As I stated in an earlier post, I wanted to give a little review of the book “Rich Dad Poor Dad”. I decided that I wanted to do a little two part review of the book. My two part review will cover things that I liked about the book and things that I did not like about the book.
My first review of the book will be things that I did not like about the book. These may be things that I did not necessarily agree with or things that may have rubbed me the wrong way. Without further ado, let’s jump right into it.
One of the first things I did not like about this book was that the author’s tone was a bit condescending and degrading to a majority of the population. I understand that he was using this tone to get a point across to readers. He was trying to drill home the idea that personal finance is vital and that the average American does not know too much about how to invest and make money. While the tone of the book put me off at times, I did not let it discourage me from the fundamental ideas he was preaching.
Another idea that I do not necessarily agree with is that you should pay yourself first. The idea is that you should pay yourself first, before you make payments to any creditors, tax collections agencies, etc. By paying yourself first and leaving those guys last you don’t cave into the pressures that these collectors put on you. This is supposed to serve as sort of motivation to find ways to come up with money to pay these collectors. The problem is that most individuals do not have the ability to just create extra cash flow out of nowhere. Maybe people reading this book are just starting out and if they choose to follow this advice they could end up in dire straits when it comes to their finances. In my opinion, people need to pay those critical bills first: rent, taxes, loans and credit card payments, and then after that focus on cutting expenses where they can so they can save up money to put into their asset column.
The author also gives off the impression that risk is nonexistent. He makes it seem like the population is full of “chicken littles” and that everyone is risk averse. He then suggests people take speculative positions that will make them a ton of money with very little risk. I believe that it is very important to consider what your risk profile is when deciding to invest. Some people would much rather take a five percent CD rather than a riskier option that could net them 16% because it would help them sleep better at night. It really is up to each and every individual. When you look at the financial crisis that occurred in the late 2000s, it was those institutional investors who did not even consider risk who were one of the primary causes of the recession. They all had the mentality of the author, which led us into a precarious position which we are still in the process of recovering from.
He also makes it seem like making money is really easy but that is pretty far from the truth. It takes years of reading and experience to make a lot of money. There is no way to get rich quick unless you win the lottery. You need to be disciplined and understand the markets and your own investing profile in order to maximize your wealth to the best of your ability.
While my post may sound critical, I really did enjoy this book. As a matter of fact, there are many great ideas that I want to discuss in my next post. Until then, happy investing!