Why the Author of 'Rich Dad, Poor Dad' Believes Savers Are 'Losers'

Kiyosaki touts the value of commodities over cash, but both have their place.

Robert Kiyosaki, the outspoken author of Rich Dad, Poor Dad, is not a fan of leaving your money in the bank. Indeed, the phrase "savers are losers" is one of the writer's many slogans. Right now, inflation is at around 8%, and even the best savings accounts only pay an APY of 2% or 3%. The result? Money in the bank may gain a small amount of interest, but the rising cost of living means it won't go as far as it used to.

Why Kiyosaki says savers are losers

Some people think that the terms "save" and "invest" mean roughly the same thing. But when Kiyosaki talks about savers, he's referring to people who leave their money in the bank -- not those who invest their cash.

Where a savings account might generate an APY of a couple of percent at most, historically, money that's invested on the stock market can generate much higher returns. The caveat is that there are no guarantees when it comes to investments, which can go down as well as up.

Kiyosaki recently tweeted: "SAVERS ARE LOSERS. 25 years ago, in RICH DAD POOR DAD I stated savers are losers. Today, US debt in 100s of trillions. REAL INFLATION is 16% not 7%. Fed raising interest rates will destroy US economy. Savers will be biggest losers. Invest in REAL MONEY. Gold, silver & Bitcoin."

Let's look at some of those ideas in more detail.

1. Real inflation vs. official inflation

Various factors have combined to push prices sky high this year -- so much so that inflation may well end up being one of the words that define 2022. But did you know that there are different ways to measure inflation? Not only do people's shopping habits vary wildly, but the quality of products can change. This makes it difficult to compare like with like and know how much prices are changing. As a result, some economists measure price increases differently and argue that inflation is even higher. Hence Kiyosaki asserts that "real inflation" is actually 16%.

2. U.S. debt and the Fed increasing rates

The U.S. national debt has just topped $31 trillion for the first time ever. This presents a number of long-term risks for everyday savers. One danger is that more tax dollars might have to go toward servicing the national debt, which could reduce people's standard of living.

At the same time, the Federal Reserve is trying to get inflation under control, and one of the tools at its disposal is to raise interest rates. The trouble is that this is a blunt instrument -- not only does it make the national debt more expensive, but it also could trigger a recession.

3. Cash vs. gold, silver, or Bitcoin (BTC)

Part of the thinking behind Kiyosaki's comment is that the government can print more money, but it can't generate more gold, silver, or Bitcoin. The risk of creating more money is that it could devalue the dollar. On the other hand, the commodities the author mentions carry their own risks -- particularly Bitcoin, which is extremely volatile. If you're looking for a safe place to put your savings, it's important to understand how each asset works.

Should you leave your money in the bank?

Kiyosaki is right to highlight the disparity between the interest you'll earn in a savings account and the rate of inflation. Investing in assets can beat inflation over time. However, even if savings rates don't keep up with the cost of living, dollars are still useful. The trick is to hold the right amount of cash and invest the rest.

It isn't clear what will happen to the economy in the coming year or two. That uncertainty is one reason to keep some money in the bank. Many financial experts advise putting three to six months of living expenses in a savings account in case of emergency. Some advise building up a year's worth of emergency reserves in case a severe recession hits. The idea is to have accessible cash on hand to tide you over if you lose your job or face some other financial crisis.

Cash may not go as far as it used to, but you still need it to pay bills and keep a roof over your head. Last time I checked, it wasn't easy to pay a landlord or mortgage company using Bitcoin or gold. Money in a bank account is also FDIC insured, so if your bank fails, you'll be covered for up to $250,000.

Bitcoin, gold, and the stock market are all investments -- assets that you hope will appreciate in value over time. The ideal scenario is to first build your emergency savings, and then look to invest money and build wealth for the longer term. That way, you can wait out any price dips and hopefully profit over time. If you don't have any cash in the bank, you could be forced to sell your assets at a loss to cover everyday living costs.

Bottom line

Don't let warnings about inflation and national debt scare you into any rash decisions. Before you invest money, build up an emergency fund in an accessible savings account. Make a plan as to what assets you want to buy, how you're going to build a diversified portfolio, and how you will manage it. Keeping all your money in cash could mean you lose part of it to inflation, but putting it in Bitcoin could mean you lose it completely. Like many things in life, it's about finding the right balance for your situation.