Let’s Read Some of Robert Kiyosaki’s Drivel

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?

25 thoughts on “Let’s Read Some of Robert Kiyosaki’s Drivel”

  1. 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. 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.

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

  4. 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.

  5. 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.

  6. 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.

  7. “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

  8. “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

  9. 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.

  10. 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!

  11. 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!)

  12. 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.

  13. 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!

  14. 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….

  15. 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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