Robert Kiyosaki Says You Should be Worried if You Are Counting on the Stock Market for Retirement

Oh really? Apparently we should all pull our money out of the market if we plan on funding our retirement or our child’s college education according to his latest drivel over at Yahoo! Finance. The opening line is just classic since he immediately references one of his literary works (if you can call it that):

When my book “Rich Dad’s Prophecy” was released in 2002, most financial newspapers and magazines trashed it because I discussed a looming stock market crash. Ironically, much of what I predicted in the book is coming true earlier than I expected.

Right, I see it clearly now. Since 2003 the DJIA has gone from around the 8,000 level to currently over 12,000. A 50% gain over the course of four years is not satisfactory I guess. In this piece he admits the market was rallying but claimed that while the market was going up the value was actually decreasing. Huh?

Well look at the awesome comparison he uses to prove it: he pulls out the returns of gold and oil since 1996 in order to “predict the future”. Oh my goodness, oil is up 600% and gold is up 200%. Shoot, why didn’t I put all of my retirement into a few commodities instead of the stock market market? What I really like is the comparison of gold to the DJIA in this ridiculous chart.It shows that while the Dow is going up it isn’t going up as fast as gold so that means the Dow is actually crashing.

That’s right folks, apparently if you compare the purchasing power of a commodity against the Dow it will allow you to predict the future. According to his findings I was actually losing money even though my retirement accounts have been seeing 10-16% returns over the last few years. I wonder what would happen if we chart the relationship of pork bellies or soybeans and the Dow? Would the results be different?

To Kiyosaki’s credit he does bring up an important point about the purchasing power of the dollar, but this is an extremely overblown and poorly executed attempt at pushing his agenda. Inflation is certainly a concern and it always has been and always will be. But comparing the Dow to the price of gold in order to construe your findings to prove that you need to make 15% in the stock market each year just to break even is downright asinine. If we carried around gold bullion in our pockets as a form of currency he may have a valid concern.

So if you ever want to retire you should get out of the market and buy gold, real estate and other hard assets. Better yet, just buy his books and all your problems will be solved.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

14 comments
dom
dom

Basically, what Robert said is spot on. Look at gold to DJ now, getting closer and closer to 1..... and that means hyperinflation round the corner. Go Fed print that money!

dom
dom

Basically, what Robert said is spot on. Look at gold to DJ now, getting closer and closer..... and that means hyperinflation round the corner. Go Fed print that money!

adam sandlter
adam sandlter

Ummm - did you eat your words now??? March 2008 DJIA 6000

Brian
Brian

Well- today is 10/7/2008, things are dire and have changed. So much for the rally of the market. Brian

Jeremy
Jeremy

Right, Drew. Because the stock market has never gone down before and this is a completely new experience. I guess Warren Buffett really is a fool.

Please take note of the heavy sarcasm.

drew
drew

Thanks for your brilliance, Jeremy.

I cannot believe how right you were about Robert's incompetence.

Please take note of the heavy sarcasm.

Rob
Rob

Kiyosaki delivers advice that is not really advice at all. It is more accurately COMMON SENSE! Or at least it would be common sense had there not been a concerted effort by our Federal Governments, U.N and other elite organisations to reeducate, and deeducate, and fabricate B.S. doctrines and theories which are excuses for the financial, monetary global chaos that is occurring before our very closed eyes. Gen x has got to be the most confused and lost generation to come along in a very long time. To our credit, it is not entirely our fault, although I must say that it is very discouraging to read the comments on these pages which clearly exemplify the errors in our thinking. To be clear, I am not defending Kiyosaki. All modern book writers are writing books to make money, not educate. Nobody cares about education anymore, in fact education is seen as the enemy, despised and shunned. We live in an era of specialization- tunnel vision really- "Don't attempt that auto repair yourself, you need a PROFESSIONAL to do it. Don't fix that toilet you need a PROFESSIONAL to fix it. Don't sell your home yourself you need a realtor. Get yourself a Class 1 drivers license and you are a PROFESSIONAL driver....LUDICROUS!!!!!! You are as we all are, HUMAN BEINGS not machines! Specialization creates ignorance! Ignorance of other professions, ignorance of tasks outside our field of expertise, ignorance about Government lies, specifically with respect to history and economy and our mortal enemy INFLATION and HYPERINFLATION. Inflation rewards those who come first, in our case the Big Booming Baby generation, otherwise known as the Baby Boomers, at the expense of those who come later- GEN X. The Entitled mentality of the BIG BOOMING BABIES has created an entire soon to be Elderly population of Adult children. All their lives they have suckled at the breast of Mama Government, and now WE get to pay their bills! This is the underlying cause of the inflation. Look at the government debt clock, look at the rate of currency expansion since 1971. Look at the past presidencies with particular attention to Nixon and Roosevelt. Look at Clinton's term in office. Everyone talks about the wonderful economy of the Clinton years but they fail to ask where did all the money come from during those supposed wonderful economic years? Find out what they did, think for yourself and do not consult a PROFESSIONAL to tell you how to interpret their actions. Think for yourself. Oh and for those who aren't sure, a house is a liability unless it's purchase price is less than 4 years gross personal income. Why? Because of the way a mortgage is structured with the majority of your payment going to interest. It is nothing more than merely a place to hang your hat, that is all, and an expensive one at that. It is not a magical mystical money pumping machine, that is just a temporary effect of the recent debt and credit orgy signed sealed and delivered to us by Mama government to keep the party going for the Big Booming Babies a little while longer. The failure of the stock market to deliver wealth is yes you guessed it structurally flawed as well. In a nutshell, a Corporation is a person with no body, no soul, no flesh, not even an image. A corporation is nothing more than a figment of the overactive imagination of corporate psychopaths which is used as the fall guy when it is time to pull the rug out from under the shareholders feet! The board members don't go broke! The CEO, Officers and Directors don't go broke, they walk away with your money. It is the corporation which goes broke!!

KMC
KMC

What kills my about Kiyosaki and his ilk is that he talks so much that eventually something is going to be right. It's especially funny when they stretch with stuff like the graph. Yep - gold is up a zillion percent and there's a stock market crash.

mapgirl
mapgirl

I suspicious of technical chart people. They really don't get it. Sure it's good to be diversified which is all I think you can glean as useful insight from his silly article.

The apple analogue for dollars in one of the first 5 comments is silly. A year later that apple is rotten! And storage for one year on that apple costs more than the apple! And it's depreciated its nutritional value which is all it's worth anyway!

That should highlight exactly what I think about articles like Mr. Kiyosaki's and of his avid fans and their logic. It's one reason why I stopped listing him as a recommended book on my blog. (My other advertising commitments notwithstanding.)

TJP @ Investor Trip
TJP @ Investor Trip

He's partially correct. The purchasing value of the dollar has gone down, but we can't forget the influx of international dollars in US markets.

Foreign investors have been driving up equity prices since the 2001 crash; one bit of information that Kiyosaki omits. I believe stocks will always make money because of one simple concept: company profits get passed down to shareholders.

As long as Coke, Wal-Mart, and Pepsi generate profits, shareholders (the company owners) will make money. Sure, the market as a whole may be damaged in the short term, but investing in strong companies that generate profits is as safe an investment as one can get.

Jeremy
Jeremy

Oh I understand where he is coming from, and real estate can be a good long-term investment. The problem is for that Joe Investor, real estate means a primary home and possibly a second home. That's it.

That is like putting your whole portfolio into one or two stocks and relying to retire on it. You can do extremely well or you could lose your shirt. This type of person also is saving for retirement in either an IRA or 401k. You don't really have the option to invest in hard assets in these plans, yet he is telling people to abandon them.

While I have no beef that having some real estate, precious metals or other assets as part of your overall portfolio, he is trying to scare people with phoney predictions of a stock market crash when the average person has no realistic option to dive into alternative investments, let alone bank their retirement on it.

Jeremie
Jeremie

As much as I like the stock market, real estate is still a lot more bang for your buck. I've been thru pitfalls with both, but if I could, I would stick with real estate. He's a real estate guy and he just wants to get more people into it. He tries to persuade people to get involved in an area where MOST people do not venture to. Everyone can get into the stock market, but few actually really invest in real estate.

Jeremy
Jeremy

You are certainly correct in your assessment of Yahoo Finance "experts" in general. The only one I particularly read is Ben Stein. Generally I ignore or don't even notice what most of them type but occasionally something is so off-the-wall such as this Kiyosaki article you need to bring it to people's attention how foolish some of these experts can be when they are supposed to be providing helpful advice.

EasyChange
EasyChange

I agree with your criticism of Rich Dad author here. But I have to say something and get it off my chest. The problem with most of yahoo! finance is that most of these articles are drivel. And its not because these authors aren't good. Rich Dad was an interesting book. I liked it. It taught me how to think differently about money. You can say that about many of the other contributors; they've had good books or messages in the past. But yahoo finance! is the problem.

Authors are driven to a deadline and end up reciting the same old information time and again. This infuriates PF bloggers and readers who have a voracious appetite for new information about money, investing, and related topics. We feel somewhat cheated by these 'regular' articles every week or two because we read them and learn nothing new.

Or what's worse is when we read them and then get excited only to find out that we need to 'buy the book' to get the full story. Its all the same drivel. My solution is simple: for people who are upset at the drivel, stop reading. These teaser articles are no better than the freebie street.com and fool.com emails /articles that "urge" me to subscribe to a premium service.

My advice to people who want actionable information about personal finance with real stories and tips? Don't read Yahoo Finance's drivel. Yahoo Finance is generally for the lightweights.

Read pfblogs.org instead. Start with a few of the well known blogs, then start exploring. PFBlogs.org hosts hundreds active pf bloggers - all sharing our stories and financial success and failure online. What better resource for learning can there be?