Rich Dad Poor Dad’s investing principles - GOOD or BAD?

[Shiloh Lundahl]

Many people on BiggerPockets (at least on the podcasts) have credited their start to investing in real estate to reading Robert Kiyosaki’s book Rich Dad Poor Dad; myself included. However, there are also some investors who disagree with his philosophies. I would like to open up this post to anyone familiar with Kiyosaki’s investing principles taught in any of his books to debate his teachings.

Which of his teachings do you feel are sound teachings and which are unsound in your opinion? I would like to invite everyone into the conversation but I would like to extend a specific invitation to @Omar Khan, @Jay Hinrichs, @Mike Dymski, @JD Martin, @Joel Owens, @Steve Vaughan, @Sterling White, @David Greene, @Dave Van Horn, and @Ben Leybovich.

Thanks to all who care to share their opinion on the subject.

[Jay Hinrichs]

this is not fair for me because i skimmed it and thought it too rudimentary.. but i can see how beginners would get in thralled with it.   And the only reason I did that much is I was bailing out a group of young investors who had done a sub too model with lease backs and got into all sorts of trouble when the rent to own and lease backs started defaulting on them and they did not have the wherewithal to cure.  they did about 30 of them and as what happens with sub prime seller finance they started defaulting one by one .. so  I stepped in brought the captial in and negotiated out a bunch of these .. I asked them how did you guys cook up these ideas and they said rich dad. ( which i never heard of at the time) so they gave me the book i scanned it and thought it was kind of fluffly and flowery but since did not read it word for word I am not the best one to comment.

[Account Closed]

I highly recommend the RDPD Cashflow game (which some Cashflow Meetups feature). I played the game 50 times in the early 2000s (mostly Cashflow 101, but some Cashflow 202) and learned a lot about developing streams of passive income.

I would advise, however, against taking the game too literally. It's easy in the game to do joint ventures with other players to add to your cashflow. But in real life, some people are crooks and I wouldn't want to let myself become a victim. Cashflow Meetups might be a good place to network with other like-minded investors, but realize scam artists attend these events also (as Willie Sutton once said, he robbed banks because that's where the money is).

[Aaron Hunt]

Great when I was in high school living under my parents roof, spending money I didn’t have and dreaming big with no plan of action.

Now, with real life to deal with...not so much.

[Bill F.]

I don't view Rich Dad Poor Dad so much as an investment book, but more a lifestyle/self help book. It tells you to invest, but doesn't spend a whole lot of time talking about actual investments.

-You can learn from both dads. He compares the two "dads" and saying how the poor one focuses on the "wrong" things. Financial IQ, interpersonal communication, sales are all great skills, but he downplays, at least to my memory, things like science, math, history ect, in favor of the money making "hard" skills. Looking at the truly successful people, they all study things outside their profession and have many "mental models" to base their choices on. Biology, physics, history, math, ect, even at a basic level can teach us a lot.

-Data doesn't lie. Getting a bachelor's degree, means on average, you'll make more than if you have a High School Diploma. Same for Masters vs bachelors. That's not a guarantee, but it increases your odds of making a higher income. He ignores the fact that his rich dad's success could be an outlier.

-What is wrong with working hard, living below your means, saving money? If you don't have the skill set of the "Rich dad" maybe that is your best bet for success? After all The Millionaire Next Door, did a pretty good job laying out that's how most people got a net worth of seven figures. Unpopular opinion here but, starting one's own business and investing full time is not for everyone. Heck, buying investment property isn't for everyone. Capitalism can be a brutal place.

A fun read for someone who may not have had the opportunities to think/learn about money as a tool rather than an end in and of itself, but not a wonder book that changes the world.

[Steve Vaughan]

I like to suggest it to folks interested in a different mindset than to work in a cubicle for 40 years.  They have to demonstrate the desire for change though. Read or listen to the book and we'll discuss it over coffee for 15 minutes if you want to.  RDPD or Multiple Streams of Income by Robert Allen are my go-to pre-reqs I require before I get my 'brain picked' by any bright-eyed new folks.

I read RDPD after I had decided to leave the cubicle and invest so the timing was right.  It informed me that there are other ways to earn money than wages and salaries, which was a foreign concept to me.  I had never earned money any other way.  'If your house is your largest asset, you're in trouble.'  "Your house is not an asset.' What?? Talk about ground-breaking concepts!

I disagree with his chicken little sky is falling slant on the stock market.  I don't listen to his podcast or want his coaching or 'asset protection' or tax people because of all the ads and fear sales, but his RDPD and Quadrant books changed the mindset of millions and I am all for and grateful for that.  

[Caleb Heimsoth]

Shiloh Lundahl to be perfectly honest I was about a year into my REI education which included about 200 podcasts and 5-7 other books before I even considered reading Rich Dad poor Dad. When I finally did read it, it took me about a day. I think the overall premise is good but it lacks a lot of in-depth knowledge and doesn’t provide much substance.

I also agree with Bill F. Especially with his points on education. I would never tell someone not to educate themselves with a degree (or degrees) and I think those that do it on here (BP) are playing a dangerous game.

Both the rich Dad and poor Dad teach things that are worth learning. I know people with lots of education who would be considered “rich” or well off my most standards. Contrarily I don’t know anyone who isn’t educated who has reached those same levels. For every bill gates, zuckerberg dropout there’s 100s of others who never succeed.

[Account Closed]

Originally posted by @Bill F.:

-Data doesn't lie. Getting a bachelor's degree, means on average, you'll make more than if you have a High School Diploma. Same for Masters vs bachelors. That's not a guarantee, but it increases your odds of making a higher income. He ignores the fact that his rich dad's success could be an outlier.

The "billionaire college dropout" is also a popular Silicon Valley myth.

There are college dropouts who became billionaires and college graduates with PhDs who became billionaires (in the 1970s and 1980s, the standard was "millionaire" rather than "billionaire" on the day of the IPO). These stories make for great headlines and sell media views (which helps sell advertising). They also feature the outliers.

Most startups fail. Tech workers can do OK (as I did) by following "The Automatic Millionaire" and "The Millionaire Next Door" strategies. But most tech and non-tech workers don't want to hear this logic. When I briefly tried to spread this gospel, I got the cold shoulder.

People have a variety of alternatives for building wealth: start a business, invest in great businesses (publicly-traded stocks), invest in rental real estate, and create intellectual property (write a book, get a patent). The choice comes down to whatever works for each individual person. I enjoy people who are enthusiastic about the products and services they're promoting. But when they cross the line to "my way or the highway," I choose the highway because I know the right answer comes down to what works for each individual.

A college degree is the sheep skin that only opens the door (for most people). After that, it's sink or swim. College is also supposed to help people develop critical thinking skills. But based on the RDPD seminar video I've seen, engaging in critical thinking at these events gets you escorted out of the room.

http://www.cbc.ca/marketplace/episodes/2010-episodes/road-to-rich-dad

P.S., When I first started reading the RDPD series, I was impressed with his statements ("Please don't read the Wall Street Journal at work. Your boss will appreciate you for it." and "Please don't try to make money illegally because it's too easy to make money legally."). Then I heard him get defensive in some of his own promotional videos ("I didn't say I was the world's best author. I said I was the world's best selling author."). I concluded at that point he was likely to be more flash than substance.

[Shiloh Lundahl]

I appreciate the comments thus far. For me, the book Rich Dad Poor Dad was the first book that outlined a complete different way of thinking then I was used to. My parents had a business and they did well financially with their business, however they did not teach me anything about investing. So when I read that book the first time when I was in my early 20s the concepts were completely foreign to me. It wasn’t until I read/listened to it again in my late 20s early 30s that I began to really understand the concepts a deeper level.

Some of my favorite mindset altering ideas from the book include:

1. Assets put money into my pocket while liabilities take money out of my pocket.
2. The rich don’t work for money. They make money work for them.
3. The middle class buy liabilities while the rich buy assets.
4. The rich use other people’s time and money to make them rich.

A lot of these ideas were reinforced for me when I was in my master’s degree program for social work and I read the book A Framework for Understanding Poverty. The author, Ruby Payne, outlined the mindset for the people in poverty, the middle class, and the wealthy. The 3 different classes have different ways of thinking and in order to change classes, one must understand the hidden rules (or mindset) of the other class.

[Jay Hinrichs]

@Account Closed

As luck would have it  .. one of my business partners new son in law was the step son of Ron Daniel  CEO of McKenzie in NYC.. and as Major luck would have it.. he was/is a member of Augusta National.. and to get super lucky to reward his step son on his new job he invited him and me to play golf at Augusta National and stay on the property two nights play 3 rounds eat in the dinning room two nights tour the lockers and win cellar.. for a golfer like me this was a highlight of my golf life.

But one night at dinner we were talking about who hires at McKenzie and if you get hired there you have punched your ticket.. and his answer was top of the class from Wharton / Harvard/ Stanford and other top schools.. 

So in my mind those who graduate from those institutions really get a leg up on the rest of society.. but like anything not all of those who graduate from those schools go on to have fabulous careers or life.. just look at the lady from Thernos she just got indicted.. LOL.  

What real estate allows is a modicum of education fairly simple concepts if you graduated from high school and those that stick to it can do as well as those that get higher paying jobs.

Sales jobs in the right industry can out perform many desk jobs.. no question.. And to me successful wheelers and dealers in real estate are usually pretty good at the sales aspect of this..

[Account Closed]

I consider RDPD more of a branding book than anything else. There are some cool sayings in it, and it is certainly a book that can get one excited about becoming wealthy but I can’t really point to any investing strategies I learned from it.

[Account Closed]

Originally posted by @Shiloh Lundahl:

Some of my favorite mindset altering ideas from the book include:

1. Assets put money into my pocket while liabilities take money out of my pocket.
2. The rich don’t work for money. They make money work for them.
3. The middle class buy liabilities while the rich buy assets.
4. The rich use other people’s time and money to make them rich.

I share the same shift in mindset.

When I worked in Corporate America, I struggled with the bureaucracy and red tape (I grew up on a family dairy farm in the snow belt where when something needed to be done, you just did it). But the job of the senior executives of corporations is to maximize the long-term value of their shareholders.

I love Corporate America now because all of these senior executives work for me, simply by me owning a low-cost total market index fund. My money works for me now rather than me having to work for my money.

[Account Closed]

Originally posted by @Jay Hinrichs:

@Account Closed@Caleb Heimsoth@Bill F.

But one night at dinner we were talking about who hires at McKenzie and if you get hired there you have punched your ticket.. and his answer was top of the class from Wharton / Harvard/ Stanford and other top schools.. 

So in my mind those who graduate from those institutions really get a leg up on the rest of society.. but like anything not all of those who graduate from those schools go on to have fabulous careers or life.. just look at the lady from Thernos she just got indicted.. LOL.  

What real estate allows is a modicum of education fairly simple concepts if you graduated from high school and those that stick to it can do as well as those that get higher paying jobs.

Sales jobs in the right industry can out perform many desk jobs.. no question.. And to me successful wheelers and dealers in real estate are usually pretty good at the sales aspect of this..

Actually, Elizabeth Holmes of Theranos is a Stanford University dropout, part of the billionaire college dropout myth of Silicon Valley. When a computer geek messes up on a design, pressing the alt-cntl-del keys resets the machine. But when government regulation is involved (such as the FDA), public safety is at risk and pressing the alt-cntl-del keys is not a good enough solution (Congress didn't enact the FDA without good reason).

https://www.youtube.com/watch?v=ta1DqI4xDRw

One of the questions that comes up for seniors and their parents is whether to attend alow-cost community college or the high cost ivy-league school (student debt is a growing problem). The articles I've read suggest that if you're content with living a comfortable middle-class lifestyle, the community college delivers. But if you want to hob-nob with the world elite, being tops in your class at an ivy-league school is the way to go.

Since I didn't attend an ivy-league school, I'm not able to comment on the validity of ivy-league alternative.

[Bill F.]

Originally posted by @Jay Hinrichs:

@Account Closed

As luck would have it  .. one of my business partners new son in law was the step son of Ron Daniel  CEO of McKenzie in NYC.. and as Major luck would have it.. he was/is a member of Augusta National.. and to get super lucky to reward his step son on his new job he invited him and me to play golf at Augusta National and stay on the property two nights play 3 rounds eat in the dinning room two nights tour the lockers and win cellar.. for a golfer like me this was a highlight of my golf life.

But one night at dinner we were talking about who hires at McKenzie and if you get hired there you have punched your ticket.. and his answer was top of the class from Wharton / Harvard/ Stanford and other top schools.. 

So in my mind those who graduate from those institutions really get a leg up on the rest of society.. but like anything not all of those who graduate from those schools go on to have fabulous careers or life.. just look at the lady from Thernos she just got indicted.. LOL.  

What real estate allows is a modicum of education fairly simple concepts if you graduated from high school and those that stick to it can do as well as those that get higher paying jobs.

Sales jobs in the right industry can out perform many desk jobs.. no question.. And to me successful wheelers and dealers in real estate are usually pretty good at the sales aspect of this..

First off, not going to lies, very envious you not only played Augusta, but stayed there. 

Second, I agree about the opportunities that REI gives people to grow/secure their wealth. And Rich Dad does do a good job framing the basics of asset vs liabilities in terms of Real Estate, like @Shiloh Lundahl pointed out in his post of what Rich Dad taught him.

In my opinion, there are lots of other books that do a better job more fairly describing this point by giving examples that are not so focused on RE to the detriment of everything else. The Millionaire Next Door is top of that list. 

You also hit the nail on the head about top tier schools, the diploma only gets you so far, at some point you have use your head and actually work. If you want to be the top RE Agent in your area, you probably don't need a Wharton MBA. If you want to be a Partner at Goldman, McKeinsey, BCG, ect, well a HBS MBA or JD from Yale won't hurt your chances. Different strokes for different folks.

The common factor in both routes you pointed out is the ability to "stick to it".  Perseverance is an underappreciated trait no matter if or where you went to college.

[Jay Hinrichs]

Originally posted by @Bill F.:

Originally posted by @Jay Hinrichs:

@Account Closed

As luck would have it  .. one of my business partners new son in law was the step son of Ron Daniel  CEO of McKenzie in NYC.. and as Major luck would have it.. he was/is a member of Augusta National.. and to get super lucky to reward his step son on his new job he invited him and me to play golf at Augusta National and stay on the property two nights play 3 rounds eat in the dinning room two nights tour the lockers and win cellar.. for a golfer like me this was a highlight of my golf life.

But one night at dinner we were talking about who hires at McKenzie and if you get hired there you have punched your ticket.. and his answer was top of the class from Wharton / Harvard/ Stanford and other top schools.. 

So in my mind those who graduate from those institutions really get a leg up on the rest of society.. but like anything not all of those who graduate from those schools go on to have fabulous careers or life.. just look at the lady from Thernos she just got indicted.. LOL.  

What real estate allows is a modicum of education fairly simple concepts if you graduated from high school and those that stick to it can do as well as those that get higher paying jobs.

Sales jobs in the right industry can out perform many desk jobs.. no question.. And to me successful wheelers and dealers in real estate are usually pretty good at the sales aspect of this..

First off, not going to lies, very envious you not only played Augusta, but stayed there. 

Second, I agree about the opportunities that REI gives people to grow/secure their wealth. And Rich Dad does do a good job framing the basics of asset vs liabilities in terms of Real Estate. In my opinion, there are lots of other books that do a better job more fairly describing this point by giving examples that are not so focused on RE.

You also hit the nail on the head about top tier schools, the diploma only gets you so far, at some point you have use your head and actually work. All that being said, if you want to be the top RE Agent in your area, you probably don't need a Wharton MBA. If you want to be a Partner at Goldman, McKeinsey, BCG, ect, well a HBS MBA or JD from Yale won't hurt your chances. Different strokes for different folks.

The common factor in both routes you pointed out is the ability to "stick to it".  Perseverance is an underappreciated trait no matter if or where you went to college.

I think I personally know one Wharton grad and he is an entrepreneur like the rest of us.. and i have seen him post on BP a few times.

but no doubt wicked smart..  I think he started in corporate then he went into real estate and has done very well for himself. But let me tell you when you add that little pearl to your resume' dealing with investors it don't hurt !!!

it was awesome at Augusta staying in the same cabins were the greats had stayed.. with little hand written notes from the likes of Watson, Palmer etc.. very low key but very classy..  and wine cellar as good as any in the world i would imagine.  And I broke 85 each day so i was happy.. LOL.

[Dennis M.]

Rdpd was a great motivational book that turned conventional thinking on getting a job and saving completely upside down on its head . I found it helpful and incredibly insightful . I began to consider how I spend my income and my future outlook in ways I have never done before in my life and to be honest it got me started in real estate more than any other book I read . That being said ... it needs to be understood that not everyone can be an investor or run a business as the book illustrates ,not everyone can have the mental ability and  skill set to achieve what Robert pushes . The reality is We need people in this country to go to college we need teachers we need truck drivers , janitors , store clerks and so fourth . The idea that they just need to get the right financial education falls short . Some people need a 401k style retirement plan to invest because they simply don’t have what it takes ,the risk tolerance ,or the self control to invest by using their own wits . 

[Account Closed]

Originally posted by @Bill F.:

The common factor in both routes you pointed out is the ability to "stick to it".  Perseverance is an underappreciated trait no matter if or where you went to college.

Another factor I had growing up is the hand-to-mouth existence of farmers in what is now the Rust Belt, but back in the 1960s, the area where I was living was decreed to be an economic disaster zone by the Johnson Administration. Financial survival meant knowing how to run out of month before running out of money. I was told to get a good education so I could get a good job and be set for life. Dropping out of high school at age 16 was as much of a concern then as it is now.

Getting a good education allowed me to get set for life, but the subject I majored in (electrical engineering) was not the subject that ended up driving my career after the first few years (in the 1970s, the "half life" of an engineer was five years; today, it's probably less than one year because technology changes so fast). They told us at college freshman orientation that no matter what we ended up doing after graduation, our one commonality was all of us were going to know how to think for ourselves.

Before I discovered the RDPD series in the 2000s, I discovered the concept of the 4% safe withdrawal rate in the 1990s. The idea was to generate enough cashflow from our investments to cover our living expenses. The web site I found (using the Alta Vista search engine, because Google was not available to the general public at the time) was The Retire Early Home Page. The web site is primitive by today's standards, but surprisingly was the only such game in town in the late 1990s.

http://www.retireearlyhomepage.com/

Today, I use the 3% SWR from a portfolio of highly diversified asset classes (the asset allocation strategy), along with the growing stream of dividends from a cherry-picked portfolio of Dividend Aristocrats (the dividend growth strategy). I do not depend on real estate rents at the present time, but I'm on BiggerPockets to learn about this additional source of income (I'll be focusing on notes rather than landlording). I'm also pilot-trading exchange-listed options.

I'm told that when Jerry Garcia was alive, many male CEOs would take their teenage sons to hear the Grateful Dead and especially the song Truckin. "What a long, strange trip it's been" describes the journey we actually end up taking through life.

https://en.wikipedia.org/wiki/Truckin%27

[Michael Plante]

much better book in my opinion is fastlane millionaire 

As for Rich Dad Poor Dad it has been proven there really was no rich dad and lots of it is made up 

[Omar Khan]

Originally posted by @Shiloh Lundahl:

Many people on BiggerPockets (at least on the podcasts) have credited their start to investing in real estate to reading Robert Kiyosaki’s book Rich Dad Poor Dad; myself included. However, there are also some investors who disagree with his philosophies. I would like to open up this post to anyone familiar with Kiyosaki’s investing principles taught in any of his books to debate his teachings.

Which of his teachings do you feel are sound teachings and which are unsound in your opinion? I would like to invite everyone into the conversation but I would like to extend a specific invitation to @Omar Khan, @Jay Hinrichs, @Mike Dymski, @JD Martin, @Joel Owens, @Steve Vaughan, @Sterling White, @David Greene, @Dave Van Horn, and @Ben Leybovich.

Thanks to all who care to share their opinion on the subject.

Gotta agree with @Bill F. and Jay

RDPD is more of a "self-help" (use that term very loosely) book than an investment book. Also Rich Dad is completely made up! There is little, if any, intellectual rigor that has gone into the content. The real “genius” is the author's massive MLM marketing that has given the book widespread coverage.

IMO, on average, this book is popular because somehow folks have decided that a

- college education is not worth it; and

- real-life experience backed by a careful, conservative approach to investing (and living life in general) is too boring

i.e. follow the Rich Dad example: shortcuts, leverage, gamble and hope for the best.

A college education continues to be THE best investment for social and economic mobility. It is as close to a guarantee as you can get in life.

George Carlin has a great quote: “… think how stupid the average person is, then realize that half of ‘em are stupider than that.” 

A person isn't trying hard enough if they can't get into a decent school in the US (with the wealth of educational opportunities on offer). Sounds harsh, but that’s the reality.

The formula has always been the same: study hard, go to a good/top school, work hard, save money, invest, educate yourself, network/learn, be kind to people, rinse and repeat.

Taking shortcuts by going the Rich Dad way is a gamble and a recipe for disaster in the real world. There is little, if any, practical advice on offer. No actual way on how to invest. Just a lot of hyperbole and vague generalities. 

The size, scale and volume of real estate investing opportunities in the US is unbelievable. Investor's just need mild doses of prudence, consistency and emotional management (all of which I need help on… lol) to get ahead. 

Taking personal responsibility goes a long way. There are so many great examples of exceptional American entrepreneurs from all walks of life that one can learn from. One doesn’t need to resort to half-baked ideas from fly-by-night operators to be successful.

Barring unforeseen circumstances and/or adverse life events, it is very hard to not be, at least, comfortably middle-class in the US. I can tell you this after having lived in a few countries and traveling extensively.

You have to try very hard to not be successful in this country! 

P.S. You don’t need a PhD in accounting (or RDPD) to figure out the recipe for disaster: spending more money than you make and not investing your savings.

P.P.S. There are no hidden rules. Nobody gets a pass on math. Deferred consumption --> save, invest, rinse repeat. That's it!

[Shiloh Lundahl]

@Bill F. and @Jay Hinrichs you talk about these Ivy League schools and the people who go to them that are later hired by big companies where they will likely get big saleries. I agree many of them are probably very smart. They would have to be  in order to get into those types of colleges. However, in my opinion, academic intelligence doesn’t translate into financial intelligence. How many of these graduates who get hired on with these big salaries will end up becoming millionaires or decamillionaires? Again, in my opinion, unless these Ivy League graduates come from wealthy families where their parents brought them up with a wealthy mindset, then they are just the high end earners of the middle class. They follow the middle class way of life by buying liabilities rather than assets. For example, it has been joked around that doctors are terrible with their money. I think this joke stems from the doctor having a middle class mindset with a large salary. Eventually these post grads get their hands tied with the proverbial golden handcuffs because their standard of living has become equal to their salaries and now they need to work in order to keep things going. 

Some of the major components of the wealthy mindset is about creating wealth and passive income by accumulating assets and creating systems that can run without the person drectly needing to be there to do the work. In other words using others people’s time, talents, and money to create wealth. The ultimate goal is choices and freedom rather than the golden handcuffs keeping you needing to work to support the liability lifestyle that was created.

To further illustrate this idea I’ll tell you about something that happened with my daughter. My daughter has the habit of being late and the other day she made us late leaving the house. When I asked her why we were late she stated something about her being stupid. I told her that that was not it at all. Then I pointed out that one of the families at our church has an adult child with Down’s Syndrome who is very precise on being on time. I told my daughter that she has a much higher IQ than he does yet she struggles with being on time. So being on time is not about being smart, it’s about having the habits that people who are on time have. The same goes for wealth. Being wealthy and staying wealthy is not about how smart someone is (or if they went to an Ivy League university or even went to college at all). It’s about having the money habits that wealthy people have. For me, that is the message of the Rich Dad Poor Dad series.

[Levi T.]

Rich Dad Poor Dad had investing principles?! 😂😂😂

[Omar Khan]

Originally posted by @Shiloh Lundahl:

@Bill F. and @Jay Hinrichs you talk about these Ivy League schools and the people who go to them that are later hired by big companies where they will likely get big saleries. I agree many of them are probably very smart. They would have to be  in order to get into those types of colleges. However, in my opinion, academic intelligence doesn’t translate into financial intelligence. How many of these graduates who get hired on with these big salaries will end up becoming millionaires or decamillionaires? Again, in my opinion, unless these Ivy League graduates come from wealthy families where their parents brought them up with a wealthy mindset, then they are just the high end earners of the middle class. They follow the middle class way of life by buying liabilities rather than assets. For example, it has been joked around that doctors are terrible with their money. I think this joke stems from the doctor having a middle class mindset with a large salary. Eventually these post grads get their hands tied with the proverbial golden handcuffs because their standard of living has become equal to their salaries and now they need to work in order to keep things going. 

Some of the major components of the wealthy mindset is about creating wealth and passive income by accumulating assets and creating systems that can run without the person drectly needing to be there to do the work. In other words using others people’s time, talents, and money to create wealth. The ultimate goal is choices and freedom rather than the golden handcuffs keeping you needing to work to support the liability lifestyle that was created.

To further illustrate this idea I’ll tell you about something that happened with my daughter. My daughter has the habit of being late and the other day she made us late leaving the house. When I asked her why we were late she stated something about her being stupid. I told her that that was not it at all. Then I pointed out that one of the families at our church has an adult child with Down’s Syndrome who is very precise on being on time. I told my daughter that she has a much higher IQ than he does yet she struggles with being on time. So being on time is not about being smart, it’s about having the habits that people who are on time have. The same goes for wealth. Being wealthy and staying wealthy is not about how smart someone is (or if they went to an Ivy League university or even went to college at all). It’s about having the money habits that wealthy people have. For me, that is the message of the Rich Dad Poor Dad series.

I agree with what you are saying but Bill and Jay are talking about averages. On average, an Ivy League graduate has a way higher chance of being a millionaire/deca-millionaire than a community/state school graduate. You can come from a humble background and, on average, you have a higher chance of economic/social mobility by going to a top-ranked school. I would go one further and say that one is already ahead (socially speaking) by attending a solid private school growing up. 

For me, RDPD was a social climber's impression of what a poor man thinks a rich man lives/thinks like. And by rich I am referring to the nouveau riche. It would be hard to pick out the true old money/truly educated individual as they have enough social grace/etiquette to not flaunt nor talk about their wealth publicly. 

Nothing beats hard work and consistence. That's why we have examples of folks with little or no education reaching society's pinnacle. But those are the outliers. 

[Bill F.]

@Shiloh Lundahl without getting too far off track with talk about top tier programs. When I mentioned these schools I specifically had their MBA and/or JD programs in mind. It's a whole different set of worms getting a master in underwater interpretative dance. Apologizes for not being clear.

As to how they live their life, we can generalize all we want, but at the end of the day they life how they want. On one hand you have Warren Buffet and Charlie Munger (Columbia MBA and Harvard Law respectively) who live frugally by anyone standards, on the other Dennis Kozlowski, who bought a $6k shower curtain, and everyone in between. Some get golden handcuff, other don't and strike out on their own. There is no one size fits all model for a group of people like we are talking about. Look at Ron Shaich, founder of Au Bon Pain. 

At the end of the day I focus on what I can control and what is best for my family. If a M.D. wants to buy a new S-class every two years; I say go for it. Her money, her choices in a free country. Plus that's about $100k that's not floating around in the market somehow competing with me for deals.

Final fun fact: statically speaking, if your family isn't already worth $1b and you want to have the best chance of achieving that net worth, get an MBA from Harvard, Wharton, or Columbia.

[Josane Cumandala]

Yeah like others have pointed out -  RDPD has no actual investing strategies. It's core takeaway is to know the difference between an asset and a liability and get educated on the asset class you're interested in. Of his books I actually liked Unfair Advantage the most because it at least tries to be a little bit more specific about investment strategies. But again the message is the same - get educated. No investment is going to work if you aren't informed on the subject. That's not a bad message but it's kind of a lazy one. The less specific you are the less chance you have of being proven wrong.

Now if anyone has read Rich Dad Advisor Ken McElroy's books on real estate investing I'd love to hear their perspectives before I buy three books. :)

[Shiloh Lundahl]

@Josane Cumandala Personally I really liked the book ABCs of Real Estate Investing by Ken McElroy. If you want to learn about multi-family deals, he outlines how he acquired and managed many of those deals.  

As far as the RDPD series goes, I liked Rich Dad’s Cashflow Quadrant the best. This book is not about specific investment strategies either but it is about the mindset differences between an employee, a self-employed small business owner, a large business (500+ employees) owner, and an investor. This book resonated tremendously with me and helped me let go of feelings of shame I had about not being a good employee when I understood that the mindset that I have, that I was taught while growing up in a family of all small business owners, went contrary to the mindset of an employee. After reading that book, I embraced the mindset of a small business owner and I started to really thrive with my business.

If people want more specific how-tos in real estate investing, they can read Robert Kiyosaki’s book The Real Book of Real Estate. It’s not as entertaining or mindset altering as his other books but if you are looking for a technical book, here it is. He has his expert advisors write chapters on their expertise. One thing that Robert Kiyosaki talks a lot about in his books is that you don’t need to know everything to be successful, you just need to build a team and hire the people who do. In this book he lets those people teach about their specialties.

Brandon Turners books on investing in real estate and manageing rental properties are good how-to books as well.

[Shiloh Lundahl]

@Omar Khan I absolutely agree with you that on average people who go to more prestigious universities and those that get higher levels of education will earn more than those who go to less prestigious universities or those who get lower levels of education. That is a given and is supported by statistics that are easy to find and are widely known. But if you look at the annual salaries or amounts that the the average person earns at the different levels of education, it still doesn’t meet the earning level of what I would consider wealthy nor does their methods of earning that money as an employee often give them the freedoms to go to work, stay home, or go on vacation and continue to earn the same amount or more.

So the message that I get out of his books is to do what you can do that can bring in a good income so that you can start buying assets. For some people that means going to school and for some that means getting a trade and for others it may mean something else. But once you have accumulated enough assets then you have more freedom to choose to do what you love doing or what you feel called to do with your life.