Kiyosaki is the author of Rich Dad Poor Dad as well as many other books. I have only read RDPD and Cashflow Quadrant. Where Tim Ferris provides a lot of detailed information on specific steps, Kiyosaki is useful for developing a healthy philosophy about wealth. He is a big picture guy.
The whole gist of his message is this: Rich people do not primarily earn money from paychecks. They earn it from income generating Assets. These might be businesses that you own but do not work at, intellectual property that generates residuals, properties that you own and rent out, investments that generate dividends etc. The secondary message is that you need to be financially literate. You do not need to be an accountant, but if you do not know how to read a balance steet, income statement, or investment prospectus than you lack the tools to live in the real world.
The reason that I like Kiyosaki is that he made me realize that his strategy was exactly my Grandfathers strategy for building wealth. My father on the other hand did not follow this strategy and treated money how most people do. Today my Grandmother lives in her home off the interest from her assets. My father is over 60 and is never going to be able to retire on anything other than Social Security (which he is wise enough to realize might go further if he moves to Panama - so even my Dad gets the concept of geo-arbitrage).
Kiyosaki's books really helped me think about money is a positive way and whereas Tim provided the short term goals, Kiyosaki got me thinking in terms of the overall plan.
That said, even I have some reservations about some of his points. The difference between me and a lot of his detractors is that I do not expect to love something completely or hate something completely. If I say I like someone or something that does not mean I absolutely endorse everything about him. If I say I dislike something that doesnt mean I hate everything about it. This should be obvious, but it isn't - especially in the magic/pagan community. If I say something nice about Crowley's incorporation of Yoga, they assume that I am a die hard Thelemite. If I say that I do not think of Crowley as a prophet they assume that I hate the man and everything he did. Its called Nuance people, go out and get yourselves some.
Anyway, Kiyosaki does make some points that don't sit well with people. Among them:
- Your House is not an Asset. This sets a lot of people off because they consider their house their main, and sometimes only, asset. Technically it is an asset. Kiyosaki however defines an asset as something that has a positive cashflow - in this case your house is a liability. Its a liability because you are dumping money into it for upkeep, because you are paying more in interest over 30 years than you are for the house itself, and because even if you pay it off, you still pay hefty taxes on it. Think you own the house when you pay it off? Try not paying the property tax. Someone will sweep in and wind up owning your house for a fraction of what its worth just because they could afford to buy the tax lien.
The problem is that a lot of people seem to say he is telling people not to buy a home! This is not true at all. He is telling people not to rest on your laurels and think that your house is the key to building wealth or that it qualifies as an income generating asset.
- He is not a big fan of savings accounts. He points out that if you just have savings sitting in an account or a CD that you are actually loosing money because of inflation. Whatever interest rate you are getting is not going to keep up with the cost of living.
Again, people mistake this message as him telling people not to save. Not true. He specifically says that you should have 6 months to a year worth of living expenses in a savings account for emergencies. What he says is that beyond that you will get a better yield by investing in assets: businesses, real estate, or the market would be prime examples. All reports and statistics I have looked at back this up.
- He makes it seem like you are a sap if you have a regular job. Basically he points out that rich people do not work unless they want to. Here I actually tend to agree with the criticism. While he pays lipservice to the idea that there is nothing wrong with being an employee or being self-employed, the books do read that way, and it is a shame.
While I disagree with his attitude, and honestly I still think about going for a good safe state job every now an then, he does make some points that are hard to ignore:
1. Being employed seems like security, but it is not as secure as people pretend. If you work for someone else, you can be let go and have NO control. If you work for yourself you still may fail, but you have a lot more control over it.
2. Employees who rely upon paychecks often do not even consider other ways that money can come in. In todays economy there are very few defined benefit retirement plans out there, and even the defined contribution plans are getting worse all the time. If you have assets to retire on, than you may find yourself looking for a job at 80 years of age.
- He is more or less against diversified investments: Again, I am on the fence about this. There are a lot of people who invest with the sole intent not to lose money. This strategy is not the same strategy that you use if you are looking to make money.
The problem here is that it is a lot easier to make riskier investments if you have money that you can afford to lose. If you are just starting out, this is IMO not the time to risk a lot of money. He is correct in saying that risk is necessary for reward, but doesnt do a great job at pointing out things that are just too risky.
- He seems very anti-tax. This is where I join the critics fully. I think is attutude towards taxes is repugnant. He gives a lot of good advice on how to avoid taxes through incorporation, purchasing real estate that gives tax breaks, etc. That is all fine, but it comes with an anti-tax message this is just foul
All that said, I have gotten a lot out of his books and make them work for me in tangible ways.