Trump and Rich Dad Reveal the Secret to Riches

Donald Trump and Robert Kiyosaki have written a new book, “Why We Want You to be Rich: “If you believe that working hard, saving money, investing for the long-term in mutual funds and diversifying is good advice then this book may not be for you.” They were on CNBC a couple of weeks ago, a day after the book was released and it was already #1 on the Business Best Seller’s list.  Their names alone cause people to act.  I have read several of Kiyosaki’s books and one or two of the Donalds, but I haven’t read this one yet.  I stumbled on a review of the book which didn’t say much about the book – other than it is their best one yet.  However, in the review the writer discusses an email that he received from a money manager that floored me.

Jack said it even better: “In 18 years in the business of managing money I’ve NEVER [his emphasis] met anyone who accumulated significant investment assets (seven figures, or more today) from following a financial or retirement or savings plan.”
“Several studies over the last 10 years have found little consistency in planning advice when researchers posing as prospective clients visit various advisers. Consumer’s Union has a summary of the research on its Web site. These plans are simply another sales angle for Wall Street and its salespeople.”
Jack spotlights a major weakness in the Trump-Kiyosaki book: In spite of all their wealth, they’re naïve about solving America’s financial illiteracy. More education? They are obviously oblivious of the fact that Wall Street already controls so-called “financial education” in America, manipulating it as a sales tool for its own interests, not the investor’s.

This is exactly what I have been thinking for years.  I lost a ton of money following Wall Streets mantra “buy the dips”, “over the long term stocks will go up” and the infamous “buy and hold.” Buying and holding hasn’t worked very well over the past 6 years.  The one I hate the most is to diversify across market capitalizations based on your age.  We have all seen the spread sheets – where you enter your age and it suggests your portfolio allocation across small, mid and large cap stocks. 

What a crock?  When the stock market goes down small, mid and large caps all go down – all be it at different rates.  Since commodities are inversely correlated with stocks – how about adding some to your portfolio. At least while stocks are free-falling, the commodities will serve as a hedge.  How about varying your allocation of stocks and commodities based on where we are in the business cycle? Few will provide that advice, because it is not in their manual.

I am convinced that you will not become financially free, by working hard and trusting your financial advisor.  I haven’t read Trump and Kiyosaki’s book yet, but that is essentially what their title says.  The money manager in the review reinforced my beliefs.  My favorite quote from the review is the following:

Investing is not what you think: Stanley and Danko emphasize that “the majority of the millionaires we interviewed said it’s nice to invest in the market, but the mother lode of investing is in their own business.” Get it? Invest in “You, Inc.” if you really want to get rich.

Financial Freedom is about investing in you.  No one cares about your financial well-being more than yourself.  You will need assistance from advisors and such, but YOU must take charge and set the course.

Source: Rich Dad & The Donald by Paul Farrell

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  • Yes, I agree that the kind of “Financial Education” Kiyosaki talks about has nothing to do with Wall Street itself, per se. His emphasis, as I gather from his writings, is that we need to focus on the concepts of money itself. Things such as cash flow, how to read financial statements without getting a migraine.

    It was Kiyosaki’s books that got me on my path of thinking of cash flow as being equivalent to the blood flowing in our bodies. If the flow is not kept in balance, or if it is stifled in any way, a total system-wide problem can ensue.

    Thanks for posting this!

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  • I agree that you need to take the bull by the horns, but I’m shocked to read that Jack has never seen anyone accumulate 7+ figures by following a retirement plan. I’m in my mid-30’s and I am absolutely sure that I will reach 7 figures following a solid asset allocation and methodical savings plan. What’s more is that I’ll reach 7-figures after only working 12 years in the corporate world. It can work, but it takes discipline. What is this guy talking about???

    Also, I saw Kiyosaki on a PBS show a few months ago, parading around with his supposed wife. I don’t know what it is about that guy… he’s charming in a sales sort of way, but he totally rubs me the wrong way. If he is so successful, why is he writing investment self-help books??

    (there must be something in the water this morning…lots of opinionated commentary from me today! 🙂

  • Btw, shameless plug: Check out how I am doing it: RetiringEarly

  • fin_indie,

    Congratulations on building your portfolio. I believe Jack was referring to advice giving by the average financial advisor or 401K administrator. Most have cookie-cutter recommendations that they sell to their customers. Over the past 6 years the Major Averages have delivered paltry returns: DOW 5.5%, NASDAQ -43.5, and S&P 500 -6.25%. Since for the most part their recommendations are in financial assets, it would have been very difficult to make money going against the headwinds created by the major indexes. If an advisor had recommended to dump all over your stocks in 2000 and pile into real estate, then money could have been made. However, most advisors wouldn’t dream of given such advice – first of all how would they make money and secondly it would violate all of the spreadsheets. Read my post Are You Diversified? for some additional insight.

  • I guess your perspective depends on the window into the market that you are using. Sure, the past 6 years has not been great. What about the past 10 years?

    Also, we need to realize that even though people may index, they generally have other asset classes, such as real estate. Selling a house and buying another can yield great gains even when the markets are flat or negative.

    One thing is correct, the advice by your average fin advisor / 401k admin is *horrible*.