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'Rich Dad' author's advice falls flat as he hits financial trouble

"I love debt," personal finance guru Robert Kiyosaki declared a month before he tipped one of his companies into bankruptcy.

Mr Kiyosaki shot to prominence in 1994 with his book Rich Dad Poor Dad, which has apparently sold more than 26 million copies.

The Japanese-American is now a regular on the speaking circuit, television talk shows and has gone on to write 11 more books, including one with Donald Trump.

But in August his company Rich Global LLC, based in Scottsdale, Arizona, filed for bankruptcy in Wyoming.

That follows a court judgment in April ordering Rich Global to pay nearly $US24 million to Learning Annex and the promotions company's founder, Bill Zanker.

Mr Kiyosaki used Learning Annex to organise high-profile speaking engagements and the court decided it was entitled to a cut of the profits.

Savers are losers
In July, when the Rich Dad author must have known Rich Global's bankruptcy was looming, he shocked hundreds of investors at a Las Vegas convention with his blunt views.

He told Freedom Fest attendees that people who take advantage of cheap money, debt financing and tax shelters are the richest people in America.

On the flip side, those who save money, buy a home, pay off their debts and save for their retirement – "they are the losers", he says.

“They teach students to stay in school, get a degree, get a job, work hard, save money, buy a house, get out of debt and invest for the long run in the stock market."

He says this “safe” approach is the “worst advice”.

Such government dependence leaves you exposed should the market collapse or the government run out of money, he argues.

The United States is still counting the cost of the sub-prime mortgage crisis, which caused global financial turmoil.

And while there are signs of rebound, commentators warn the housing market is not in full blown recovery.

Half a billion in debt
This doesn't worry Mr Kiyosaki, however, who in July was still advocating his leverage message.

It turns out Mr Kiyosaki and his wife Kim are primarily property speculators who have more than 3500 rental units. They generate millions of dollars in rent each year, yet they owe little or no tax because of their debt.

"I love debt," he boasted in Las Vegas. "I have about half a billion dollars in debt.

“The government and the Fed punish savers and reward debtors."

Mr Kiyosaki's other investments include gold and silver, and especially oil, because of the tax credits.

“America is the biggest tax-free country in the world,” he boasted.

As one market analyst notes, you can be tax-free if you know how to play the game – but such a game is not for the faint-hearted.

Also, there is a cautionary note that most businesses fail and making money from real estate is not easy, otherwise everyone would be doing it.

A tale of living richly
Mr Kiyosaki's website bills Rich Dad Poor Dad as the No 1 personal finance book of all time.

His "poor dad" was his father – the highly-educated head of the Hawaiian school system.

He earned a decent salary but complained about being broke and how he couldn't afford things.

The "rich dad", the father of Mr Kiyosaki's best friend, dropped out of high school to build a business.

While he wasn't wealthy, he enjoyed the finer things in life and always asked, "How can I afford it?"

Both were good men, Mr Kiyosaki says, but only one lived richly.

Neither Mr Kiyosaki's Wyoming-based lawyer, Mark Macy, nor his PR company Plata Publishing replied to NBR ONLINE's requests for an interview.

dwilliams@nbr.co.nz

More by David Williams

Comments and questions

" living richly" is a phrase I like to use - to me it means being able to hold my head high and look people in the eye ie not dependent on the means or opinions of others. It does not entail getting into debt to buy the latest bit of tat that all your contacts aspire to or running your house for the benefit of the bank that really owns your house and you just administer it for them. Once you no longer have high amounts of house/car debt you will be surprised how much you have to spend on what you enjoy every month. You will be living richly instead of just being "rich" which often means mortgaging the whole of your life and peace of mind to the demands of others eg capricious bosses.

Any" FOOL CAN MAKE MONEY"

But "ONLY A WISE MAN CAN HOLD ON TO IT"

Thats were the "REAL SKILLS ARE"

If people attract what they are and not what they want, the quest should be to discover what one is, so they may understand change is necessary. Kiyosaki attracts richness because he has what every other rich lister has; a name that is in harmonry with money and how to rat it out. The most wealthy men on the planet have names like Robert, Gary, Stephen, Michael, and even 'Bill Gates' fits this group. These are simply facts.
However, to study true success, just look at the Nobel Prizer winners. This will show that anyone can become successful, and well off if they become aware of what they 'need' to focus on, and therefore attract. Again Mr Kiyosaki has the ability to bring fortune his way, BUT he does not control the conditions of his battle ground and this is why he has conceeded to bankruptcy with Rich Global LLC.
He may be under pressure right now, but he'll pull through... but not forever, bigger battlefields lay waiting in his future.

Most high geering and greedy investors with poor CASH FLOWS will be bankrupt in the end....ask any bankers or financiers.

No matter how much cavier they chew and how much champagne they spill, the borrower is still servant to the lender.

This article doesn't talk anything about it, no wonder no one replied to the interview.

This is simply a business move on his part as he feels that 24 million is too high a price to pay a marketing company, so bankruptcy is actually a wise move.

If you had actually read his book 'Rich Dad, Poor Dad' you would see where he's coming from. His advice may be controversial and unorthodox, but it actually makes sense.

Hey P Vaughan which drug are you on mate oh let me guess P

So this guy's company filed for bankrupcy, big deal! He probably has other companies, if not he'll just create another LLC. Didn't one of his friends go broke once? What was that guy's name..???
Oh yeah, it was Donald Trump!

It makes me laugh when he tells everyone to rent your accomodation don't ever buy it or pay off a mortgage, my son follows him to the letter, he owns a suitcase and just recently a car, he rents his accomadation and pays off someone else's mortgage..great skills!! he tells me he is 20G a year better off, but from 4 years of continuous rentling, he can't show me the 80G's that he has saved from being better off.

Your headline is misleading as it is one of his companies, not him personally, that has file for bankruptcy. One can understand that he would insulate his personal wealth by using company structures, not that I like the guy .

This is a strange progression from some of the earlier books he wrote - like other respondents, I suspect he's doing ok somewhere along the line. The millions have gone somewhere before this particular company went bankrupt.

One message he has said recently is worth noting, regardless of his current business dealings. When currencies stopped linking to precious assets (e.g. the Gold Standard), they became simply a means of dealing with assets. FIAT currency has no value of its own. Hence, one should not regard currency as an investment in its own right, and move into something that has value and has the ability to retain its intrinsic value (inflation-proof). RK then says that if you plough all your money into your own home, then it ends up costing you (insurance etc) and not making you any passive income. That's good advice.

That's where our household stops taking his advice and puts its own thinking cap on, because any investments we make need to be fully understood by us, not simply because a book told us to make them.

"FIAT currency has no value of its own. Hence, one should not regard currency as an investment in its own right, and move into something that has value and has the ability to retain its intrinsic value (inflation-proof). "

Yes it does. It has value as a medium of exchange (much like Gold), and like gold derives it's worth from the supply and demand of it.

If Fiat Money has no intrinsic value then all financial assets have no instrinsic value as they would effectively be providing a real return of 0.

I suggest you stop regurgitating youtube arguments from Ron Paul fans.

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