Despite being a recent Businessweek best seller, Robert Kiyosaki is regarded by many to be a classic real estate scam artist.
Each and every one of his real estate books contains faulty and misguided advice. His latest real estate book, Rich Dad's "Prophecy" is based on speculation and unsound economic principles.
In the book, Kiyosaki predicts a huge stock market crash in 2016. He says this crash will be caused by the liquidation of 401(k)s at the federal mandated age of 70 1/2 at which time baby boomers must start removing money from their nest eggs. Although this idea raises some interesting concepts on market devaluation, the overall concept is lined with faulty logic, and the conclusion is absurd.
Firstly, the liquidation of 401(k) assets will be done slowly, on a per month basis, preventing a mass liquidation and panic.
Secondly, the number of baby boomers that Kiyosaki states in his novel is grossly overstated, possibly by a number as large as 40 million.
Third, most competent brokers encourage senior citizens to move their mutual fund assets into bonds years before the federally mandated age, as a safeguard to prevent sudden losses from riskier securities.
Lastly, if the stock market crash is worse than 1929 (as Kiyosaki has predicted), huge devaluation would occur in all sectors of the economy. This would include asset classes such as real estate and small businesses.
Nevertheless, Kiyosaki recommends that capital be invested in real estate as a "safeguard". He argues a traditional real estate "buy and hold" strategy, recommending that properties be acquired through various methods of leverage. He goes into little detail about these methods, but rather suggests that the reader invest in his expensive tapes.
Kiyosaki is selling his books on fear and ignorance. The popularity of his books is dangerous, because it discourages pursuing such fundamental asset producing qualities such as education and savings in favor of more dangerous measures. There is also a great deal of evidence that "Rich Dad" never existed, as was reported in an article by Smart Money Magazine (Feb 2003). Kiyosaki still affirms that Rich Dad is a real figure who served as a mentor for him when he was a starting businesman.
Those looking to Kiyosaki's books for pracical real estate knowledge will be sorely disappointed.