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'Rich Dad, Poor Dad' author Robert Kiyosaki reveals he's $1B in debt

57 points by andyjohnson0 3y ago

Grimblewald 3y ago
"Living debt free is the worst advice you could give" What advice can one give me, an individual who does not wish to live the life of a tape worm?
- mewpmewp2 3y ago
  How does life of a tape worm connect with the idea?
  - mrkeen 3y ago
    I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?
    - LargeTomato 3y ago
      4 kinds of people. 1. People who love taking advantage of capitalism. 2. People who begrudgingly take advantage of capitalism. 3. People who understand capitalism but pout about it. 4. People too stupid to understand capitalism.
      - dsr_ 3y ago
        At least 3 orthogonal axes, not 2. x: understanding capitalism y: success in capitalism z: supporting capitalism All of these are slightly correlated, but only in rough outline.
        Grimblewald 3y ago
        I think we need one more axis, willingness to exploit others. Capitalism isn't inherently bad, but it is a problem when it has major flaws that allow for systematic an unintended avenues of exploitation. I support capitalism, I understand capitalism, and I have success in the system however I categorically refuse to partake in the smorgasbord of options for exploiting those who create value to live the life of a parasite. I take pride in my work and get compensated fairly, the work I do requires a lot of expertise and continued learning and development, something not everyone wants to do. My doing so provides significant value and that affords me some nicer things in life, but I do not agree that those who work more mundane jobs shouldn't be compensated such that they can live comfortably. The system only works if everyone who works full-time hours can life a comfortable life. The moment full-time work does not buy you comfort and security, the system rapidly becomes one that survives of the backs of slaves.
    - scotty79 3y ago
      > Society is built from people producing economic output. That's a very idealistic image. People producing economic output are a not that large fraction of society. There are a lot of people in the society who are useless or harmful from the point of view of economic output. Military, advertising, retirees, children and full-time learners, significant fraction of bureaucrats and political class, successful rent seekers. They are all part of society. I don't have the numbers but I think, altogether they are majority.
      - rmbyrro 3y ago
        Isn't that a cynical view of society?
        scotty79 3y ago
        Doesn't mean it's wrong. Besides, it only sounds bad if you care about economic output and give it a moral value.
        mping 3y ago
        It's woefully short sighted, as it misses the long-term prospect of economic output, as most classes of people you mentioned provide some economic benefit in one way or another. Cynicism should be precise, in my opinion.
        scotty79 3y ago
        You can swing to the opposite end of the spectrum and argue that everybody is economically useful indirectly to the point that any meaningful definition of economic utility is gone. I think emotional opposition to what I wrote comes mainly from the fact that people tend to give moral valuation to economic usefulness. If you are not useful, you are bad. And since they don't want to think about large amount of people as bad, cognitive dissonance arises and forces them to extend the definition of economic utility till they feel comfortable again. Till they narrowed down the amount of bad people to fit their comfortable world view. I think much healthier way is to say that economic utility and morality are orthogonal and it's perfectly fine that retirees or learners don't have economical utility without any additional justifications. This approach allows making moral judgements more freely and accurately. In this framework, being economically useful can't be used to cover immoral behavior and lack of usefulness can't be used to stigmatize perfectly harmless people or even those useful in other ways.
    - lnxg33k1 3y ago
      Society is built on people exploiting those producing economic output, the whole system is based on parasites, cmon at least let’s try to don’t think others are idiots (or be naive) when talking about capitalism > But this guy just buys low, sells high, and uses other people's money to do so? Some people call it capitalism
    - itsoktocry 3y ago
      >and uses other people's money to do so? Other people who entrust him with their money, and expect a return. It's not like he's stealing it, and I'd argue he's the one doing the most work in that transaction.
      - mrkeen 3y ago
        He sounds like you should not entrust money to him: > “If I go bust, the bank goes bust,” he added. “Not my problem.”
    - is_true 3y ago
      I used to think like you, but then I learned about market makers. If you would need to sell something in a time there aren't many buyers and you needed the money, that kind of people can help you liquidate your asset. A lot of the times this happens because people make bad investments, but I'm not sure it's his fault.
      - HenryBemis 3y ago
        Dave Ramsey keeps saying that he never buys on 'fair price'. He always buys low/cheap. Being super patient is also a key attribute for financial success.
    - mewpmewp2 3y ago
      Buying low, selling high does produce economic output. It funnels money into causes that generate economic output. If you are able to buy low and sell high you must have some ability to tell the promise of something and if you buy low you are making the promise be more efficient. There's a vector of progress in some direction and you are deciding the direction by choosing what you are investing in. And if you are using other people's money you are just increasing the power of the vector in the right direction by more than you could have on your own. So if you have that ability, it's a very wise thing to do. Money is a tool to organise/decide where the direction should be at and magnify that direction.
      - Grimblewald 3y ago
        Market forces only work when no individual or even large groups of individuals control enough capital to influence market trends, the problem is because of the dismantling of capital gains taxes etc. we have exactly that. We live in a state of affairs where individuals own over 80% of rental properties in entire suburbs. They can then do whatever they like with rent, since there is no such thing as market forces in those areas. They then collude with similar individuals in surrounding areas and create an unregulated monopoly. How do you propose that is beneficial?
  - Grimblewald 3y ago
    Money is a tool that lets us track the goods and services we are throwing on the communal pile. You can trade money you've been given to take things from the pile as needed. The problem is some people get so much money through unintended glitches in the system that they can take so much of the pile that significant portions of the population are left without. This man, and people like him are tape worms and I want nothing to do with it. I don't want to live a life of struggle or suffering, but I don't want my life of ease to be at someone else's expense.
- Mo3 3y ago
  He's talking about debt to purchase cash flow generating assets, not consumer debt.
- fakedang 3y ago
  > While he recommends leveraging debt to buy assets, he disapproves of taking out a loan to buy materialistic items that won’t increase in value or pay dividends. > “A lot of people use debt to buy liabilities,” he said. “I drive a Ferrari. Guess what? It’s paid off 100% because it’s a liability. I drive a Rolls-Royce. It’s paid off 100% because it’s a liability.” There's your answer. And this is actually sound advice. You don't want to accrue interest payments on depreciables. But in the current money printing macro environment, it makes sense to leverage, depending on your time horizon and the prevailing interest rates.
  - al_borland 3y ago
    Which means for the average person, where nearly all their purchases are liabilities, telling people to live debt free is good advice and Kiyosaki quotes getting thrown around out of context do more harm than good. I’m also curious to see how all these debt gluttons using “OPM” are going to fair in an environment of rising interest rates. When the tide goes out we’ll see who was swimming naked. I’m sure we’ll see many people get humbled.
    - LargeTomato 3y ago
      That's right, almost everything you buy is a financial liability. Debt glutton is a very loaded term. I bought 2 houses in the pandemic but I did so thoughtfully, after much research. My income can fully cover both mortgages and living expenses. In the US, interest rates are usually locked in and the monthly payment on the mortgage is not affected by the rates of today. Everyone I know who did "the real estate thing" is playing the long game. All of our assets are illiquid for now and that's okay. There are always reckless people, unlucky people, foolish people. But vilifying debt is not the answer.
      - dgellow 3y ago
        The lesson I remember learning from 2008 was that a really, really large part of the population is foolish and reckless. On both sides, not only buyers. What if you’re the exception here instead of the norm?
- rmbyrro 3y ago
  His debt doesn't fund consumption, it funds real estate, which he rents or sells for a profit. He's not advocating to go into debt for a lush Bahamas vacation. The value of long-term debt to fund real assets is that inflation corrodes the debt value, while boosting the asset value. Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate.
  - itsoktocry 3y ago
    >Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate. It's a shame that lending institutions also understand this and attempt to set their lending rates accordingly.
    - rmbyrro 3y ago
      They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin air. When a lender pays interest, even if it's below inflation rate, banks still make profit, because they didn't have to put any real assets, so the opportunity cost is zero.
  - dvh 3y ago
    Stupid me. I was using money to buy food the whole time.
    - HenryBemis 3y ago
      Good sarcasm :) I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around. I follow a mix of "7 accounts.." (https://www.youtube.com/watch?v=auzLhKvsxnQ https://www.youtube.com/watch?v=auzLhKvsxnQ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save more than I should (I 'live less'). This is a principle you can do irrespective of the amount (as long as it's over €$1000). I don't mind changing phones every 3 years, and put those $200 to work for me instead of the other way round.
zpeti 3y ago
https://archive.vn/4M9AR https://archive.vn/4M9AR
zpeti 3y ago
I thought this was actually going to be an interesting article, about how he over leveraged himself and is now bankrupt, but no. It's a high profile person who is using debt to build a business. This is basically every business person in the USA, except Kiyosaki hit some magic number at $1bn. This is completely meaningless without knowing what his assets are worth. Probably more than $1bn. Yet again, it's proved to me journalism is completely dead.
- LargeTomato 3y ago
  Just block low tier news. I block verge, ars technica, fortune, etc.
  - maigret 3y ago
    What is high tier news?
    - paulgb 3y ago
      As a general rule, if you aren’t paying for it, it’s probably crap. Paid sources are just better-incentivized and better funded to do real reporting. The traditional newspapers (like WSJ, NYT, WaPo) still do quality reporting. People tend to have strong feelings about them because they disagree with the editorial side (often for good reason), but if you have the media literacy to know what’s news vs. what’s editorial, they are still quality sources.
    - LargeTomato 3y ago
      That's subjective but I like the Economist a lot. NYT is fine. It is what is it but it's a lot better then e.g. CNN.
- andrewstuart 3y ago
  It’s true that without the full picture $1b in debt means zero.
- FooBarBizBazz 3y ago
  Exactly. You can't just add up the "debts" or "liabilities" side of the ledger and say, "guy is $1B in debt". You also have to include the assets side of the ledger. If his debts are balanced by assets, then he isn't (net) in debt at all; he's levered. Granted, leverage can be dangerous -- if the assets evaporate, then you can be in trouble. But I wonder even about that in this case. Does he personally have $1B in loans? Or does he control companies with $1B in debts? If the latter, then if push comes to shove, those companies can go bankrupt, and he's probably still fine, I imagine. (Hm. I guess a highly levered company has a very "convex" return profile, like a call option.) So I agree. If somebody is going to do a story on how Robert Kiyosaki uses debt, they should do this accounting and figure out how much he is personally liable for. And how the assets balance the liabilities. Not that I'm particularly a fan of the guy, to want to defend him. I've listened to him speak and he says nothing. As for his assets -- he's talking about physical silver and oil wells? This sounds like cranky goldbug stuff. But what do I know.
beAbU 3y ago
If you owe the bank $100k that's your problem. If you owe the bank $100M that's their problem.
- ProllyInfamous 3y ago
  If you owe the hospital $1,000 that's your problem. If you owe the hospital $100,000 that's their problem. Medical debt is the #1 USA reason to personally declare bankruptcy... USA! USA!! USA!!! [EDIT]: Despite this comment's unpopularity, this was how I first heard a similar quote, over a decade ago (in Medical School)... so it remains posted =P
  - HenryBemis 3y ago
    This is a typical saying in many languages. You owe <insert small amount>, it's your problem. You owe <insert insane amount>, it's their problem. Coz if you get hit by a bus good luck collecting on the debt.. Now, regarding the medical debt.. I remember the day that I found out that in EU i was getting €60k gross, for a job that would pay $130k gross in the US.. so yeah.. eat well, work out, and if in the US you can save an extra $30-50k per year depending on your lifestyle.
    - ProllyInfamous 3y ago
      Definitely, different approaches to ease of maintaining a "healthy" lifestyle. I have about five years of my annual salary in investments (no house, yet), plus a healthy "retirement" account, if you can call bitcoins and gamestops "sound." But I also DO NOT HAVE HEALTH INSURANCE (private contractor, for two+ decades). Nor any dependents (so no life insurance, obviously). I cannot contribute to such a broken system [healthcare] — I'd literally rather die. For the GDP% spent in US, we really ought to treat ourselves better!
    - hotpotamus 3y ago
      I have a childhood medical condition that has caused me a lifetime of marginal disability. I eat right and work out (as much as possible with the disability and it causes me much pain). I also save lots of money because I assume I'm going to need all of it for medical purposes at some point, and I'll still end up poor. Such is life I suppose, but it is possible to imagine a better system at least.
epolanski 3y ago
I think the guy is one of the biggest intellectual scammers out there. He wrote his famous book when working a normal 8 hour job and was nowhere near being wealthy. He wasn't a rich dad. Just a normal guy.
- raverbashing 3y ago
  His ideas probably can be summed up in a couple of paragraphs and 99% of it is the basic stuff that anyone that doesn't torch their credit card every month does. Yes rich dad buys a car within his means, poor dad finances the brand new truck and doesn't know what "9% APR" means but he's happy cause he can "afford it" (not). But since the average financial literacy is very low and several people look for the loudest monkey in the room this guy got successful
  - abalashov 3y ago
    This was always my impression every time that former high school classmates-turned-MLM-shysters would hawk his work to me; thank you for confirming it.
  - itsoktocry 3y ago
    >His ideas probably can be summed up in a couple of paragraphs and 99% of it is the basic stuff that anyone that doesn't torch their credit card every month does. This book was written in the 90s. It was a totally different information landscape. It's easy to look at it now and say the content is obvious. I read it when I was young, along with school friends who were also burgeoning "masters of the universe" (ie interested in being "rich"). I think it had some great lessons. That said, the guy obviously turned into a "scammer", thanks in part to the success of his book. He wrote a book with Trump, for crying out loud.
- deleted 3y ago
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- aaron695 3y ago
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- 3y ago
ClassyJacket 3y ago
My sister tried to get me to read this book, around the same time she lost a bunch of money to a pyramid scheme.
- Seanambers 3y ago
  Rich Dad Poor Dad is a good book for beginners. It introduces a lot of concepts, views and rules that most people have never encountered before. And packages this into a story which makes it easy to understand. Judging from the comments in this thread nobody have either read the book or knows very little about investing/finance in general but of course they have strong opinions. Nothing wrong with the book at all, and honestly I dont understand this endless bashing of the author. Just checked Amazon it has a 4.7 star average with 94,163 ratings for a book that was self published in 1997. Pretty Good I would say.
- abalashov 3y ago
  A couple of high school classmates sucked into the morass of MLMs were the only ones who ever pimped this book to me unironically.
ixaxaar 3y ago
How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities.
- Mo3 3y ago
  He is in debt, in US dollars, to buy cash flow generating real assets like rental property. He is effectively shorting the US dollar, inflation corrodes the debt value and at the same time boosting the asset value.
  - chiefalchemist 3y ago
    Right. It's good debt. It's the type of debt rich people do to get richer. He's got assest that more than likely appreciate greater than the interest on the debt. It's not like he's run up $1B in high interest credit card debt buying needless shite at TJ Maxx. This is one of the key differences between rich and poor. Rich use debt to their advantage. Poor use debt to stay poor, lose ground.
- roenxi 3y ago
  US dollar debt overall is still selling, assuming that it all comes through treasury securities [0]. That is still a reasonable uptrend on the Grand Total line. Although China appears to be nope-ing out. It is entering an interesting phase because it isn't immediately clear from the stats who is on the other side of the tax havens like Luxembourg, Ireland and the Caymans. Brave people, without a doubt. I'm cynically assuming retirement funds but not really putting any weight behind that wild stab. [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...
- itsoktocry 3y ago
  >How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? How could he be wrong about a strategy that bankrupted him? What does the market tell you? I see the DXY on an upward path for 20 years. De-dollarization is overblown. >I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities. 10-20% of a basket of various commodities is a pretty standard allocation, if a bit high. It's certainly not some major defensive hedge.
black_13 3y ago
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throw0101d 3y ago
Kiyosaki has always given bad advice, "Rich Author, Poor Readers": * https://awealthofcommonsense.com/2023/12/rich-author-poor-readers/ https://awealthofcommonsense.com/2023/12/rich-author-poor-re...
treffer 3y ago
I think he is right. This is basically modern portfolio theory. You should hold an optimal mix of assets, but you can hold negative quantities. If money is a bad way of keeping value (bad banks! Inflation! Money printing!....) then holding a negative amount (debt) and putting it into other parts of your portfolio is a good idea. A really a basic idea, with a solid mathematical foundation. I can highly recommend the first week of financial markets on coursera if you want to see a not so controversial introduction to this concept. The only problem is that it adds risk (swings could become larger than your net worth, which can mean bankruptcy)
deleted 3y ago
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kioleanu 3y ago
"He who dies with debts has made a profit"
jacknews 3y ago
Does he actually produce anything of value, or just arbitrage various financial trends, eg cheap debt paired with steep asset price rises, especially property? To me, how you get it, and how you spend it, are essential in judging the worth of wealth. eg, how does he spend what he 'earns'?
303uru 3y ago
Rich Dad Poor Dad is a lying, POS, grifter. https://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1 https://johntreed.com/blogs/john-t-reed-s-real-estate-invest...
DueDilligence 3y ago
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57 points by andyjohnson0 3y ago

"Living debt free is the worst advice you could give" What advice can one give me, an individual who does not wish to live the life of a tape worm?

mewpmewp2 3y ago
How does life of a tape worm connect with the idea?
- mrkeen 3y ago
  I think the idea is that Kiyosaki's lifestyle is that of a parasite. Society is built from people producing economic output. But this guy just buys low, sells high, and uses other people's money to do so?
  - LargeTomato 3y ago
    4 kinds of people. 1. People who love taking advantage of capitalism. 2. People who begrudgingly take advantage of capitalism. 3. People who understand capitalism but pout about it. 4. People too stupid to understand capitalism.
    - dsr_ 3y ago
      At least 3 orthogonal axes, not 2. x: understanding capitalism y: success in capitalism z: supporting capitalism All of these are slightly correlated, but only in rough outline.
      - Grimblewald 3y ago
        I think we need one more axis, willingness to exploit others. Capitalism isn't inherently bad, but it is a problem when it has major flaws that allow for systematic an unintended avenues of exploitation. I support capitalism, I understand capitalism, and I have success in the system however I categorically refuse to partake in the smorgasbord of options for exploiting those who create value to live the life of a parasite. I take pride in my work and get compensated fairly, the work I do requires a lot of expertise and continued learning and development, something not everyone wants to do. My doing so provides significant value and that affords me some nicer things in life, but I do not agree that those who work more mundane jobs shouldn't be compensated such that they can live comfortably. The system only works if everyone who works full-time hours can life a comfortable life. The moment full-time work does not buy you comfort and security, the system rapidly becomes one that survives of the backs of slaves.
  - scotty79 3y ago
    > Society is built from people producing economic output. That's a very idealistic image. People producing economic output are a not that large fraction of society. There are a lot of people in the society who are useless or harmful from the point of view of economic output. Military, advertising, retirees, children and full-time learners, significant fraction of bureaucrats and political class, successful rent seekers. They are all part of society. I don't have the numbers but I think, altogether they are majority.
    - rmbyrro 3y ago
      Isn't that a cynical view of society?
      - scotty79 3y ago
        Doesn't mean it's wrong. Besides, it only sounds bad if you care about economic output and give it a moral value.
        mping 3y ago
        It's woefully short sighted, as it misses the long-term prospect of economic output, as most classes of people you mentioned provide some economic benefit in one way or another. Cynicism should be precise, in my opinion.
        scotty79 3y ago
        You can swing to the opposite end of the spectrum and argue that everybody is economically useful indirectly to the point that any meaningful definition of economic utility is gone. I think emotional opposition to what I wrote comes mainly from the fact that people tend to give moral valuation to economic usefulness. If you are not useful, you are bad. And since they don't want to think about large amount of people as bad, cognitive dissonance arises and forces them to extend the definition of economic utility till they feel comfortable again. Till they narrowed down the amount of bad people to fit their comfortable world view. I think much healthier way is to say that economic utility and morality are orthogonal and it's perfectly fine that retirees or learners don't have economical utility without any additional justifications. This approach allows making moral judgements more freely and accurately. In this framework, being economically useful can't be used to cover immoral behavior and lack of usefulness can't be used to stigmatize perfectly harmless people or even those useful in other ways.
  - lnxg33k1 3y ago
    Society is built on people exploiting those producing economic output, the whole system is based on parasites, cmon at least let’s try to don’t think others are idiots (or be naive) when talking about capitalism > But this guy just buys low, sells high, and uses other people's money to do so? Some people call it capitalism
  - itsoktocry 3y ago
    >and uses other people's money to do so? Other people who entrust him with their money, and expect a return. It's not like he's stealing it, and I'd argue he's the one doing the most work in that transaction.
    - mrkeen 3y ago
      He sounds like you should not entrust money to him: > “If I go bust, the bank goes bust,” he added. “Not my problem.”
  - is_true 3y ago
    I used to think like you, but then I learned about market makers. If you would need to sell something in a time there aren't many buyers and you needed the money, that kind of people can help you liquidate your asset. A lot of the times this happens because people make bad investments, but I'm not sure it's his fault.
    - HenryBemis 3y ago
      Dave Ramsey keeps saying that he never buys on 'fair price'. He always buys low/cheap. Being super patient is also a key attribute for financial success.
  - mewpmewp2 3y ago
    Buying low, selling high does produce economic output. It funnels money into causes that generate economic output. If you are able to buy low and sell high you must have some ability to tell the promise of something and if you buy low you are making the promise be more efficient. There's a vector of progress in some direction and you are deciding the direction by choosing what you are investing in. And if you are using other people's money you are just increasing the power of the vector in the right direction by more than you could have on your own. So if you have that ability, it's a very wise thing to do. Money is a tool to organise/decide where the direction should be at and magnify that direction.
    - Grimblewald 3y ago
      Market forces only work when no individual or even large groups of individuals control enough capital to influence market trends, the problem is because of the dismantling of capital gains taxes etc. we have exactly that. We live in a state of affairs where individuals own over 80% of rental properties in entire suburbs. They can then do whatever they like with rent, since there is no such thing as market forces in those areas. They then collude with similar individuals in surrounding areas and create an unregulated monopoly. How do you propose that is beneficial?
- Grimblewald 3y ago
  Money is a tool that lets us track the goods and services we are throwing on the communal pile. You can trade money you've been given to take things from the pile as needed. The problem is some people get so much money through unintended glitches in the system that they can take so much of the pile that significant portions of the population are left without. This man, and people like him are tape worms and I want nothing to do with it. I don't want to live a life of struggle or suffering, but I don't want my life of ease to be at someone else's expense.
Mo3 3y ago
He's talking about debt to purchase cash flow generating assets, not consumer debt.
fakedang 3y ago
> While he recommends leveraging debt to buy assets, he disapproves of taking out a loan to buy materialistic items that won’t increase in value or pay dividends. > “A lot of people use debt to buy liabilities,” he said. “I drive a Ferrari. Guess what? It’s paid off 100% because it’s a liability. I drive a Rolls-Royce. It’s paid off 100% because it’s a liability.” There's your answer. And this is actually sound advice. You don't want to accrue interest payments on depreciables. But in the current money printing macro environment, it makes sense to leverage, depending on your time horizon and the prevailing interest rates.
- al_borland 3y ago
  Which means for the average person, where nearly all their purchases are liabilities, telling people to live debt free is good advice and Kiyosaki quotes getting thrown around out of context do more harm than good. I’m also curious to see how all these debt gluttons using “OPM” are going to fair in an environment of rising interest rates. When the tide goes out we’ll see who was swimming naked. I’m sure we’ll see many people get humbled.
  - LargeTomato 3y ago
    That's right, almost everything you buy is a financial liability. Debt glutton is a very loaded term. I bought 2 houses in the pandemic but I did so thoughtfully, after much research. My income can fully cover both mortgages and living expenses. In the US, interest rates are usually locked in and the monthly payment on the mortgage is not affected by the rates of today. Everyone I know who did "the real estate thing" is playing the long game. All of our assets are illiquid for now and that's okay. There are always reckless people, unlucky people, foolish people. But vilifying debt is not the answer.
    - dgellow 3y ago
      The lesson I remember learning from 2008 was that a really, really large part of the population is foolish and reckless. On both sides, not only buyers. What if you’re the exception here instead of the norm?
rmbyrro 3y ago
His debt doesn't fund consumption, it funds real estate, which he rents or sells for a profit. He's not advocating to go into debt for a lush Bahamas vacation. The value of long-term debt to fund real assets is that inflation corrodes the debt value, while boosting the asset value. Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate.
- itsoktocry 3y ago
  >Even if the asset doesn't appreciate above the inflation (meaning you do nothing all day), you can still make money if interest is lower than the inflation rate. It's a shame that lending institutions also understand this and attempt to set their lending rates accordingly.
  - rmbyrro 3y ago
    They don't care. In the US, reserve requirements are very low. For every dollar of capital, they can lend 10x, 20x more. They literally create money out of thin air. When a lender pays interest, even if it's below inflation rate, banks still make profit, because they didn't have to put any real assets, so the opportunity cost is zero.
- dvh 3y ago
  Stupid me. I was using money to buy food the whole time.
  - HenryBemis 3y ago
    Good sarcasm :) I don't know who you are and how much you make. The first thing I do when I get paid is "pay my future self". Believe it or not, food comes second. The order of business is 1) Invest, 2) Save, 3) Spend. Never the other way around. I follow a mix of "7 accounts.." (https://www.youtube.com/watch?v=auzLhKvsxnQ https://www.youtube.com/watch?v=auzLhKvsxnQ), Intelligent Investor (for investments - mostly VOO or VOOG with some SOXX). I perhaps save more than I should (I 'live less'). This is a principle you can do irrespective of the amount (as long as it's over €$1000). I don't mind changing phones every 3 years, and put those $200 to work for me instead of the other way round.

zpeti 3y ago

https://archive.vn/4M9AR https://archive.vn/4M9AR

zpeti 3y ago

I thought this was actually going to be an interesting article, about how he over leveraged himself and is now bankrupt, but no. It's a high profile person who is using debt to build a business. This is basically every business person in the USA, except Kiyosaki hit some magic number at $1bn. This is completely meaningless without knowing what his assets are worth. Probably more than $1bn. Yet again, it's proved to me journalism is completely dead.

LargeTomato 3y ago
Just block low tier news. I block verge, ars technica, fortune, etc.
- maigret 3y ago
  What is high tier news?
  - paulgb 3y ago
    As a general rule, if you aren’t paying for it, it’s probably crap. Paid sources are just better-incentivized and better funded to do real reporting. The traditional newspapers (like WSJ, NYT, WaPo) still do quality reporting. People tend to have strong feelings about them because they disagree with the editorial side (often for good reason), but if you have the media literacy to know what’s news vs. what’s editorial, they are still quality sources.
  - LargeTomato 3y ago
    That's subjective but I like the Economist a lot. NYT is fine. It is what is it but it's a lot better then e.g. CNN.
andrewstuart 3y ago
It’s true that without the full picture $1b in debt means zero.
FooBarBizBazz 3y ago
Exactly. You can't just add up the "debts" or "liabilities" side of the ledger and say, "guy is $1B in debt". You also have to include the assets side of the ledger. If his debts are balanced by assets, then he isn't (net) in debt at all; he's levered. Granted, leverage can be dangerous -- if the assets evaporate, then you can be in trouble. But I wonder even about that in this case. Does he personally have $1B in loans? Or does he control companies with $1B in debts? If the latter, then if push comes to shove, those companies can go bankrupt, and he's probably still fine, I imagine. (Hm. I guess a highly levered company has a very "convex" return profile, like a call option.) So I agree. If somebody is going to do a story on how Robert Kiyosaki uses debt, they should do this accounting and figure out how much he is personally liable for. And how the assets balance the liabilities. Not that I'm particularly a fan of the guy, to want to defend him. I've listened to him speak and he says nothing. As for his assets -- he's talking about physical silver and oil wells? This sounds like cranky goldbug stuff. But what do I know.

beAbU 3y ago

If you owe the bank $100k that's your problem. If you owe the bank $100M that's their problem.

ProllyInfamous 3y ago
If you owe the hospital $1,000 that's your problem. If you owe the hospital $100,000 that's their problem. Medical debt is the #1 USA reason to personally declare bankruptcy... USA! USA!! USA!!! [EDIT]: Despite this comment's unpopularity, this was how I first heard a similar quote, over a decade ago (in Medical School)... so it remains posted =P
- HenryBemis 3y ago
  This is a typical saying in many languages. You owe <insert small amount>, it's your problem. You owe <insert insane amount>, it's their problem. Coz if you get hit by a bus good luck collecting on the debt.. Now, regarding the medical debt.. I remember the day that I found out that in EU i was getting €60k gross, for a job that would pay $130k gross in the US.. so yeah.. eat well, work out, and if in the US you can save an extra $30-50k per year depending on your lifestyle.
  - ProllyInfamous 3y ago
    Definitely, different approaches to ease of maintaining a "healthy" lifestyle. I have about five years of my annual salary in investments (no house, yet), plus a healthy "retirement" account, if you can call bitcoins and gamestops "sound." But I also DO NOT HAVE HEALTH INSURANCE (private contractor, for two+ decades). Nor any dependents (so no life insurance, obviously). I cannot contribute to such a broken system [healthcare] — I'd literally rather die. For the GDP% spent in US, we really ought to treat ourselves better!
  - hotpotamus 3y ago
    I have a childhood medical condition that has caused me a lifetime of marginal disability. I eat right and work out (as much as possible with the disability and it causes me much pain). I also save lots of money because I assume I'm going to need all of it for medical purposes at some point, and I'll still end up poor. Such is life I suppose, but it is possible to imagine a better system at least.

epolanski 3y ago

I think the guy is one of the biggest intellectual scammers out there. He wrote his famous book when working a normal 8 hour job and was nowhere near being wealthy. He wasn't a rich dad. Just a normal guy.

raverbashing 3y ago
His ideas probably can be summed up in a couple of paragraphs and 99% of it is the basic stuff that anyone that doesn't torch their credit card every month does. Yes rich dad buys a car within his means, poor dad finances the brand new truck and doesn't know what "9% APR" means but he's happy cause he can "afford it" (not). But since the average financial literacy is very low and several people look for the loudest monkey in the room this guy got successful
- abalashov 3y ago
  This was always my impression every time that former high school classmates-turned-MLM-shysters would hawk his work to me; thank you for confirming it.
- itsoktocry 3y ago
  >His ideas probably can be summed up in a couple of paragraphs and 99% of it is the basic stuff that anyone that doesn't torch their credit card every month does. This book was written in the 90s. It was a totally different information landscape. It's easy to look at it now and say the content is obvious. I read it when I was young, along with school friends who were also burgeoning "masters of the universe" (ie interested in being "rich"). I think it had some great lessons. That said, the guy obviously turned into a "scammer", thanks in part to the success of his book. He wrote a book with Trump, for crying out loud.
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aaron695 3y ago
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ClassyJacket 3y ago

My sister tried to get me to read this book, around the same time she lost a bunch of money to a pyramid scheme.

Seanambers 3y ago
Rich Dad Poor Dad is a good book for beginners. It introduces a lot of concepts, views and rules that most people have never encountered before. And packages this into a story which makes it easy to understand. Judging from the comments in this thread nobody have either read the book or knows very little about investing/finance in general but of course they have strong opinions. Nothing wrong with the book at all, and honestly I dont understand this endless bashing of the author. Just checked Amazon it has a 4.7 star average with 94,163 ratings for a book that was self published in 1997. Pretty Good I would say.
abalashov 3y ago
A couple of high school classmates sucked into the morass of MLMs were the only ones who ever pimped this book to me unironically.

ixaxaar 3y ago

How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities.

Mo3 3y ago
He is in debt, in US dollars, to buy cash flow generating real assets like rental property. He is effectively shorting the US dollar, inflation corrodes the debt value and at the same time boosting the asset value.
- chiefalchemist 3y ago
  Right. It's good debt. It's the type of debt rich people do to get richer. He's got assest that more than likely appreciate greater than the interest on the debt. It's not like he's run up $1B in high interest credit card debt buying needless shite at TJ Maxx. This is one of the key differences between rich and poor. Rich use debt to their advantage. Poor use debt to stay poor, lose ground.
roenxi 3y ago
US dollar debt overall is still selling, assuming that it all comes through treasury securities [0]. That is still a reasonable uptrend on the Grand Total line. Although China appears to be nope-ing out. It is entering an interesting phase because it isn't immediately clear from the stats who is on the other side of the tax havens like Luxembourg, Ireland and the Caymans. Brave people, without a doubt. I'm cynically assuming retirement funds but not really putting any weight behind that wild stab. [0] https://ticdata.treasury.gov/resource-center/data-chart-center/tic/Documents/slt_table5.html https://ticdata.treasury.gov/resource-center/data-chart-cent...
itsoktocry 3y ago
>How is this guy wrong in hedging against the declining dollar and rising price of commodities? At a time when all central banks are de-dollarizing and buying gold, wouldn't this be the perfect hedge? How could he be wrong about a strategy that bankrupted him? What does the market tell you? I see the DXY on an upward path for 20 years. De-dollarization is overblown. >I know for a fact that most fund managers (at least in India) have been converting as much as 10-20% of their portfolios into gold and other commodities. 10-20% of a basket of various commodities is a pretty standard allocation, if a bit high. It's certainly not some major defensive hedge.

black_13 3y ago

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throw0101d 3y ago

Kiyosaki has always given bad advice, "Rich Author, Poor Readers": * https://awealthofcommonsense.com/2023/12/rich-author-poor-readers/ https://awealthofcommonsense.com/2023/12/rich-author-poor-re...

treffer 3y ago

I think he is right. This is basically modern portfolio theory. You should hold an optimal mix of assets, but you can hold negative quantities. If money is a bad way of keeping value (bad banks! Inflation! Money printing!....) then holding a negative amount (debt) and putting it into other parts of your portfolio is a good idea. A really a basic idea, with a solid mathematical foundation. I can highly recommend the first week of financial markets on coursera if you want to see a not so controversial introduction to this concept. The only problem is that it adds risk (swings could become larger than your net worth, which can mean bankruptcy)

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kioleanu 3y ago

"He who dies with debts has made a profit"

jacknews 3y ago

Does he actually produce anything of value, or just arbitrage various financial trends, eg cheap debt paired with steep asset price rises, especially property? To me, how you get it, and how you spend it, are essential in judging the worth of wealth. eg, how does he spend what he 'earns'?

303uru 3y ago

Rich Dad Poor Dad is a lying, POS, grifter. https://johntreed.com/blogs/john-t-reed-s-real-estate-investment-blog/61651011-john-t-reeds-analysis-of-robert-t-kiyosakis-book-rich-dad-poor-dad-part-1 https://johntreed.com/blogs/john-t-reed-s-real-estate-invest...

DueDilligence 3y ago

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