Robert Kiyosaki’s Book, “Rich Dad, Poor Dad” has long been hailed as a must read for anyone who wants to do well with money. In the book, he compares the financial advice of his two fathers, his well educated father who was a typical American, and his other father (who was actually his friend’s father) who was more of an entrepreneurial type.

In the book, he asks the entrepreneurial father to teach him about money. The “rich dad” then teaches him through various life lessons about how money works. The rich dad teaches him the value of financial intelligence, using corporations to avoid taxes, and building business systems and income producing assets rather than the traditional means of working hard and saving for the future.

The book and Kiyosaki’s teachings as a whole have on critical flaw. He never factors in risk. Kiyosaki suggests that we focus on a few “good investments” rather than diversifying your portfolio. This is a great way to become broke, very quickly. In fact, Robert Kiyosaki lost all of his money in 1985 when his t-shirt business failed. Kiyosaki had to declare bankruptcy and ultimately became homeless! Risk is an extremely important part of finance that Kiyosaki just glosses over and barely ever mentions. You have to factor in risk in your investments, otherwise you would be going to Vegas and betting your money on 18 black all the time because the payout is about 4000%! Of course you wouldn’t do that because there’s far too much risk involved!

“Rich Dad, Poor Dad” has a lot of anecdotal stories and lessons, but offers almost no concrete advice that one should follow. Many readers of the book feel extremely motivated to become financially independent and are ready to “escape the rat race”, but they soon realize that the book gives them no idea how to proceed. If this book is supposed to teach us about money, should it not give us concrete suggestions as to what we should do in order to become financially independent?

It’s quite clear that some of the things that Kiyosaki is teaching is quite simply, bad advice. Perhaps his “rich dad” was not as wise as Kiyosaki had thought. Kiyosaki described his “rich dad” as one of the richest men in Hawaii. After the rich dad could never be found, many people believed that the rich dad was a metaphor rather than an actual person. In 2003, Kiyosaki backed off from the statement that “rich dad” was a real person, and instead stated, “Is Harry Potter real? Why don’t you let Rich Dad be a myth, like Harry Potter?”

Kiyosaki’s book just does not offer a worthwhile plan to follow, and it practically ignores risk all together. I think I’ll get my financial advice from someone who actually has a lot of money, as opposed to the mythical “rich dad.”