IN the last 3 weeks many people have asked me for my view on Robert Kiyosaki’s concepts. Surely there is a lot of merit in what he says, but there are many limitations too.

Let me see:

1. He underestimates risk, and dramatically underestimates risk.

2. He takes one theory of investing in real estate and makes it look great.

3. He ridicules all other methods of earning money. This is ridiculous – the fact that everybody tries the same model will reduce the returns from that model :). This is what Morgan Stanley calls ‘Convergence of Strategy’ in a well documented research paper.

4. He ridicules all people who are employees and use the 401(k).This is like criticizing about 99% of the people I know. I cannot AFFORD to take such a view. Sure employees do not become super rich. However to use money as a yardstick of success is a STUPID concept. I know of experts who know almost everything in their field – and get invited to Chief Minister’s and Prime Minister’s expert committees – and they earn salaries less than a million rupees.

5. His own strategy could have failed in various markets in India and succeeded in many markets. He does not accept the downside. This is funny I have seen people make big fortunes and make losses too in commodities, real estate, equities, debt, business, etc. Not many middle class people are ready for hardship. Dammit, they do not want it!! 🙂 – who is RK to force it on ALL?

6. I have met many people who have read his book – only 2 concepts stick – real assets and liabilities and the cash quadrant. However I have not met anybody who has paid ‘000 s of $ to attend his seminars.

7. His idea of ‘Cash flow investing’ is similar to ‘Dividend based investing’ which many people born in the decades of 50s, 60s and perhaps ’70s have done. Not sure people born in the ’80s have patience to do it. This is called ageism – like sexism and though I do not like ageism or sexism nor am I sure whether it is correct, I am still saying it….pardon me if it hurts.

more to follow…