I promise this would be my last post on how awful some of the columns Robert Kiyosaki (of Rich Dad, Poor Dad fame) pens for Yahoo! Finance are. His latest effort contains this gem:
I have been highly critical of the standard financial planning advice — “work hard, save money, get out of debt, invest for the long term, and diversify” — for a long time.
Mr. Kiyosaki doesn’t really explain why the financial planning advice is bad but is kind enough to provide this “proof”:
This mantra […] is followed by millions of investors — who lost $7 trillion to $9 trillion between 2000 and 2004. Many are still following this bad advice today.
Not only did millions of investors lose trillions of dollars, many also missed the boom in real estate, oil, gas, and previous [sic] metals.
Leaving aside the fact that five years is hardly long-term for equities, doesn’t diversify mean buying different asset classes including bonds, real estate, resources and materials? For instance, my target asset allocation diversified among various asset classes using ETFs would have returned roughly 6.5% between 2000 and 2005. Not bad considering that we’ve been through a brutal bear market in large-cap US equities, the bursting of the technology bubble and the more than 30% appreciation in the Canadian dollar. If that is bad advice, maybe I need more of it.
NB: Consumerism Commentary is also critical of the column.
