Anyone who has had the misfortune to listen to Kiyosaki’s podcast will have heard he has holds some pretty bizarre opinions. That said the concept behind his Cashflow Quadrant is actually well founded.
One thing he forced people to think about was whether they would prefer to have finite buckets/pools of money, or would rather have renewable streams of money.
Once the bucket is emptied, everything is gone… think about all those stories of lottery winners, professional sporting stars, and so on pissing it all away. This represents the left hand side of his quadrant, if a worker stops working then their income ceases immediately.
However a stream of money can (in theory) infinitely replenish the contents of the bucket, so makes for a much better choice. The really wealthy people in the news, Bezos and Gates and Buffet, all made their wealth from owning assets that generate streams of money.
When you think about it the PF / FIRE mantra of spend less than you earn and invest the difference is establishing that same type of income stream, in the form of interest/dividends/rent/capital growth from their investments.
Where 4% rule skeptics get uncomfortable is around the risk that devotees will empty the bucket out faster than it can be replenished. @EarlyRetirementNow wrote some great posts talking about this recently.
The other area Kiyosaki made people uncomfortable is when he called out owner occupier home ownership as being a liability rather than an asset, because it consumes rather than generates income.
I think the wisdom of his message is to consider the opportunity cost of owning your own home versus investments.
Many people take out a big mortgage and then channel vast portions of their income for the next 25-30 years into something that will never generate them any income. Any capital growth they may enjoy is difficult to access while they reside in the property.
The alternative approach would be to channel those same funds into income producing assets that will grow in value over time. Money makes money, so the wealth of the investor will increase at a faster rate than it would have were it trapped in a property that generates no income. Again the PF /FIRE mantra is consistent with this, spend less so you can invest more for the future etc.
As your pile grows, at some point in the future some/all of that passive income stream could be diverted to fund a mortgage for the investor to buy their own home. Alternatively some of the investments could be sold to purchase the investor a home. Either way the wealth an investor enjoys at that point will likely be greater than had they just bought the home initially.
In summary: Kiyosaki had a couple of good ideas, that could be summarised into the diagram above and printed on a t-shirt. Unfortunately he’s then diluted those powerful observations by publishing a bazillion books that all say the same thing, and makes a fortune ripping off gullible wannabes who attend his expensive courses.