Forecasts & Strategies
by Mark Skousen
“The poor and middle class work for money…. The rich have money work for them.”
—Robert T. Kiyosaki, author, Rich Dad, Poor Dad
Many of you may have read the best-seller, Rich Dad, Poor Dad. The author, Hawaiian-born Robert Kiyosaki, criticizes his own father, a high school teacher, for pursuing a traditional low-risk lifestyle. His “poor” dad advises his son to get a formal education, become a professional, get married and have kids, buy a nice middle-class home, and invest regularly in safe mutual funds and blue-chip stocks for long-term financial security. At one point, he refers to his father as “my socialist dad.”
But Robert is attracted more to his best friend’s dad, a seat-of-the-pants entrepreneur who runs a series of businesses out of his rundown home. His adopted “rich” dad takes a riskier approach—forget about a traditional education and profession. Be a risktaker and a dealmaker! Drop out of school and start your own business. His “rich” dad even advises that a house is a liability that ties up seed capital that could be used in a new business opportunity. This “rich” dad has no time for leisure or sports; his passion is all business and making another deal.
Robert rejects his “poor” dad’s conservative approach in favor of the high-risk adventures of the “rich” dad. He describes the thrill of victory and the agony of defeat going this route. Robert invests in income-producing real estate, business ventures and penny stocks. At one point in his mid-40s, he’s broke and sleeping in his car. But in the end, he reports, it pays off, and now he’s a multi-millionaire and a motivational speaker.
I admire hardworking, self-made entrepreneurs who honestly provide a better product and become rich. But it’s a big mistake to recommend this high-risk approach to everyone. Not everyone is suited to be a swashbuckling adventurer; most in fact are better off working for others and investing in free enterprise through the stock market.
Robert is wrong to criticize his father and his conservative investment strategies. There are many paths to the top of a mountain. Read George Clason’s Richest Man in Babylon.
I also dislike the arrogance and know-it-all attitude of the author. Sometimes he comes across as a jerk. It is simply wrong to suggest that owning a home without a mortgage is a “liability.” Businessmen who always have to make a deal, who can’t relax or enjoy spending time with the family, who can’t go out to dinner without talking business, who don’t enjoy reading, hobbies, or intellectual or spiritual pursuits, are not to be admired, but pitied. Robert Kiyosaki needs to read Lin Yutang’s The Importance of Living (available from Laissez Faire Books, 800/326-0996 or click www.lfb.com). “Those who are too busy can’t be wise.”