Robert Kiyosaki’s Best and Worst Advice
Written by
Tiffany Lew
Edited by
Rebekah Evans
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Robert Kiyosaki’s classic 1997 book “Rich Dad Poor Dad” precedes him, but does his advice stand the test of time and scrutiny?
GOBankingRates summarized some of the author, entrepreneur and motivational speaker’s best and worst advice.
Here is Kiyosaki’s best and worst advice.
Kiyosaki’s Best Advice
Understand the Difference Between Assets vs. Liability
Through his website, Kiyosaki stresses financial literacy, including a core theme: defining the difference between assets and liability. Assets generate income while liabilities incur costs. An asset is something you own that holds financial value or can generate it, like a house, stocks and savings accounts. A liability is the opposite of an asset as it’s an economic value that you owe, such as loans. Knowing the difference helps you focus on making wealth-building decisions.
Invest in Passive Income Streams
Make money work for you instead of trading time for money. Kiyosaki emphasizes passive income streams through assets rather than relying solely on income.
Financial services company Fidelity supports this idea. You should try passive income ideas such as dividends, CDs, real estate, course creation, renting out a room and many other options, according to Fidelity.
Invest in What You Understand
Kiyosaki warned against making financial moves based on what’s a trendy, hot topic. “Don’t invest in what you don’t know. Learn first then invest,” he’s said in his book and on social media.
Peter Lynch is another financial figure who also has said this. The manager of the Fidelity Magellan Fund popularized the principle, stressing the importance of knowing what you own and why you own it, a key theme of his book, One Up on Wall Street.
Kiyosaki’s Worst Advice
Don’t Save Money
Most financial advisors would agree on the basics of saving, such as having an emergency fund and a balanced approach to your finances. However, one of Kiyosak’s core arguments is that “savers are losers,” Kiyosak said in Rich Dad. Kiyosaki argued that saving is a losing strategy because of inflation.
Saving is one of the most important financial habits you can adopt as you can deal with unexpected costs and emergencies and reach your financial goals, according to HSBC.
Participate in MLMs
In his book “The Business School,” Kiyosaki encouraged participation in mult-level marketing (MLM) for the learning and networking opportunity, even though MLMs are known to have a predatory nature and a high failure rate.
Alternatives to MLM work include options such as freelance and consulting, e-commerce and direct sales, service-based businesses and affiliate marketing.
Editor’s note: This article is for informational purposes only and does not constitute financial advice. Investing involves risk, including the possible loss of principal. Always consider your individual circumstances and consult with a qualified financial advisor before making investment decisions.
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