Author Topic: Rich Dad Poor Dad: Questions about assets/investing  (Read 1415 times)


  • Bristles
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Rich Dad Poor Dad: Questions about assets/investing
« on: January 08, 2021, 07:49:56 PM »
I've been on this site/forum for a while and it's changed my life. I've greatly reduced expenses, improved my career, etc. One area I think I may fall short is investing. Someone recommended Rich Dad Poor Dad so I gave it a read. Setting aside the controversy surrounding the author and the noise in the book, I wanted to find out more about the author's list of assets he recommends investing in. He basically drops the list and then offers no specifics on how or why you would want these things.

I'll get into more description below, but in general I am wondering (for certain ones) how someone even goes about investing in the things he lists. I also have questions about why he considers certain things assets and not others.

Some personal background...

  • I'm a 32 male working in tech
  • Salary is $100k plus a bonus here or there
  • I'm married, my wife is a SAHM and we have one child (under 1 year old)
  • I have an emergency fund set aside
  • I am contributing to my 401K such that I'm getting the max company match
  • I have a Roth IRA that I don't really do much with
  • We have a VTSAX that we dump any extra cash into
  • Our net worth (and I'm including my house to the author's dismay) is about $290k

A screenshot of the asset list from RDPD

Businesses: How does one go about doing this, and how much would one need to get in on this? How do you just find a business lying around that you can buy/invest in, not be present at, and still gain an income from it?

Stocks: I'm already investing in stocks due to the 401K, VTSAX and Roth (which I should probably be hitting harder if I'm honest). But I don't know the first thing about investing in individual stocks. The author talks about finding young tech companies, investing in them for a year, and selling. Say I found a stock I wanted to invest in. How much would be a worthwhile amount to put into it?

Also, the author poo-poos mutual funds for some reason, claiming they aren't a real asset. Not sure what's up with that.

Bonds: I'm unclear on exactly how these work or how to even go about investing in them. I have seen references on this board to some kind of Vanguard fund that is specifically for bonds. Does anyone do this? And why would i?

Real Estate: On one hand the author claims that your home is not an asset. I can see how this might be true if you are unfortunate enough to have your home lose value (housing crash or some other reason). However, mine has only increased in value. Obviously this might not always be the case, but for now it's working out for me. The author is mainly talking about real estate other than your home that can generate income, but wouldn't the risk of these other properties becoming liabilities still exist (e.g. covid taking out the profitability of the commercial real estate sector)? Why are other properties considered good but not your own house? And wouldn't this logic apply to literally any investment? He recommends stocks, but the market could crash/drop. He recommends businesses that don't require his presence, but these could fail. Etc. Anyway, I could see how buying up some houses to rent out/Airbnb or whatever could yield a stream of cash. This is something I've considered. Perhaps when this market finally chills out I'll look into it more.

Notes: Not even sure what these are or why they are recommended.

Royalties: It's unclear if the author is referring to IP that he created (i.e. his books) or if he's somehow scooping up rights to other IP and profiting off of it. If it's the former, I guess one could get creative and put out something people want and then you get royalties. I am a screenwriting hobbyist but have thus far not sold anything. Maybe one day. If it's the latter, how does one do this?

Anything else: Well... yeah. This is the most vague thing in the list. I guess one could "invest" in coins or stamps or whatever and hope they increase in value. People thought that with pogs, beanie babies, etc. This one is hard to pin down, so I'll leave it to you if you want to address this one. The author gives no examples of these misc. things he might invest in.

I know some people think this guy is a crock, but I see reason behind his "assets vs. liabilities" drum that he bangs. I just wish there were more actionable pieces of advice. Which is why I'm turning to you fine people. Which items in this list are worthwhile in your opinion, and how would one intelligently get involved?


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #2 on: January 08, 2021, 09:32:15 PM »
Most small businesses fail. Small businesses that are being run by employees rather than the person with the biggest financial stake in their success fail even more often. Maybe someone might buy a franchise and hire a professional manager to run it? I'd say steer away from this one unless you really want to start your own business, in which case plan to put in lots and LOTS of hours yourself.

Stocks are reasonable. I'm all for mutual funds though. Been investing for close to a decade and my stock picking has substantially underperformed my investments in low cost index funds.

Bonds. Yes you can buy bond funds, much easier than individual bonds. Personally, I don't have much invested in bonds though. Interest rates are extremely low already.

The argument with your home is that it doesn't generate any revenue and it costs you money to maintain. People who see their houses as investments use that to help them justify to themselves buying a bigger house (a bigger investment) with bigger carrying costs instead of buying the least expensive house that satisfies their needs, giving you more money to invest in income producing assets. Rental properties carry risk, but at least have a chance of generating revenue. Personally I don't think the extra work/stress of being a landlord is worth it, but there are plenty of people on the forum who feel otherwise and have been quite successful at it.

Notes/IOUs: this just means lending money to people and getting paid back principle + interest. This would include hard money lending. Really not a necessary thing one needs to do, some people get really into it. You can sometimes make good returns, but there is a significant risk of either losing principle of getting sucked into messy and complicated processes to try to recover your investment (for example having to foreclose on and sell a piece of real estate which was used to secure a hard money loan).

Royalties. It's legally possible to buy the IP rights to other people's songs/books/patents/etc. I don't know anyone who has done this, but it would technically qualify as an asset.


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #3 on: January 09, 2021, 08:01:21 AM »
he got rich off that fairy story and didn't do anything in the book.

i'm not sure why you want other people to flesh out what he couldn't even give enough details on because he never did it.


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #4 on: January 09, 2021, 10:27:11 AM »
Honestly, I'm not even going to bother reading beyond the title. Put down the Rich Dad Poor Dad material (written by a scammer) and look elsewhere. The stickies on this site would be a good start. Bogleheads is another. Bigger Pockets has a good reputation if you want real estate information.


  • Bristles
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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #5 on: January 09, 2021, 12:39:08 PM »
He's talking about various forms of passive income. But all passive income becomes that after a significant amount of work has been put into it. So, starting a business for instance. I know folks who start websites that prepare people for certification tests and they make a lot of money. But to do it successfully you need to create a TON of content. You also need to periodically update that content.

A lot of up front that then pays for itself for some amount of time (probably a few years). Same with writing a book. Creating a popular book that sells well for years will bring in passive income, but the up front cost is significant.

That's what he is probably talking about regarding starting a business you don't have to work at. I suppose you could be real estate investing with a management company running the show. Again, you need the up front work of buying the property, working with the management company, and then you need to ongoingly make decisions periodically and work with the management company / renters.

There's really no such thing as "set it and forget it" except for, maybe, ETFs.


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #6 on: January 09, 2021, 01:07:23 PM »
You have a high income already. In all probability, your surest path to speeding up the path to retirement is to get your spending in control so that you have more money to put into investments. "We have a VTSAX that we dump any extra cash into" - you'll have even more money for investments if instead of dumping extra money into that account, you put it into a traditional IRA for your wife (your bonus would have to be massive for her to not be able to deduct that, assuming you file jointly), or increase your traditional 401K contributions. Or go read the sticky deborah linked.

Really suggest posting a full case study. If you do a good job, you'll for sure have a better idea of what your spending is and you'll get good advice on areas to improve.

I agree with the others - Kawasaki is selling a fantasy. I'd say he's selling that to people who are frustrated with their financial situation, but don't really want to do anything to change it.


  • Bristles
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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #7 on: January 09, 2021, 01:38:02 PM »
I don't count my home as an asset/investment because I need to live someplace and I can't sell a bedroom to buy groceries.  The only way to make money on it is to sell it and buy something at a lower cost and pocket the difference  Some people borrow against the equity but it is a loan that charges interest and needs to be paid back.


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #8 on: January 09, 2021, 01:41:08 PM »
I appreciate the replies from those who provided a substantial answer. I have already read the sticky. I feel that maybe I didn't emphasize enough that, while I did read the book, the only thing I cared to find out more about was this specific list of things to invest in. I'm just exploring and learning. I'm not about to go to this author's seminar or whatever. A case study may be a good idea.

Frankies Girl

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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #9 on: January 09, 2021, 03:54:15 PM »
I wrote up a VERY long reply last night and then got weird and just deleted it. :(

I'm going to preface this with a simple statement of fact: I'm just a poor country chicken and likely quite naive over the ways of big city gurus and their fancy ways of hustling. So anything that seems dumb, I'll refer you to my sig line (either one really... oh hey, look at me getting one of my hustles worked into the conversation! ;D Sorry, I mean the one about I have no idea...  )

Basically all the things on the list are stuff that require lots of time/energy and research along with ongoing maintenance and involvement to keep things working towards earning you the best bang for your buck. He's advocating active over passive, because in general the thinking is that being active means you're going to make more than if you just did the "lazy" index investing. Marketing at it's best.

Moral of the story if you don't want to read the wall below: There are two paths, and you can choose the simple one.Those that insist that it does have to be complex/complicated are usually also trying to sell you something. ;)

Businesses: He's advocating active tracking/researching new/startups and trying to figure out if they are both honest, have a real idea that can be monetized and also a person that is able to implement their plans and all they need is capital (your money) to turn it into a successful business. Real $ investments to become a partner. Again, lots of initial work even if you're not actually working FOR the business. You need to find the startups, you need to go over their books, their business plans, do research on the market, do background checks on the business people involved and most of all trust them that they aren't stupid/lazy/scammers and that the business will actually turn enough of a profit to pay you back for your investment. Or find a working/established business that isn't failing but for some reason is offering investment opportunities.

Nothing about this sounds attractive to me. I am exhausted just typing all that mess out. I mean - there are good opportunities out there despite me sounding like a giant Eeyore. But you'd have to have a level of both trust and the drive to scope this stuff out for yourself and a sense of adventure that I appear to be lacking. ;)

Stocks/Bonds: this is the only thing I do personally because I like passive investing.

The NotRich Dad guy is just... wow. I guess the nice way to put it is: if things seem overly complicated then look to the person that is telling you this is so. He's offering some lovely seminars that cap out at $45 THOUSAND dollars for his personal attention. Because investing and finance is SO ZOMG COMPLICATED? Hmmmm.

Stock/bond investing is as simple or complicated as you want to make it. Stocks (and this is going to be REALLY simplified - apologies) are what you buy to get growth. Bonds are what you buy to get stability. You generally want to have a mix of them in your asset allocation with a slight tilt towards one or the other depending on your comfort levels with volatility and investment goals. Mutual funds are fine. They are (and I am sure you may already know this) not composed of 1 individual stock. They can be 10 stocks, or 100 stocks, or have a mix of stocks and bonds. There are index stock funds and indexed bond funds, so that right there is what I do and it's worked out just dandy for me and thousands of other investors. You have to figure out what wealth means and what exactly you're looking for because once most of us reach "more than enough" there's no real point in the pursuit of excess. I have no interest in fancy brands, showing off, buying new cars every year with all the bling or the biggest and bestest mansions.

Read the Bogleheads site, read Jim Collins' book: The Simple Path To Wealth

If you take away nothing else from what I'm saying here, please think on this: you don't have to do complex when simple works for you. You should not feel bad for valuing your time or other non-monetary things over money. Passive investing/Bogleheads investing/index investing still does = wealth. All the rest is just noise, designed to make you think you're too dumb/busy/whatever to handle investing on your own.

Real Estate: Real estate - either residential or commercial - is a good source of income if you have the temperament and drive to be a land lord. I do not have either so RE investing sounds like torture to me. It is NOT a one size fits all thing, and anyone that touts it as such is a booger-eating moron. It comes with extra work/people interactions if you DIY, or you hire a property manager and rely heavily on them being honest and good at their job for a slice of your pie. And with the COVID thing, there's been a world of hurt in the RE community (can get some ideas of the pros and cons by checking out the forum over at Bigger Pockets).

Why are other properties considered good but not your own house?
because it's locked in and can't be used unless you sell it. It is part of your net worth but not liquid and not earning you any money except for unrealized-until-sold appreciation. You could monetize your personal home by renting rooms out, renting out space for people to use for storage/working/events/camping/animals/crops... in which case you can count your property as an income producing asset. Some folks get a nice BIG house and rent out extra bedrooms and their borders literally pay them to live in their own house. But you're trading off privacy and free and easy use of your own stuff for extra $. 

Notes: This is (my opinion)a silly suggestion of making money by becoming your friendly neighborhood loan shark. You'd could technically become quite rich doing this, but you'd also have to figure out how to force deadbeats to pay. (sounds like a fun way to spend the day - sitting in small claims court, filing paperwork, paying the fees to get them filed/served) and also make sure to report your income from this correctly so a bookkeeper might need to be hired. Honestly, this is a really awful idea unless you love doing lots and lots of legwork and loaning money to people that were considered too risky to get conventional loans... there's a reason why they can't get loans through regular channels. Sounds stupid and exhausting, but hey - gotta hustle to make bank I guess?

For a cautionary tale, check out peer to peer Lending Club's saga. It was a nice idea, but again - what happens if you loan money to people that have not great credit and history of not paying things back? (spoiler: they still don't pay things back)

Royalties/intellectual property: Oh yes. Either buy the rights to other people's work and market them to turn a profit (ha, like that's an easy thing to do), or more likely: do things that are creative and monetize them. In a way, this works REALLY well if you can write something or do music or art that can be done once and then licensed for a reoccurring fee without you having to produce anything further, but I'd also include things like performances/artwork/crafting on demand. 3D artists could work up plans that could be patented and sold, crafters could create a cool new pattern and market it but you could ALSO produce said unique projects as well. Let me tell you this can be a slippery slope from turning something sort of passive into active... I am a professional artist. I have sold my artwork. I also do voice work and while most of my performances were for fun (free), I have been paid for some recordings I posted for fun (this is more "OMG I'm in a video game" sort of thing than worrying about the actual $). If you have something you can do - writing/art/music/crafting/building - that you enjoy doing as a hobby and can create to sell in some form or fashion without burning yourself out on the enjoyment factor, then have at it. But going into it as a means of making profit could not only turn that hobby into a drudge, it can also burn it out completely. I speak from personal experience on this one. It is heartbreaking to lose that spark, so guard that stuff well and don't push hard if you feel the joy fading. There are better ways to make money. 

Anything else: More "gotta always be scanning for the next big thing" mentality. So yes, the next beanie baby, cryptocoin... There is also the darker side as we've seen recently. Please don't start hoarding TP or hand sanitizer or buying out all the PS5s on the market. I mean sure, you could make money, but would you be the type of person that feels good about it? But even the benign stuff you have to both recognize it to get into it where you can flip for profit, but know when to get out of it before it craters out too. Does that sound like fun? It sure doesn't to me.
« Last Edit: January 09, 2021, 07:22:38 PM by Frankies Girl »


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #10 on: January 10, 2021, 07:51:25 AM »
Why are you looking to advice about "stocks and bonds" (from that list) from an author who has no documented success investing in stocks and bonds?  If the book is made up, as the author has admitted, that's more than a controversy.  Are you talking about something else?  Building your investment plan off a list from a book that was made up, by someone without a track record, seems like a bad start.

You could look at the success of passive index funds over active funds, which has a track record decades long.  Or you might listen to Warren Buffet, who beat the S&P 500 for decades.  There's plenty of people with a significant track record of investing well, all of whom are better than the author you seem to be following.


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #11 on: January 10, 2021, 10:08:24 AM »
I'll admit, he is fun to listen to on audio book, like a "graphic novel" for adults. In reality he seems out of touch. Where can  a beginning investor (without much money) find a business to buy and then let someone else run it? In the book, I think he is talking about established corporations generating millions already. Not an option for most people. I believe he assumes most people are willing to absorb lots of debt, even to buy a corner store. As been said above, letting someone else run that is looking to go bankrupt.

Real estate has typically been a good long term investment, generating modest amounts of income . I am talking about a rental house. You can make the rent, but still have to make the mortgage. Where I live RE is getting very expensive, making that route a little riskier. Add the eviction moratoriums sprouting up today and---uh-oh. I am not saying it is a deal breaker, but it is riskier today.

For me, I max out my 457 at work. I mean past the matching, putting the max IRS allowed. That is the psychologically the easiest, "set it and forget it". If you have more, put it in your Roth IRA. If you have more then save up and decide. Or take on another job for additional income, or open a small business like a maid service, landscaping etc and build from there (this last part is not meant to be taken literally or as a next step plan, just a way to think about growing more).

Anyhoo, like I wrote, he is fun to listen to. I don't know too much about the author than his books. Question, did he have a boatload of money when he began?


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Re: Rich Dad Poor Dad: Questions about assets/investing
« Reply #13 on: January 11, 2021, 01:22:19 PM »
You can start a real estate LLC or SLLC and hire a property management company to handle the property. Of course if you're going to do that you could just buy an REIT.
Some have reported success with laundromats, vending machines, etc. but you'd have to reach significant scale before hiring your first manager.
Tim Ferriss allegedly made his fortune selling "nutritional supplements" on the internet while working 4 hours a week and flying to dance clubs across Europe, before discovering the more lucrative field of selling media. The trick is to hire the right employees to run the business for you, and to automate reporting/information so you can step back from it. I suppose that goes for any business.
Some have promoted blogging as a business or side gig, but success on the level of MMM is rare and most bloggers earn less than minimum wage.

Notes / IOUs
As noted by @maizefolk and @Frankies Girl the whole Lending Club experiment didn't go so well. You don't hear as much talk about this asset class in the FIRE community. It always struck me as odd that lending to people over the internet would yield better results than my neighborhood brick-and-mortar bank could achieve.

Real Estate
This is where Kiosaki allegedly made his fortune before moving into the more lucrative world of selling books and making TV appearances promoting real estate investment in the mid-2000's. To me, this overlaps with "business" because operation at any level of scale would require hiring a manager.

There are now platforms where you can buy specific royalties. See: It is unclear whether this will turn out better than Lending Club / Peerstreet / etc. My question is who files a lawsuit for me when my song/movie/patent is used without permission? How do I even find out about that? Therefore, isn't it fairly safe to infringe on any royalty/patent owned by a small retail investor?