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Let’s Read Some of Robert Kiyosaki’s Drivel

By JLP | May 1, 2007

One of my readers sent me a link to a recent article by Rober Kiyosaki titled Playing the Mutual Fund Lottery. I can sum this article up for you in one word: DRIVEL! The point of the piece is that mutual funds (ALL mutual funds since he doesn’t make any distinctions) really aren’t much better than playing the lottery. Here are a few quotes from the article:

But isn’t there a better chance of making money in a mutual fund than there is in the lottery? Hardly. There may be less of a chance of losing all the money you put into a mutual fund than there is of losing all the money you put into lottery tickets, but you’re never going to win big in a mutual fund.

In fact, mutual funds are designed to minimize your returns by creating a “balanced portfolio.” If they could minimize the risk of the market itself, that might be OK. But the problem is that nobody can minimize the risk of the market without sophisticated hedge strategies that aren’t typically used in mutual funds.

“…you’re never going to win big in a mutual fund”

I’m thinking this could be the problem for most people: they all want to win big. What about winning smaller amounts over time? It’s the “winning big” mentality that hurts so many people over the long run. Why? Because they take on more risk than they should tyring to “win big.” Think back a few years ago when seemingly everybody was making a killing in internet stocks. I knew of a guy who retired from a long career and put ALL his money into Worldcom stock. He did this for no other reason than to try to “win big.” Guess what, he LOST BIG! He lost it all, or most of it and the sad part is, he doesn’t have a long career in front of him to make up the difference.

…mutual funds are designed to minimize your returns by creating a ‘balanced portfolio.’”

Huh? Not ALL mutual funds are balanced. Doesn’t Robert know this?

One final dose of hogwash:

If you don’t like the idea that most of the money spent on lottery tickets supports government programs, you should know that most of the earnings from mutual funds support investment advisors’ and mutual fund managers’ retirement.

You take all of the risk, you put in all of the capital, but most of the money goes to the fund manager and your investment advisor. Lottery funds go to worthy causes like schools and the arts, so which is better?

“You take all of the risk, you put in all of the capital, but most of the money goes to the fund manager and your investment advisor.”

MOST of the money goes to the fund manager? How so? Again, even if this were true of some mutual funds, it’s not true of all.

Personally, I think articles like this are representative of what you get from Kiyosaki – NOTHING. Go back and reread the article. Notice how he raises your curiosity but doesn’t give any answers. My guess is that you won’t get the “answers” until you fork over the money for one of his “coaches. Better yet, why not just play the lottery?

Topics: Investing, Mutual Funds | 25 Comments »


25 Responses to “Let’s Read Some of Robert Kiyosaki’s Drivel”

  1. thefeeonlyplanner Says:
    May 1st, 2007 at 9:57 am

    I remember several years back I met with a prospective client and it was going reasonably well until I asked the question of his experience with investing. He answered “I have all of Kiyosaki’s books, I am a big fan of his!”. I answered him that, in my humble opinion, I think he is full of it and ended the meeting shortly thereafter…You can’t help everyone, some people can’t be saved from themselves!

  2. Wesley Says:
    May 1st, 2007 at 11:18 am

    Robert Kiyosaki talks investment gibberish

    http://economicdespair.blogspot.com

  3. John Wilks Says:
    May 1st, 2007 at 11:38 am

    By his own admission, he says he is a best selling author. Not best writting but best SELLING.

    Nevertheless, his books are very amusing and should be considered entertainment.

  4. English Major Says:
    May 1st, 2007 at 12:05 pm

    I am almost entirely sure that Robert Kiyosaki is delusional in some way that symbolizes our collective shortcomings in our cultural relationship with money.

  5. Jeffrey Says:
    May 1st, 2007 at 12:23 pm

    I agree with the observation that he raises your curiosity, but gives you nothing of his own. I read through several of his books, looking for something specific to try, and came up empty.

    That said, I know some people who have found him inspiring. I do not share their enthusiasm.

  6. tinyhands Says:
    May 1st, 2007 at 12:34 pm

    This is, far and away, the most thorough of the (many) Kiyosaki debunking sites — http://www.johntreed.com/Kiyosaki.html

    I wouldn’t have cared, except that Ray Lucia (excellent radio host) mentioned it on air.

  7. Don Says:
    May 1st, 2007 at 12:38 pm

    The biggest thing I learned reading his books were that I didn’t want his life. So, if I don’t want his life, what do I do? He has no advice for me. I’d rather have William Bernstein’s life, so consequently those books have been more useful for me.

    Kiyosaki does make one point that is very worth considering. Mutual fund companies make money whether the market is up or down, since you just pay a fee. There is something “racketeerish” about that, and it is smart to find companies where the fees are low.

  8. Miguel Says:
    May 1st, 2007 at 1:03 pm

    I think Kiyosaki is absolutely brilliant. The guy obviously knows little or nothing about finance and investing, yet has managed to become rich peddling reckless gibberish.

    I guess really, the bottom-line is that most personal finance self-help material out there is rehashed concepts. The key is retooling it in an entertaining way, taking an opinionated point of view, and creating a celebrity persona around that (ex. Suzy Orman, who at least knows something of what she’s talking about).

    Kiyosaki says some things that make sense to lure you in, and then by the time he says something utterly bizarre, your brain just doesn’t want to believe it.

    All kidding aside, he’s extremely dangerous. Extremely.

  9. Moneymonk Says:
    May 1st, 2007 at 4:32 pm

    “Huh? Not ALL mutual funds are balanced. Doesn’t Robert know this?”

    Actually, there are very good MFs

    Many mutual funds have double digit returns

  10. Moneymonk Says:
    May 1st, 2007 at 4:33 pm

    “Huh? Not ALL mutual funds are balanced. Doesn’t Robert know this?”

    EXACTLY, there are very good MFs

    Many mutual funds have double digit returns

  11. bigbuddha Says:
    May 1st, 2007 at 5:35 pm

    I read Kiyosaki’s post when it first went up, I was amazed, confused, outstanded. I have read his books, I actually believe in cashflow being king and therefore building enough assets so that I can live off the cashflow from them and choosing whether to work or not, but really he’s totally gone off the rails here, MUTUAL FUNDS just like GAMBLING, and GAMBLING at least being FUN, that’s the talk of a madman.

    He is really becoming a danger to the community in general with all his nonsense posts. This I hope will turn even his most ardent followers into non-believers.

  12. Cordwainer Bird Says:
    May 1st, 2007 at 7:22 pm

    The RK followers are nutjobs. Consider:

    http://workingwithrichdad.blogspot.com/2007/03/more-support-for-mutual-funds-post.html

    Mmm, mmm, mm, that’s some mighty tasty Kool Aid you got there.

  13. Cash Money Life - A Personal Finance Blog with a Salute to the Military » Kiyosaki Writes: Lottery Better than Mutual Funds Says:
    May 3rd, 2007 at 12:49 pm

    [...] All Financial Matters has a similar post – “Let’s Read Some of Robert Kiyosaki’s Drivel.” He has some other great points. I recommend it. [...]

  14. AllFinancialMatters » Blog Archive » I’m Not the Only One Who Thinks Robert Kiyosaki is a Joke! Says:
    May 21st, 2007 at 11:35 pm

    [...] There’s a pattern here, folks. Robert Kiyosaki is proving over and over again that he’s not worthy of writing for Yahoo! Finance. Not too long ago, I profiled one of his silly articles in a post titled Let’s Read Some of Robert Kiyosaki’s Drivel. This time it’s Samerwriter’s turn. Check out Kiyosaki – What a Joke. [...]

  15. manoj Says:
    June 1st, 2007 at 11:21 am

    hey man the stuff on ur blog is gud but to check out some more interesting stuff on robert kiyosaki check this one out you will find all you want right in here real intresting stuff chk this one straight out

  16. User Says:
    June 12th, 2007 at 12:15 pm

    Kiyosaki posted his latest Yahoo Finance article, and in it he claims that his advisor Tom Wheelwright was the one who actually wrote one of his previous articles, “Playing the Mutual Fund Lottery.” This article was UNIVERSALLY panned. It’s funny that two months after getting so many negative reviews, Kiyosaki all of a sudden claims that, oh wait a minute, he didn’t actually write that article, someone else did. And then he had the nerve to actually CHANGE the original article, and state that the words are from Tom Wheelwright. That introduction was not in the original article!

    Any way you look at it, when things started going bad, Kiyosaki pawned the blame off on someone else. What an absolute crock!

  17. Aaron Says:
    September 11th, 2007 at 6:20 pm

    Wow, this blog is totally one sided, I wonder if the moderator is just canning all the Pro Kiyosaki and only posting the anti-Kiyosaki comments. Typically of closed minded neo nazi people.

    Anyway, Kiyosaki is very on the mark, Mutual Funds are not the tools for winning, just playing it safe. I invest in vehicle with average annual returns of 36% or greater. What a waste to put your money into a mutual fund. A mutual fund is a diversified product for the unlearned masses who will not take the time to learn the rules of investing.

    Think about that, people who don’t know how to invest put their money into an investement vehicle. What do you think happens. Sure, their money grows, for some, but it sure isn’t a great living. Think of all you that have posted comments, are you financially wealthy? The answer is no, and you’re pissed off that your not so you knock others. Robert has some very good points, and I for one am not a staunch follower of his, but lets face it, he has way more money than you, so he probably know more about how money works than you. The guy at the top is always hated.

    By the way, every financial person is required to tell you the same thing, all investments are not guaranteed. Once person commented that one person wanted to win big, so he put all him money into the stock on one internet company and lost it all. What about all the mutual funds that owned stock in those companies. What about all the mutual funds that only owned stock in internet companies. What about them? The government requires all register Reps that sell any investment product to disclose to their clients that their money is not gauranteed, and in fact they could loose it all. Frankly, I don’t think that is a strategy for winning, only for loosing.

    So the uneducated masses will by this diversified product and slowly build a few dollars for retirement, and like on social security, while the financially literate will live happily and live the type of lives that they dream of while other pinch pennies and clip coupons in retirement and curse out the government for such a low Social Security check and blame everyone else for their problems, but realize that the problems has always been inside of you!! (evident by this ridiculous blog!)

  18. AllFinancialMatters » Blog Archive » This is Just Too Good Not to Highlight Says:
    September 15th, 2007 at 12:09 am

    [...] Every once in a while a buried post will get a comment that is just funny. Unfortunately, because these posts are buried, most of you will never see these comments (I only see them because I receive an email when someone comments). Anyway, here’s one that some guy left in response to a Kiyosaki-bashing post I did several months ago. I know it is crazy of me to entertain this stuff, but this is just too funny: Wow, this blog is totally one sided, I wonder if the moderator is just canning all the Pro Kiyosaki and only posting the anti-Kiyosaki comments. Typically of closed minded neo nazi people. [...]

  19. Piggy’s Blog - Journey to Success » [PF] About Robert Kiyosaki and Rich Dad, Poor Dad Says:
    September 21st, 2007 at 1:41 am

    [...] Let’s Read Some of Robert Kiyosaki’s Drivel – Silly words spoken by Robert Kiyosaki. This teaches us to do our own research and be cautious and skeptical about advice from “financial advisor”. [...]

  20. jerry Says:
    November 28th, 2007 at 7:36 pm

    This blog site is the joke not kiyosaki. I have built a multi million dollar empire of the advice from kiyosaki and his co-authors. so for those of you who try to say kiyosaki says nothing but drivel then you have no idea what you are talking about.

  21. Rob Says:
    January 29th, 2008 at 7:47 am

    Well, I guess he must make controversial points so his books would sell well :)

  22. cliff Says:
    March 24th, 2008 at 12:33 pm

    A guy (Kiyosaki) who has the courage to lay down a few opinions that might help people to understand investments gets my vote. The passionate critiques coming from MF advocates are evidence of the healthy debate he has created amongst those with open attitudes to investment. Well done Robert!

  23. Matt Says:
    October 23rd, 2008 at 12:49 am

    October 2008 how are those mutual funds doing guys? people who knew when to get out or ehem hedged their accounts bet their doing alot better….

  24. Rich Dad...Stupid Dad? | Fashionopoly - The Business of Fashion Says:
    November 12th, 2008 at 9:34 am

    [...] a pretty word or too with no real sound financial basis. Take for example this great article calle Let’s Read Some of Robert Kiyosaki’s Drivel at allfinancialmatters.com. The author dissects an article by Kiosaki which claims that mutual [...]

  25. seth Says:
    February 3rd, 2009 at 10:22 am

    I read through all the comments, and I am surprised how everyone tries to put Kiyosaki down!
    Wish we could take a vote and see how many of you who commented on this subject are millionairs.

    Everyone of you is correct. I assumed you all have financial education and know more about investment than all of his books combined.
    You’re also very wise to note that none of his advise give you a case to try! If he did, and bunch of uneducated idiots started to invest and lose their money based on his advice, then and only then he would be a bad person.

    He is making people curious, motivates them to see a better future and don’t be bound to their jobs and a secure life. It is inspirational!

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