Is the author of 'Rich Dad Poor Dad' in debt for billions? This is the truth
The author of the world's most famous finance book caused a stir when he claimed he held an astronomical debt of billions of shekels. Now it turns out: his personal debt is much smaller, it is a PR stunt - and the strategy behind the crazy number is revealed | All the details
The author of the successful finance book 'Rich Dad, Poor Dad', Robert Kiyosaki, clarifies the confusion that arose around his resounding statement that he is mired in debt of 1.2 billion dollars (about 3.5 billion shekels).
In clarifications provided recently, including by his business partner and former wife Kim Kiyosaki, it was clarified that the amount is not his personal liability, but a debt including a group of real estate investors and partnerships that hold about 1,500 housing units.
According to Kim Kiyosaki's estimate, Robert's personal share of the huge debt is only between 30 and 60 million dollars. Kiyosaki presented the astronomical number of 1.2 billion dollars as a rhetorical and provocative tool, intended to spark public debate around the strategic use of borrowed money for investments.
Kiyosaki has been promoting the concept of 'good debt' for years - taking out loans to purchase assets that generate income, contrary to the common advice of financial advisors to get rid of debts. The method is based on the fact that interest payments are tax-deductible, which allows for minimizing tax payments legally.
In addition, each asset in the investment portfolio is held in a separate Limited Liability Company (LLC). This separation creates a legal barrier that protects the entire portfolio if a specific asset encounters difficulties, and allows for generating cash flow and appreciation without paying capital gains tax upon sale.
Despite Kiyosaki's success, financial experts warn that imitating such a high-leverage strategy is very dangerous for the private investor. Taking out large loans amplifies not only profits - but also losses.
In the absence of strong cash flow or professional management, a drop in real estate prices or a rise in interest rates could turn the debt into a severe economic crisis. Kiyosaki, for his part, claims that his goal is to teach the public how to manage money, but the gap between giant partnerships and small private investment remains critical.
