Rich man, poor man...

by Joanne Black / 08 August, 2009
The author of <i>Rich Dad, Poor Dad</i> is a wealthy man - but does he really have all the answers?

In a room in Wellington's civic complex, people who have just paid to have lunch with self-styled wealth "guru" Robert Kiyosaki are scrambling for their cameras as he gets up to leave.

"Please, may I have a photo?" some ask, posing quickly with him in front of their cellphones as he obliges with a good-natured smile, still trying to get to the stairs. More people want a picture, he poses again and you wonder not only how he puts up with it but why. As he made clear during the three-hour presentation, it has been a long time since he and wife Kim needed to work for money.

On this day, Kiyosaki has fronted a presentation to a few hundred people in the Wellington Town Hall, most lured by the chance to see and hear him, and to play his Ca$hflow board game, one of the tools aimed at improving people's financial knowledge. They are also lured because Kiyosaki is one of the big names in the crowded field of self-help financial literature.

He came to prominence as the author of Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money - That the Poor and Middle Class Do Not! It is a book about his biological father, whose advice was to study and get a good degree and a safe government job, and also about the father of a school friend, the "Rich Dad", the first person to awaken Kiyosaki's entrepreneurial spirit.

After he wrote the manuscript, publishers turned him down, so he published the book himself. It grew in popularity, but his big breakthrough came when he was in Australia in 2000 and his wife called to say, "Oprah wants to talk to you."

"Who's Oprah?" he claims to have replied, and explains to the audience, "Rugby players and marines [Kiyosaki has been both] don't watch Oprah, poofs do." And after that one-liner, he grins at the audience in such a Winston Peters way you expect a New Zealand First banner to unfurl from the back of the stage.

Kiyosaki's style of presentation is engaging. He can be self-deprecating, particularly about his failure in the school system. He was not particularly good at anything at school, he says, and schools teach people that mistakes are failures, whereas in real life mistakes are the best way to learn.

His audience, many of them also possibly not that successful at school, are hooked. He mocks academic success: PhD stands for "poor, helpless and desperate", and "the best way to get even with A-grade students was to make them employees of mine".

This goes over a treat with the audience, but it flies in the face of many studies that show that for most people the best way to enhance their earning potential, and therefore their wealth, is not by shunning education, but by embracing it.

But that was not Kiyosaki's route.

In an interview with the Listener he says even as a child he was interested in money, in the same way other children liked horses or music. A fifth-generation Japanese-American, he was born and raised in Hawaii to a socially conservative family who did not discuss money.

"I would talk to my mum and dad about money, but in my family they were afraid I would grow up to be a greedy man, so they played it down.

"Then I went to school, and if there had been a course called 'How to Get Rich', I would have been an A-student. But there was no such course and I just languished in school. I didn't know why I was there."

After school he joined the Marine Corps, went to the Vietnam War, returned to the US, eventually started his own company, which was successful for a while, then lost everything and started all over again. All this time he was taking business and self-improvement courses, apparently in some kind of almost spiritual search that led him to what he now considers his "mission": to teach people about finance and entrepreneurship.

He is scathing of schools and school systems that do not include financial knowledge as part of their curricula but, again sounding like Winston Peters, he says the rich also have a conspiracy to keep people ignorant.

"It is a deliberate conspiracy. We don't have financial education in schools and that's not by accident. It seems to me that it is the lack of financial education that is the root of all evil. The two groups who most criticise me are education departments and mutual funds. They hate us because they are the biggest crooks I can think of."

He says people need to start by learning the vocabulary of finance. "For example, I don't call my house an asset - [many] people don't know the difference between assets and liabilities.

"Here's another: cashflow and capital gain. The reason people are being creamed financially is that most invest for capital gains, whereas I invest for cashflow. Capital gain is when someone says, 'Oh, my house has appreciated in value,' or, 'My stock went up in price.' I don't do that game, I invest for cashflow. So if a property or stock or business doesn't put cashflow in my pocket, then I don't really want it.

"A third one is fundamentals and technicals. Fundamentals is can you read a financial statement? Technicals is can you read the charts showing the trends in the marketplace? Basically those are it. It's not that hard.

"I believe the reluctance to teach it is part of the conspiracy, but obviously people in education don't know it, either. Harvard just lost 40% of its endowment. Harvard and Yale were touting their guys as their most genius managers, and they got ripped in this market."

Kiyosaki says investors should never stay long in the stock market. "The stockmarket is for liquidity and you want to be in and out of it quickly."

But isn't that contrary to advice that investment is a long-term game? "Well, that's what they want you to do. But it's really bad advice, it's tragic advice. The pros don't do that. I'm in my 60s and I have friends who have been wiped out [by doing that].

"Financial knowledge is money. If you had bought gold in '85 you'd have taken a beating, but if you'd bought it in 2000, you'd be looking like a genius. I began buying it in 2000. Knowing when to buy and sell is part of the process. I just watched the trends and the reason I started buying it is because under George W Bush, the US started printing more money and came out with sub-prime loans. They were basically taking poor people and strapping loans on them. And I said this is when it's going to crash, and it did, around 2007. I took a huge position in gold when it was at about US$350 [an ounce] and now it's about $900.

"And in real estate, I am making more money than ever before because I never bet on capital gains or appreciation. I just want income. My wife and I own 1400 apartment houses and units, and every month hundreds of thousands of dollars come in because most people need a roof over their heads. So I don't count on appreciation."

For all Kiyosaki's undoubtedly genuine commitment to improving people's financial knowledge, he is doing very nicely, thank you, out of their ignorance.

He is still writing books - his latest, Rich Brother, Rich Sister: Two Different Paths to God, Money and Happiness, written with his sister, Emi Kiyosaki, is the parallel stories of their lives as he became an entrepreneur and she a Buddhist monk. His Rich Dad brand is now a corporation, with franchises available and merchandise for sale.

In Wellington, he presents his audience with a pyramid of learning, showing you learn least by listening - which he considers the main teaching method in schools. He says the way to learn about money is to play games, so you can make mistakes without losing real money.

If this were really true, that playing games made us rich in the real world, most of us would own hotels in Park Lane and Mayfair by now, and possibly a row of terrace houses in Old Kent Rd. But this is hardly the case, judging from the audience in the Town Hall, who know enough to feel they are not getting anywhere but are unlikely to be here if they were rich.

Many have come to play Ca$hflow 101, the board game that you can own for $395. Ca$hflow 202 costs $275 and the e-version is a mere $225, but wait, there's more. Something called the Freedom Kit costs $2215, the Millionaire Kit is $4190 and the Billionaire Kit takes an eye-watering $4500 out of your wallet. Your quest to leave financial ignorance behind could make someone rich - but it just might not be you.

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