Robert Kiyosaki: Here’s Why Saving Money Actually Makes You Poorer
Written by
Dawn Allcot
Edited by
Amen Oyiboke
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Personal finance expert and “Rich Dad, Poor Dad” author Robert Kiyosaki recently shared on X, formerly Twitter, that “fake” money (that is, fiat money, which is not backed by gold) “makes the rich richer … and the poor and middle class poorer.”
Kiyosaki went so far as to tweet, “The Rich do not work for money and Savers (of fake$) are losers.”
Before you go ahead and wipe out your emergency savings account on a dream vacation or a collection of Louis Vuitton bags, it’s important to understand the context behind how your money loses value in a traditional savings account and what Kiyosaki actually meant.
How Cash Loses Value
The U.S. dollar is no longer backed by gold or other commodities. The more money the U.S. government prints, the less value each dollar holds.
Collin Plume, founder and CEO of Noble Gold Investments explained, “Cash loses value by the minute — probably the only asset in the world that does so. So, saving cash actually means losing purchasing power or diminishing wealth.”
CK Zheng, co-founder and CIO of ZX Squared Capital said, “Saving money will not make you rich, for sure. It will make you poorer compared to your friends who invest wisely.”
Hedge Against Inflation with Investments
Kiyosaki asserted that investments like gold and silver hold their value, unlike cash. “Please start saving Gold, Silver, & Bitcoin,” Kiyosaki posted, calling these assets “Real Money [sic].”
“Gold holds its value and keeps up with inflation. If you invested $50,000 ten years ago in gold, if you convert it to cash now, you will still be able to afford everything you were able to afford 10 years ago, and then some,” Plume said.
Peter J. Klein, founder and CIO at ALINE Wealth added, “Gold and other precious metals serve as a hedge against not only inflation but also geopolitical flare-ups.”
Zheng shared that the younger you are, the more you should be investing in diversified assets as much as possible. “For the younger generation, investments are far more important than savings to become financially self-sufficient,” he said.
The Importance of Building Emergency Savings
However, there are good reasons to keep cash on hand. Experts recommend saving anywhere from three months to one year’s worth of living expenses in a high-yield savings account.
“Having money available instantly in a savings account is essential,” said Melanie Musson, personal finance expert with Clearsurance. “You can’t pay your utility bill or insurance deductible with gold.”
Likewise, having cash-based assets like money markets and Treasury bills puts you in a better situation to take advantage of market downturns. “When markets are under stress, cash is the asset from which an actively minded financial advisor can pull from to allocate to assets whose prices have been discounted due to short-term volatility,” Klein said.
Expert Tips on Building a Balanced Portfolio
A balanced portfolio created based on your personal risk profile may include any combination of cash in a high-yield savings account, high-yield CDs, stocks, T-bills, precious metals and even crypto.
“When you invest, you need to make sure you can afford any potential loss that may occur in the short term,” Zheng said.
Plume shared that, for every dollar he puts into the stock market, crypto or other ventures, he invests a dollar in gold or silver. “The idea is to have an asset that you can count on when the economy goes south, that one asset you can liquidate quickly while you wait for the rest of your portfolio to recover.”
As far as Bitcoin, he said, “That serves a different purpose. It’s your risky pile, that one asset that can tank as fast as it can recover. It can turn you into a millionaire overnight or make you poor. You need assets like that, but no more than you need traditional ones like stocks.”
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