self-employed), so they can minimize tax expenses.
Wait, why do employees pay more in taxes than business owners? It all comes down to the marginal tax rate discrepancies between earned income and dividend income/capital gains.
Warren Buffett pays a lower tax rate than his secretary because virtually his entire net worth is wrapped in Berkshire Hathaway stock. So, if he doesn’t sell any shares, he doesn’t have any income for the IRS to tax.
This could all change under a new tax code, but it’s how the code is currently written. As the old saying goes, it’s not what you earn but what you keep.
I minimize my tax bill by investing in tax-advantaged retirement accounts (401k and IRA) and deferring taxation on capital gains.
The first time I read Rich Dad Poor Dad I thought it was 100% true, but I was a naive 14-year-old. Reading the book as a 22-year-old college graduate offered a whole new lens.
I can’t be the only person who thought, “No way! That’s total bullsh*t.” The dichotomy and conversations Robert supposedly has with his Poor Dad and Rich Dad throughout the novel seem a little far fetched.
Call me a little bit skeptical that his dad told him, “Go to school, get a job, work for someone with good benefits, and getting rich is impossible”. Who actually says that?
There are multiple conspiracies hurdling around chat rooms, and no one has EVER been able to pin down who this rich dad actually is! Nevertheless, Kiyosaki firmly states Rich Dad is real.
Journalists went on a search through Hawaii property records and business licenses, but they were never able to locate the supposed character. Again, the Robert Kiyosaki fraud builds.
Robert has done numerous interviews since the book’s publishing, and he always tells the SAME story (just different characters).
Supposedly, Robert has fought with his accounting professor, entrepreneurship professor, and marketing professor because “they don’t know they’re teaching”.
Is Robert Kiyosaki just picking fights with everyone? Or, more likely, is he simply making up the encounters for a dramatic story.
Amway and MLM Sales
Alas, we have reached the epitome of the Robert Kiyosaki fraud. You’re going to need to buckle up because the rabbit hole is so deep you might spot China.
I’m sure everyone is familiar with Amway, but if you’re not, here’s a simple explanation. Amway is a multi-level marketing company, also known as a gigantic pyramid scheme, that provides e-commerce marketing.
A pyramid scheme is when a company generates income through recruiting, initial investments, and sales to distributors all within the company. There is essentially no revenue from customers outside Amway.
This would be like Disney charging all their employees a fee to work for them. Sounds dumb right?
Well, I was recently pitched on Amway from a recruiter (unsolicited of course), and you bet there was a Four Quadrant and Rich Dad Poor Dad reference.
Recruiters always mention personal finance buzzwords (passive income, entrepreneurship, financial freedom, own your business) to appeal to emotions. Well, no sh*t, I would love to earn income for doing nothing.
Does anyone happen to know an author who wrote a book on this exact topic? Hmm, not ringing a bell. Oh wait, Robert Kiyosaki!
In fact, Robert Kiyosaki and former Amway CEO (Bill Gavin) are very good friends! Well, maybe I am just being a little cynical…..nope I did one quick Google search and the plot fell into my lap.
The pyramid scheme industry provides Kiyosaki with a steady set of customers for his products; in return, Kiyosaki provides these scummy companies his support that you can be a business owner and pay less taxes (untrue of course)!
Going back decades, Kiyosaki has sold millions of dollars in training materials, sales guides, and personal finance books to the Amway cult.
Forbes noted, “Robert Kiyosaki, author of the bestselling Rich Dad Poor Dad series of financial advice books, is offering his fans yet another lesson in how the rich are different than you and me.
They file for bankruptcy not because of ill health or unemployment related issues, but instead as a strategic business move.”
How is this possible? Robert Kiyosaki, the financial guru billionaire, filing for bankruptcy? Now, I understand why he did this, but it’s not a great look for a personal finance expert to file bankruptcy!
Sure, this 100% makes Robert Kiyosaki a fraud because he can’t even practice what he preaches, but I digress.
$100K Bitcoin and Corporate Real Estate
This is where Kiyosaki falls right off his rocker! Personally, I think hell will freeze over before the price of bitcoin reaches $100K. Honestly, I think bitcoin is worthless (read my full explanation here).
Following his thesis that central banks, money printing, and booming deficits doom the Bretton-Woods monetary system, he believes Bitcoin can fill the void.
I think gold already serves this role perfectly (it’s only been used as money for 6,000 years). Additionally, he co-authored a best selling novel with Donald Trump on the beauty of corporate real estate.
Geez, talk about two asset classes getting taken behind the woodshed and beaten repeatedly with a metal bat!
Corporate real estate values are collapsing as tenants abandon traditional office space in the work-from-home economy. There are wonderful tax benefits from owning real estate.
- Interest Deduction
- 1031 Exchange
- Stepped-Up Inheritance Basis
I think Robert is living in fantasy land if he genuinely believes Bitcoin will 10x in price and is where you should park your retirement savings.
What do I know, I’m just a kid? At least I never declared bankruptcy!
In late 2019, I kept seeing the great YouTube algorithm suggesting new Kiyosaki videos. The videos were so generic and clickbaity (so naturally I clicked). These are some of the ludicrous titles!
- Rich vs Poor Mindset
- The Speech That Broke The Internet!!! Keep Them Poor!
- What The Elite Don’t Want You To Know!
I began to notice that most of the videos were interviews with Brian Rose from London Real. Also, every video juxtaposed elites against the working class.
He never recognizes someone may be down on their luck!
Who are these elite people, and what don’t they want me to know? I highly doubt the Rothchilds are cringing and foaming at the mouth because Robert Kiyosaki gave me some vague advice.
Every video leaves you wondering, “Great, but what do I do now?” He just mentions buzzwords and “they don’t teach you this in school”.
Yeah, they don’t teach me how to fix a spare tire in school, but it takes 5 minutes to learn. What should I invest in? How do I amass wealth? What is my next step?
All of these questions have no answer, but I bet Robert would love for you to purchase his overpriced real estate investing courses!
Bashes Financial Assets
He has this super rehearsed line of buying stocks, bonds, mutual funds, and ETFs in a 401(k) is for losers. Then follows another line about investing long-term in the stock market is for schmucks.
I always wonder, “Dude, where are you getting your advice?” There has never been a 20 year stretch in US history where the S&P 500 has gone down.
I realized it’s because he has absolutely no idea how to fundamentally value a business. He never mentions value investing, like a Warren Buffett disciple might.
Nope, instead he talks about the time he bought Coca Cola at the recommendation of his financial planner and lost money. Well, did you run a DCF valuation or do any analysis? Highly unlikely.
He stirred the whole financial world into a storm with his famous line, “Saving money is for losers. Why save money when the government is printing it?”
I don’t disagree, but that’s why I own real assets. The Fed can print money, but they can’t print real estate, innovation, and businesses! Inflation can wipe out your cash savings fund, but that’s why you diversify.
Debt is Money
Not all of his advice is too bad, and I actually agree with a lot of his criticisms surrounding the Federal Reserve. Kiyosaki has long argued against the abolition of the gold standard by Richard Nixon in 1971.
Politicians hate the gold standard for the same reason high school kids don’t want chaperones at prom; they facilitate restraint, take the punch bowl away, and kill all the fun!
But, we couldn’t stimulate the economy during a recession if we were on a gold standard? Yes, that’s true, but one could also argue the stimulus is an artificial high.
Hayek’s Nobel Prize winning theory on the boom-bust and credit cycle all boils down to loose monetary policy from the Federal Reserve and foreign central banks.
Historically, individuals could redeem their US currency (fiat, paper money) for real gold reserves stored at the central bank. The old saying was “the dollar is good as gold”, which was true.
In the 21st century, you most definitely cannot redeem currency for gold (I dare you to try). Kiyosaki has argued that central bank meddling in fixing interest rates has led to debt = money.
Interest rates are the price of money, and we wouldn’t want the government setting the price of bread. Somehow, we have allowed un-elected bureaucrats to set the price of money.
What’s He Selling?
Honestly, every time I see another Robert Kiyosaki fraud I just wonder, “What’s he trying to sell me now?” Is he writing a new book or developing another sales guide?
The best way to make money online is to talk about how to make money online. It’s a lot harder to build a legitimate business and generate revenue, with a high profit margin.
This is a good question to ask any time someone solicits you for “just a quick call”. Ulterior motives and poorly aligned incentives are one-in-the-same online.
Robert Kiyosaki Fraud
The Robert Kiyosaki fraud will take you down the deepest of rabbit holes and have you scratching your head in disbelief. The man has valid points, but he extorts his vague (and general) advice for financial gain.
Talk about a supposed “expert” littered with negative reviews, lawsuits, business bankruptcy, vague advice, and sleezy sales tactics.
This isn’t the same guy who wrote a life-changing book in the 1990’s. It’s a guy looking to capitalize on his false authority and part you from your hard-earned money.