The key to riches

Borrow, avoid tax, service

be courageous

When I picked up “Why the Rich are Getting Richer” by Robert Kiyosaki (2017), I was hoping for some kind of attempt to explain the growing wealth and income inequality. Kiyosaki (2017) certainly suggests it will in the “bonus section” at the front of the book. In the end, however, Robert Kiyosaki’s book is on how to stay rich, with some general tips on getting rich in the first place.

But why are the rich getting richer?

I’m reading between the lines here, Kiyosaki (2017) does not explicitly say why.

In it’s simplest form, I think it goes like this: Rich people use money to buy assets, which leave them with more income and wealth at the end of the year. Everyone else uses money to buy liabilities and cover expenses, which means income only grows with salary raises and wealth does not grow at all.

Over time, one person has rising income and rising wealth, the other has static income and static wealth. A gap will form.

Oddly enough, Kiyosaki (2017) quotes Karl Marx at the beginning in the bonus section. Odd because Robert Kiyosaki is certainly an aristocrat that Karl Marx believes the proletariat should rise up against. These days though, anyone can become a capitalist, all you need is $1 and the RobinHood app, and you have your first asset. No-one is stuck in the proletariat class in the west today, so why do we still have a growing gap? Kiyosaki (2017) believes it comes down to financial education. I’m not convinced that explains everything, but we will have to look elsewhere for a deeper answer.

On the principle that you should always try to learn something from a book, I’ve summarised the core ideas I found in Kiyosaki, 2017.

If you are already rich…

Congratulations! You are already set. All you need to do is make sure you take advantage of any tax breaks offered by the government and use debt to buy more assets that pay down the debt. Please use your wealth and experience to teach others to be rich, and run businesses that provide shelter for the struggling families who want just want security and safety from the harsh world (see Kiyosaki, 2017, p. 192).

For everyone else

Kiyosaki (2017) is supposed to be about teaching you how to become rich. The message I see sounds like this: Find a way to produce value and profit from it. After that, focus on buying assets, avoid liabilities and minimise expenses.

An asset is something that pays you when you own it, and the classic asset classes are real estate, shares, and bonds. You could probably also include owning a private business as an asset too. Liabilities are things that lose value over time, such as cars. Some expenses are inevitable, but we can look for ways to reduce our overall spending. Taxes are an expense that, with the right strategies, you can reduce, and Kiyosaki (2017) is pretty keen on tax avoidance (the legal version, not the illegal tax evasion).

First, produce value

The real trick is HOW to produce value and HOW to buy assets.

Robert Kiyosaki has most of his wealth in real estate, and makes a lot of money through his “Rich Dad” financial education courses. In Kiyosaki, 2017 he makes it clear that his real estate is creating value by providing affordable housing for people, and the “Rich Dad” training programs leave people better off financially.

Producing value is hard, and Kiyosaki (2017) doesn’t offer any get rich quick tricks. In fact, he recommends doing it the hardest way possible: start as an employee, start a small business, run a big business, become an active investor, and fail all the way. However you end up producing value, do it with integrity, then you know you really are giving back to the world.

As for being rich, running a business seems to be the best way, but the value you produce is to shelter all your employees from the rough and tumble of the economy. We can’t all run businesses, certainly not big businesses. However, we can all use debt and buy assets, which will leave us better off in the long run.

Then, buy assets

Once you are producing some value, it’s time to buy assets. Kiyosaki (2017) only mentions in passing, but the hard part about buying assets is that you have to look at a lot of options. The rule of thumb is that only 1 in 100 assets are worth buying. Kiyosaki (2017) is also pretty critical of shares, and constantly lumps holding shares into the same class as sitting on cash. He certainly doesn’t like the instability of the stock market, or that you can’t get the same tax deductions on shares as you can on property, but I wonder if maybe he just doesn’t like the “passive” part of many mum and pop investment approaches.

Overall, you get out what you put in, both in terms of time and money. Obviously, more money in means more money out. Investing time matters too though. If you spend the time to learn about your investment options, the tax rules around them 1 and responsible debt associated with the asset class, then wait until you find the best option, you will get the best returns. If you drop it into an EFT or term deposit, your returns will be much smaller.

A degree is an asset, but the returns are falling

One point Kiyosaki (2017) repeats over and over is that education is no longer a good investment. Student loans are getting larger and more burdensome, and well-paying jobs are less and less likely to come from formal qualifications. If you need to earn money to live, or you want to be really rich, treat a university degree as another investment option. Whether you go to university or not, read a lot of books, and attend seminars by successful people, online and in person.

If you want to be rich, accumulate a lot of debt?

One thing Kiyosaki (2017) advocates for quite strongly is debt. You reduce tax, increase returns, and you didn’t even have to generate much cash. Once you get an asset, the asset produces cash flow, which reduces your debt. Ideally, you then refinance to buy new assets, borrowing more money against your asset which has less debt on it AND has grown in value. Keep growing, and enjoy being a member of the upper class.

Be aware that taking on debt is making a prediction about the future. For personal debt, such as credit cards and car loans, you are predicting that your income will remain large enough to make repayments. For debt borrowed to buy an asset, you are predicting that the asset will produce enough cash flow to pay down the debt and that the value of the asset will never drop below the amount of outstanding debt. How confident are you that the house will always have tenants, or the share will pay dividends, and that the market won’t crash? Debt is like fire, in controlled moderation you can cook up a delicious stir-fry, too much and you burn your house down.


Kiyosaki, R. T. (2017). Why the Rich Are Getting Richer. Plata Publishing.

  1. (Kiyosaki, 2017) mentioned 1031 Exchanges, you don’t have to pay capital gains if you immediately buy more real estate! Not available elsewhere though. ↩︎