richdad cashflow 101

Re: cashflow101

From what I've read around the subject (and not the books themselves admittedly) it seems that rather than teaching a "new way of thinking" RK, and many others who pitch their own "systems", most likely simple spurs people into thinking for themselves about their finances (notwithstanding the whole "system" and "cult" allegations levelled at him). In personal finance there is no magic bullet. Whatever precipitates it analysing one's finances and making appropriate plans is no bad thing. On the other hand, believing that there is some sort of get rich quick/easily plan out there is a bad thing in my opinion.

Re: cashflow101

Hi adrian

Basically RK is preaching about the value of investing rather than consuming. The game illustrates that point by one going around the "rat race" continuously until one takes a punt and decides to invest. Unless a player invests they cannot get out.

I think it would be a bit much to say that it teaches you about accounting, finance and investing; it baiscally get you thinking about a new way of doing things rather than drawing a cheque each month from a job (i.e. start up your own business, buy investment property or shares). It gives a little insite into accounting (P&L and Balance sheet) but you certainly would not be an accountant at the end of it!!

Re: cashflow101

Thanks for the reply, LiamG

"On the other hand, believing that there is some sort of get rich quick/easily plan out there is a bad thing in my opinion."

Agree with this Clubman, however I also think that if you believe you'll never be able to get rich, then you won't. If you believe you'll never be able to understand real estate, the stock market or starting your own business, then you won't do any of these things. If you start to believe that it's possible, then at least it's a start.

I think that not believing at all is as bad (if not worse) than believing that there's an easy path to riches.

Re: cashflow101

I think that not believing at all is as bad (if not worse) than believing that there's an easy path to riches.

No offence but this cult like appeal to a sort of quasi-religious sense of faith is what bothers me about these sorts of systems. This sort of nebulous/touch-feely stuff has no place in any reasonable assessment of one's personal financial situation and making objective plans as a result. That is the basis for a large part of John T. Reed's criticism above and I have to agree with him on that front.

Re: cashflow101

I know where you are coming from Clubman. I found the first RDPD very motivational - the rest I bought were much of a muchness.
However, i would point out that in none of RK's books is there any specifics - only general points like invest, purchase income generating assets etc. It is general ideas he tries to get across. The lack of specifics is a negative from my point of view but probably helps with regard to its wide appeal (i.e. it doesn't get too technical so the reader keeps reading)
I do see the cultishness of the whole thing however.
May I ask if you have read any of the books? If so what were your opinions following reading & how they changed after reading Mr Reed (I know mine did!)

Re: cashflow101

May I ask if you have read any of the books?

As I mentioned above I haven't read any of the books - just skimmed some interviews and critical appraisals.

Cashflow 101

My comment was meant to read

"I think that not having belief in anything is as bad as believing you're going to get rich quick and easy" - I certainly don't think believe there's an easy way to get rich.

"no place in any reasonable assessment of one's personal financial situation and making objective plans as a result. "

In "Retire Young, Retire Rich" RK recommeds that you hire a personal accountant, get to know a good lawyer etc.

Immediately after reading one of RK's books I searched the internet for critics of him, as I had serious doubts about the guy. I came across that page by Mr Reed which confirmed my doubts.

However you should read one of his books, try "Retire young, retire rich". It is an interesting read, if only just to confirm your suspicions. Everything from discussing how real estate is the best investment to building businesses and leveraging people to make money for you. He writes about Bill Gates explaining that he is so rich because he created a corporation of thousands of people to develop his products, all working for him. Yes, stating the obvious how he became rich. But most people will have the mindset of being good employees serving their companies, and climbing the corporate ladder. Made me think of Michael O'Leary here, he was working in an office as an accountant or something until he went out on his own and built Ryanair. Used to think he was a pratt until I read RK's book, and now I admire him.

There is some good content in the book between the "nebulous/touch-feely stuff" and the "quasi-religious sense of faith" ;-)

Re: Cashflow 101

he was working in an office as an accountant or something until he went out on his own and built Ryanair.

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Actually, he was working as an accountant while running a newsagent shop in Walkinstown in the evenings...

cashflow 101

Here's some criticism's I had about Mr. Reeds 'criticisms'

He says RK gives no real advice, nothing specific. - Correct RK sells financial education books not specific financial advice. He has opened up a new market. Most authors give specific advice on what to invest in.

He gives a number of quotes and then says 'wrong' - This world is not black and white. A sucessfull incestor once told me there are no 'right' and 'wrong' ways to invest. There are many excellent ways to invest.

His analysis is totally one sided and unobjective. This guy has a bee in his bonnett.

RK most probably holds his wealth in a Nevada type corporation, meaning not even the tax man has access to details of his wealth. He does'nt have any. It is all held in an anonymous and perfectly legal corporation.

However fair play to him for kick starting a very interesting and educational debate!

Re: cashflow 101

RK sells financial education books not specific financial advice. He has opened up a new market. Most authors give specific advice on what to invest in.

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I don't think this is correct. Any decent bookshop stocks a good variety of "financial education" books, the majority of which don't tip any particular shares or investment strategy. I think its a bit much to claim that Kiyosaki (spell??) invented this genre.

Re: cashflow 101

I've read a couple of Kiyosaki's books...Retire Young, Retire Rich and Rich dad's Guide to Investing. He is guilty of rehashing the same stuff in his books. For this reason I'd never buy another one. But he is a motivator and his books are interesting. Someone else here already mentioned that he strongly and regularly informs his readers to surround themselves witha team of people, lawyers, accountants etc...so I don't think he necessarily gives bad advice.
I've also read some of his criticisms, including those that he made up the whole rich dad, poor dad scenario. I was a bit disappointed when I read this, but on reflection, it doesn't really matter.
Ultimately, I think Kiyosaki is offering inspiration for those in society who strive to go from mediocre to filthy rich.

Piggy

Re: cashflow 101

With due respect Clubman, if you have not read his books and then just read a critique by Mr Reed, how can you judge RK's books?
Personally (aside from the afore mentioned cultish side of them) I found them quite motivational - and am trying to get off my backside to do a few things than perhaps I would not have done had I not read them.

Re: cashflow 101

With due respect Clubman, if you have not read his books and then just read a critique by Mr Reed, how can you judge RK's books?

I wasn't judging his books - I was making observations about some aspects of his "system" which he also promotes through high profile interviews in the media.

Re: cashflow 101

To be fair Clubman, I don't think that anyone would go off and use RK's "system" based on a "high profile media interview" - at most it would lead them to buy a book.

Re: cashflow 101

Some people have said that RK doesn't give any bad advice, or specific advice. But he does:

He promotes the idea that investing through a company allows you to write off all sorts of things like Porches (Business Expense) and Trips to the Bahamas (Board Meetings)

He quite rightly suggests that people need to become financially literate and take control of their finances, and then turns around and peddles the idea that the Rich get Rich through loopholes.

He chastises people who don't understand basic financial terms, and then he makes up a new definition for 'Asset', ignoring the established meaning.

He has written a story about how to get rich in property, with specific examples of deals he did, even though there is no evidence that he did them. Nowhere is there a disclaimer that these are illustrative parables. Some of the deals he described are just not possible. In true Religious/Cult style he covers himself by saying that there will allways be doubters who say that what he did is not possible.

He published a book (or two) predicting the fall of equities,
AFTER the fall had actually happened, but claiming his Rich Dad had predicted it all along.

He repreatedly claims that property is a better investment than Shares, even though over the period in which he claims to have been investing, the reverse has been true.

He appeals to people who believe that the only difference between them and the rich is that the rich have learned some simple insight which they missed out on because of their conventional education.

I presume he paid Today FM for the interview on "The Last Word", it was basically an Add for him in which he wasn't challenged. We get these sweetheart interviews fairly regularly, they should be obliged to announce that it's an ad.

-Rd

Re: cashflow 101

Liam to be fair I think you are misquoting Clubman and misrepresening his point.

Re: cashflow 101

Hi Tommy

I apologise if you think I am misrepresenting Clubmans point. The point I am trying to make is that I think one should have at least read one of the books before damning them.
From what I gather Clubman has "skimmed" certain elements of RK's opinions via interviews etc, then read Mr Reed and decided that his system is incorrect.

Incedentally, after reading Reed, it has opened my eyes too but having read a few of the books I feel I would have a more informed view.

Daltonr, I agree with a lot of the points you made. It always bothered me that the Cashflow game has a number of cards where you can "win" via stocks yet he then comes out in one of his subsequent books to forsee the end of the stock market!

As I said before, the main use of RK is, I feel, motivational.

Re: cashflow 101

From what I gather Clubman has "skimmed" certain elements of RK's opinions via interviews etc, then read Mr Reed and decided that his system is incorrect.

I never said that his system was "incorrect" and don't have enough understanding/insight (or inclination to find out more) to judge this to be honest. But I do have grave reservations about any sort of magic bullet get rich quick (or even slow) systems that people promote by writing "best seller" books (why not a book on how to write best seller books instead for example?). RK's is just one. There are many more.

Re: cashflow 101

The point I am trying to make is that I think one should have at least read one of the books before damning them.

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You don't necessarily have to read any of Kiyosaki's books to argue (convincingly IMHO) that some of his ideas are harebrained, for example, encouraging novice investors that it is a good idea..

(1) to invest in property using a limited company structure, a device which will be suitable in a small minority of cases but an absolute disaster otherwise.

(2) to claim tax deductions against rental income for all sorts of hooky quasi-personal expenses such as foreign holidays, Porsche cars etc when such expenses are clearly not tax-deductible and when claiming such expenses could cause a taxpayer horrendous problems and costs in the event of any future investigation of their tax affairs.

Re: cashflow 101

Liam,

To be fair to Clubman, there are lots of things that we know are a bit hookey without actually trying them. E.g. if you describe a Pyramid Scheme then I can damn it without trying it.

You're right that it's isn't fair to damn an author without at least reading his books, but my interpretation of what Clubman said was that it sounded like "Just another Scheme" and we've seen these schemes before.

He was relying on the reporting of John T. Reed, but then lots of people pass comment on Iraq based on the reporting of Bob Fisk et al, without actually being there.

There are a lot of GURU's out there willing to sell you their advice, but quite often they are unwilling to show you how the advice has worked for them. RK will tell you about his big houses, his Ferrari's and Porche's, etc. etc. And he probably is very wealthy, but much if not all of that wealth could be from writing books in which he lies about making his money in property. When people have tried to dig into his property empire or business past, it doesn't bare much resemblance to what he describes.

Part of the problem of course is that an awful lot of people bought RDPD after the Last Word Interview so those people will staunchly defend RK for fear of seeming foolish.

I'm struck by how many similarities there are between these books and organised religion actually.

-rd