Robert Kiyosaki
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Robert Toru Kiyosaki (born April 8, 1947) is an investor, businessman, self-help author, and motivational speaker. Kiyosaki is best known for his Rich Dad, Poor Dad series of motivational books and other material. He has written 18 books which combined have sold over 26 million copies [1]. Although beginning as a self publisher, he is now published by Warner Books, a division of Hachette Book Group USA. Three of his books, Rich Dad Poor Dad, Rich Dad's CASHFLOW Quadrant, and Rich Dad's Guide to Investing, have been on the top 10 best-seller lists simultaneously on The Wall Street Journal, USA Today and the New York Times. The book Rich Kid Smart Kid was published in 2001, with the intent to help parents teach their children financial concepts. He has created three "Cashflow" board games for adults and children and has a series of "Rich Dad" audio cassettes. He also publishes a monthly newsletter and gives motivational talks around the world. He also writes a weekly column on Yahoo Finance. [2] [3]
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[edit] Personal life
He is married to Kim Kiyosaki. He was born and raised in Hilo, Hawaii and is a fourth-generation Japanese American. Kiyosaki is an alumnus of Hilo High School. He attended the U.S. Merchant Marine Academy in New York, graduating with the class of 1969 as a deck officer and served in the Marine Corps as a helicopter gunship pilot during the Vietnam War, where he was awarded the Air Medal. Kiyosaki left the Marine Corps in 1974 and got a job selling copy machines for the Xerox Corporation. In 1977, Kiyosaki started a company that brought to market the first nylon and Velcro "surfer" wallets, which grew into a moderate success. In 1985 Kiyosaki founded a business and investment education company that taught to a large number of students throughout the world. In 1994 at the age of 47 he sold his business and 'retired'. Around 1996-1997 he formed Cashflow Technologies, Inc. which operates and owns the Rich Dad (and Cashflow) brand.
[edit] Robert Kiyosaki's teachings
A large part of Kiyosaki's teachings focus on generating passive income by means of investment opportunities, such as real estate and small businesses, with the ultimate goal of being able to support oneself by such investments alone. In tandem with this, Kiyosaki defines "assets" as things that generate money, such as rental properties or businesses, and "liabilities" as things that cost money, such as house payments, cars and so on. Kiyosaki also proclaims financial leverage to be critically important in becoming rich.
Kiyosaki stresses what he calls "financial education" as a means to obtaining wealth. He says that life skills are often best learned through experience and that there are important lessons not taught in school. He says that formal education is primarily for those seeking to be employees or self-employed individuals, and that this is an “Industrial Age idea”. And according to Kiyosaki, in order to obtain financial freedom, one must be either a business owner or an investor, generating passive income.
Kiyosaki speaks often of what he calls “The Cashflow Quadrant,” a conceptual tool that aims to describe how all the money in the world is earned. Depicted in a diagram, this concept entails four groupings, split with two lines (one vertical and one horizontal). In each of the four groups there is a letter representing a way in which an individual may earn income. The letters are as follows.
- E: Employee – Working for someone else
- S: Self-employed or Small business owner – Where a person owns their own job and is their own boss.
- B: Business owner – Where a person owns a “system” of making money, rather than a job to make them money.
- I: Investor – Spending money in order to receive a larger payout in return.
For those on the left side of the divide (E and S), Kiyosaki says that they may never obtain true wealth. Conversely, those on the right side of the divide (B and I) are supposedly following the only road to true wealth.
[edit] Books
Kiyosaki is best known for his book Rich Dad, Poor Dad, the #1 New York Times bestseller. Kiyosaki followed with Rich Dad's CASHFLOW Quadrant and Rich Dad's Guide to Investing. He has now had at least a dozen books published. A partial list of his books is included below. [4]
- Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not! (2000)
Originally self-published before being picked up commercially to become a best seller, the central concept of the book is an anecdotal comparison of his "two fathers." His "poor dad" was his biological father, who became Superintendent of the Hawaii State Department of Education but had very little real net worth. Contrasted with this is his (arguably fictitious, see “Criticism and Controversy” section of this article) "rich dad," his best friend's father who became "the richest man in Hawaii" by investing his smaller income into income-producing investments. Its main purpose as a self-help book is to help people rethink their idea of money and especially their concept of themselves as employees who will gain financial rewards from conformity and education.
Kiyosaki uses the "rich dad, poor dad" comparison to illustrate his view that the majority of people are stuck in what he refers to as "the rat race"—living paycheck to paycheck and spending all of their time working to pay bills. In his books, Kiyosaki advocates tax-advantaged investment vehicles, such as real estate or businesses, rather than ownership of securities. This idea is further developed in his later books and "Rich Dad" became Kiyosaki's personal brand for various publishing ventures.
- Cashflow Quadrant: Rich Dad's Guide to Financial Freedom (2000)
Cashflow Quadrant is a personal finance and investing book written with Sharon Lechter, C.P.A. as the sequel to Rich Dad, Poor Dad. In it, Kiyosaki discusses what he calls the cashflow quadrant: a grid consisting of the letters E, S, B, and I. The cashflow quadrant itself is just an illustrative tool to show the difference between Employees, Self Employed/Small Business owners, Business owners (not directly involved in the day-to-day operation of the company), and Investors. Kiyosaki discusses the differences between concepts and ideas characteristic of each quadrant, particularly as they relate to passive income and tax advantages. Again, as a self-help author, he invites readers to consider their own ideas about money.
- Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not! (2000)
Rich Dad's Guide to Investing gives the reader a roadmap to becoming the Ultimate Investor, one who uses other peoples' money to create investments that people want to buy into. While the first two books use broad strokes, this one goes into much more detail about actually implementing some of the strategies heretofore discussed.
- Rich Kid, Smart Kid (2001)
Rich Kid, Smart Kid is a retelling of Kiyosaki's views, condensed and clarified to try and help parents better understand and teach their children key financial concepts. It includes a series of activities that a parent can do with their child to make them aware of property, finance and the various ways and places businesses make money.
- Rich Dad's Prophecy (2002)
Rich Dad's Prophecy predicts that the market will crash around 2016 when the oldest Baby Boomers start cashing out their 401(k) plans. Individuals whose savings are locked into 401(k) plans will suffer because these retirement plans aren't flexible and don't do well in a bear market. [5] Robert Kiyosaki believes this may be his most important book yet.
- Why We Want You To Be Rich coauthored by Donald Trump (2006)
Why We Want You To Be Rich is a book written by both Robert Kiyosaki and Donald Trump. It encourages individuals to become financially literate to combat the upcoming problems facing America, such as the shrinking middle class and the entitlement mentality. [6]
Other Books:
- If you want to be Rich & Happy don't go to School? (1992)
- Retire Young, Retire Rich (2001)
- Rich Dad's The Business School (2003)
- Who Took My Money (2004)
- Rich Dad, Poor Dad for Teens (2004)
- Before You Quit Your Job (2005)
- Rich Dad's Escape from the Rat Race - Comic for children (2005)
[edit] Didactic games
Kiyosaki stresses the value of games, particularly Monopoly, as tools for learning basic financial strategies such as "trade four green houses for one red hotel". Kiyosaki has created several games to reinforce the information in his books.
- Cashflow 101
“Cashflow 101” is a board game designed by Kiyosaki, which aims to teach the players concepts of investing and making money.
There are two stages to the game. In the first, "the rat race", the player aims to raise his or her character's passive income level to where it exceeds the character's expenses. The winner is determined in the second stage, "the fast track". To win, a player must get his or her character to buy their "dream" or accumulate $50,000 in monthly cash flow.
The game forces the players to do the accounts by themselves. In place of “score cards”, there are financial statements. Therefore, players can see more clearly what is happening with their money. It generally shows how assets generate incomes and liabilities and 'doodads' affect expenses.
- Cashflow 202
“Cashflow 202” is a more advanced game than Cashflow 101. It is designed to help players learn about more sophisticated investing strategies. Cashflow 101 was generally meant to teach investing techniques that would work best in an “up market” where property values steadily increase, whereas Cashflow 202 is supposed to teach investment strategies for a fluctuating market where property values depreciate as well as rise.
- Cashflow for Kids
“Cashflow for Kids” is basically a children’s version of Cashflow 101, good for ages 5 through 9. There is also a cashflow for kids e game available for free. [7]
- Cashflow® The E-Game
“Cashflow® The E-Game” is a computer software version of the Cashflow 101 board game. It is not necessary to have the board game in order to play the computer game.
- Cashflow 202 The E-Game
“Cashflow 202 The E-Game” is a software expansion of the computer game “Cashflow® The E-Game”. It’s counterpart is the “Cashflow 202” board game described earlier in this article.
[edit] Other Products
Rich Dad Advisor Series
The Rich Dad Advisor Series is a series of books written on different business topics. These books are seen as more technical in nature as they tend to be written by lawyers, accountants and other professionals, they are however written for the lay person and it is recommend you see your own advisors. Books in the series include:
- How to Buy and Sell a Business: How You Can Win in the Business Quadrant
- Protecting Your #1 Asset : Creating Fortunes from Your Ideas : An Intellectual Property Handbook
- Sales Dogs : You Do Not Have to Be an Attack Dog to Be Successful in Sales
- Real Estate Riches: How to Become Rich Using Your Banker's Money
- Loopholes of the Rich: How the Rich Legally Make More Money and Pay Less Tax
- Real Estate Loopholes: Secrets of Successful Real Estate Investing
- Rich Dad's Real Estate Advantages: Tax and Legal Secrets of Successful Real Estate Investors
Audio/Visual
This is a quick list of audio/visual (such as tapes and DVDs) that have been released. Almost all of Robert Kiyosaki's books have been released as audio products:
- Rich Dad's Secrets To Money
- "Think It" "Learn It" "Do It"
- Rich Dad's Roads to Riches: 6 Steps to Becoming a Successful Real Estate Investor
- How To Increase The Income From Your Real Estate Investments
- How To: Find and Keep Good Tenants (Audio)
- How To: Find Great Investments (Audio)
- How To: Get Your Banker To Say "Yes! (Audio)
[edit] Appearances
- PBS
Several local stations of the Public Broadcasting System (PBS), including WTTW of Chicago, KOCE of Los Angeles, WLIW of the New York/New Jersey area, and WGBH of Boston, have featured Kiyosaki during fund-raising drives. During this television special, Rich Dad's Guide to Wealth with Robert Kiyosaki, he provides viewers with what he calls "financial education", as opposed to academic or professional education.
- News
Kiyosaki has been seen giving financial advice on various network television news channels.
- New York City's Madison Square Garden (October, 2002)
This speech was the subject of a CNN story.
[edit] Criticism and controversy
Kiyosaki's books and teachings have been criticized by some for having anecdotal lessons, but lacking concrete advice on what exactly one should do. Many readers find his work highly motivational and educational, but some find it lacking information to put it to use. Kiyosaki responds that his material is meant to be more of a motivational tool to get readers thinking about money, rather than a step by step guide to wealth. He also says the books are supposed to be "interesting" to people, which precludes involving a lot of technical material. [8] At the Learning Annex seminar in New York in 2005, Kiyosaki shocked some members of the audience with stereotypical comments about African-Americans in an attempt to motivate.
Questions have arisen concerning Kiyosaki's true financial acumen, particularly in light of his ubiquitous, vocal and trusted presence in the popular culture of financial advice. For example, Kiyosaki claimed in one column[9] that investors in any mutual fund with a 2.5% annual fee would, over a long time period, surrender 80% of the earnings to the fund. Kiyosaki repeated this claim in a subsequent column[10], expanding his criticism of mutual funds by stating they are for "losers".
Kiyosaki's claim is given credence by the founder of mutual fund powerhouse Vanguard, John C. Bogle. In a Frontline episode titled 401(k)s: The New Retirement Plan, For Better or Worse, Bogle, too, claims that management fees gobble up approximately 2.5% of an investor's annual returns and approximately 80% of an investor's long term gains. He claims management fees reduce the value of a $1,000 investment over 65 years from approximately $140,000 at 8% compounded annually to a mere $30,000 at 5.5% compounded annually. Bogel's solution is to utilize index funds to substantially reduce or eliminate management fees. [11]
Kiyosaki has also been criticized for being overly repetitious in his teachings. Some consider this a tactic to produce “filler” material in order to make it appear he is covering more material. Kiyosaki claims that this is an intentional teaching style that he feels is important.
Kiyosaki has made appearances on PBS that are thought by some to be little more than expanded infomercials. This choice of programming has been generally controversial among PBS viewers, and is discussed on John T. Reed's criticism of Kiyosaki.
Critics of Kiyosaki's work have thought some of his advice to be financially poor or even dangerous. For example, he advocates focusing on a few "good investments" rather than diversifying or putting money into 401(k)s. Kiyosaki advocates risk-taking and recommends people "have guts" to take risk (see the "Risk-Taking" section of this article). These standpoints conflict with the views of conservative investors.
Kiyosaki's boardgames have been criticized for being excessively expensive - USD $200 for the most expensive Cashflow 101.
Kiyosaki downplays the importance of traditional/tertiary education to the importance of financial success. There are individuals who would object to this assertion, as well as studies to the contrary.
Some have questioned Kiyosaki's status as a successful investor and businessman prior to the formation of his present venture, CASHFLOW Technologies, Inc. They claim that his wealth has come only as a result of selling books and audio presentations about topics he has not personally succeeded in and that he is probably worth far less than the $50 to $100 million USD he once claimed in an interview. They note he has claimed to be bankrupt as recently as 1985, a high school dropout and a deserter from the military. Some of these items do not agree with records and may have been stated for "dramatic effect". In several of his books he makes claims about his accomplishments which appear to be exaggerations, fabrications or misdirection.
It may be difficult to discern fact from fiction and anecdote in many of his works. Some readers believe that Rich Dad is fictional and that Kiyosaki created him as an author surrogate (a literary device). In the past, Kiyosaki has maintained that Rich Dad actually existed, but that he died decades before the book was first published. However, he has never revealed his name or any other identifying information. Attempts by outsiders to determine Rich Dad's identity have not revealed a conclusive candidate, despite the prominence such a wealthy individual would likely have had in Hawaii in the 1950s. In the February 2003 issue of SmartMoney magazine, Kiyosaki appeared to back off his claim that his "rich dad" was a real person, instead stating “Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?”. Some supporters of Kiyosaki claim to have researched the issue and come up with the notion that “Rich Dad” is really a (now deceased) man named "Richard Kimi". [12] In his latest book however he claims that Rich Dad was in fact real, but was asked by his family not to reveal this individual's name.
Kiyosaki is also an endorser of network marketing (such as Amway, Tahitian Noni, Mary Kay, Quixtar, Juice Plus, etc.). He reasons in his book, The Business School For People Who Like Helping People, that the companies teach the skills necessary to be a successful business owner, like leadership, the ability to sell and teach, and emotional intelligence. Critics say he endorses the industry in order to sell more of his books and material to their members.
On September 19, 2006, Kiyosaki wrote in a Yahoo Finance that the NYMEX is an exchange where "orange juice, pork bellies,... are traded"[13]. In reality, neither orange juice nor pork bellies are traded on the NYMEX.[14]
[edit] Partial bibliography
- If You Want to Be Rich & Happy: Don't Go to School? : Ensuring Lifetime Security for Yourself and Your Children (1992). ISBN 0-944031-38-2.
- Rich Dad, Poor Dad - What the Rich Teach Their Kids About Money - That the Poor and Middle Class Do Not! (first published in 2000), by Robert Kiyosaki & Sharon L. Lechter. Warner Business Books. ISBN 0-446-67745-0.
- Cashflow Quadrant: Rich Dad's Guide to Financial Freedom (2000). ISBN 0-446-67747-7.
- Rich Dad's Guide to Investing: What the Rich Invest in, That the Poor and the Middle Class Do Not! (2000). ISBN 0-446-67746-9.
- Rich Dad's Rich Kid, Smart Kid: Giving Your Children a Financial Headstart (2001). ISBN 0-446-67748-5.
- Rich Dad's Retire Young, Retire Rich (2002). ISBN 0-446-67843-0.
- Rich Dad's Prophecy: Why the Biggest Stock Market Crash in History Is Still Coming... and How You Can Prepare Yourself and Profit from It! (October, 2002). Warner Books, Incorporated. ISBN 0-641-62241-4.
- You Can Choose to be Rich (2003) 12-CD Audio series with booklet.
- Rich Dad's Before You Quit Your Job : 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business (2005). ISBN 0-446-69637-4.
[edit] External links
- RichDad.Com, Kiyosaki's official website
- RichWoman.Com Sister site to RichDad.com, For Women
- RichKidSmartKid.com Official site connected to RichDad.com, For kids
- Yahoo! Finance Robert Kiyosaki biography and archive of articles
- John T. Reed's criticism of Kiyosaki
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