In the realm of financial education, few names stand out as boldly as Robert Kiyosaki. As the author of the globally renowned Rich Dad Poor Dad book, he has spent decades warning people about the traps that traditional financial systems set. One of the most pressing messages found across many Robert Kiyosaki books is his cautionary stance on what he calls “fake assets.” These are investments that are widely promoted as smart or secure but, in his view, are financial illusions that keep people poor or middle-class.
In this post, we’ll dig into Robert Kiyosaki’s definition of fake assets, why he believes they are dangerous, and what alternatives he offers through the rich dad book series and beyond.
What Are Fake Assets?
According to Robert Kiyosaki, fake assets are financial instruments that don’t produce reliable, recurring income. While they may appreciate over time, they don’t meet his core standard of a “true asset”—something that puts money in your pocket each month.
Examples of fake assets include:
- Mutual funds
- Stocks bought without financial literacy
- 401(k)s and IRAs
- ETFs
- Fiat currency (e.g., the U.S. dollar)
- Real estate bought for speculation without rental income
These are all products promoted by mainstream finance, but Robert Kiyosaki books repeatedly warn that such assets are often speculative and rely too much on the hope of appreciation rather than actual value generation.
The Philosophy Behind Real vs. Fake Assets
Robert Kiyosaki’s teachings, especially in the Rich Dad Poor Dad book, focus heavily on the importance of passive income. His definition of a real asset is anything that generates consistent cash flow—rent from real estate, dividends from businesses, or royalties from intellectual property.
His cashflow quadrant, introduced in one of his most famous rich dad books, categorizes people into four groups:
- E – Employees
- S – Self-employed
- B – Business owners
- I – Investors
Fake assets, he warns, keep people trapped in the “E” and “S” quadrants—working for money instead of letting money work for them. True wealth, he says, is found in the “B” and “I” quadrants.
The cashflow quadrant has become one of the most referenced concepts in Robert Kiyosaki books, providing a blueprint for escaping the paycheck-to-paycheck lifestyle.
Why Fake Assets Are Dangerous
1. No Real Cash Flow
In the rich dad book series, Kiyosaki is consistent about one thing: if it doesn’t produce income, it’s not an asset. Fake assets like mutual funds may grow in value, but unless they’re producing dividends, they don’t generate income. This goes against the principles outlined in rich dad’s guide to investing, where cash flow and control are the ultimate goals.
2. Lack of Control
Unlike owning a business or investment property, fake assets give you little to no control. In mutual funds or 401(k)s, fund managers make decisions for you. Robert Kiyosaki argues in rich dad’s guide to investing that real investors must take an active role in managing and understanding their investments.
3. Market Dependence
Unlike owning a business or investment property, fake assets give you little to no control. In mutual funds or 401(k)s, fund managers make decisions for you. Robert Kiyosaki argues in rich dad’s guide to investing that real investors must take an active role in managing and understanding their investments.
4. Illusion of Safety
In the Rich Dad Poor Dad book, Kiyosaki describes how his “poor dad” believed in saving money and investing in government-approved plans like a pension or 401(k). His “rich dad,” by contrast, focused on acquiring assets that produced income. Kiyosaki’s point is that financial safety is often an illusion unless you own cash-flowing assets.
The Retirement Account Myth
Traditional retirement accounts like 401(k)s are heavily criticized in the rich dad book series. Kiyosaki argues they are structured to benefit Wall Street, not the average investor. He outlines several reasons:
- Tax deferment, not avoidance – You’ll still pay taxes, often at a higher rate later.
- No liquidity – Early withdrawal comes with penalties.
- Market volatility – Your nest egg is at the mercy of the market.
- Inflation risk – Money sitting in these accounts loses purchasing power over time.
In rich dad’s guide to investing, Kiyosaki emphasizes building financial knowledge so you don’t have to rely on cookie-cutter investment tools that promise growth but deliver uncertainty.
Fiat Currency: The Biggest Fake Asset of All
Another focus of Robert Kiyosaki is the instability of fiat currencies. He frequently criticizes central banks for printing money and devaluing the dollar. His distrust of fiat money is echoed across various Robert Kiyosaki books, where he urges readers to hold assets like gold, silver, Bitcoin, and income-producing property.
He argues that fiat currency is not only a fake asset but also the root of many financial collapses, as seen in hyperinflationary economies around the world.
What to Invest in Instead
1. Cash-Flowing Real Estate
One of the pillars in rich dad’s guide to investing is income-producing real estate. Rental properties generate monthly cash flow, offer tax benefits, and appreciate over time.
2. Business Ownership
Starting or investing in a small business puts you in the “B” quadrant of the cashflow quadrant, giving you control and potential for high returns.
3. Gold, Silver, and Crypto
Robert Kiyosaki supports owning hard assets like precious metals and cryptocurrencies as protection against currency debasement and inflation.
4. Intellectual Property
Royalties from books, music, or online courses are examples of assets that generate passive income—an often overlooked strategy that aligns with the philosophy found in the Rich Dad Poor Dad book.
The Role of Financial Education
Throughout all Robert Kiyosaki books, the core message is that financial literacy is the foundation of wealth. Without understanding money, cash flow, and risk management, people fall prey to fake assets.
The rich dad book series doesn’t just provide motivation; it delivers frameworks and actionable ideas. From the cashflow quadrant to tax strategies in rich dad’s guide to investing, Kiyosaki emphasizes empowerment through education.
Final Thoughts
Robert Kiyosaki’s urgent warning about fake assets is not fearmongering—it’s a wake-up call. While conventional wisdom suggests that retirement plans, mutual funds, and fiat money are reliable, Kiyosaki sees them as deceptive tools that keep people dependent and financially insecure.
Through the Rich Dad Poor Dad book, the cashflow quadrant, and other influential Robert Kiyosaki books, he urges readers to break free from financial illusions. Instead of chasing paper profits and theoretical wealth, he advocates for acquiring real, income-producing assets—just as outlined in rich dad’s guide to investing.
In a financial world filled with noise, the timeless insights from the rich dad book series offer clarity, courage, and a roadmap to real wealth.