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Robert Kiyosaki, the renowned author of "Rich Dad Poor Dad," has slammed a long-standing investment formula that advocated allocating 60% to stocks and 40% to bonds. In a post on X, Kiyosaki described the formula in uncomplimentary terms, noting that it was obsolete.
Robert Kiyosaki declares 60/40 formula" dead"
Notably, the formula was meant to create a balance between risk and returns for long-term investors. However, Kiyosaki claims that the formula is misleading and not advisable, particularly in light of growing government debts.
He explained that the 60/40 rule died when a former U.S. President ended the gold standard. That is, the fiat currency was no longer backed by gold. Kiyosaki argues that from then on, the currency became "fake money" as the government freely printed the notes.
The renowned author also stated that bonds, which are government debts, are risky assets as well because they rely on a government that has “gone bankrupt.” Hence, both stocks and bonds rest on shaky ground.
Kiyosaki has advised a replacement, with Morgan Stanley’s 60/20/20 alternative. In this model, 60% of resources are allocated to stocks, 20% to bonds and 20% to gold. He justifies the inclusion of gold, emphasizing that the asset offers more enduring security than a paper investment.
"The facts are gold has outperformed stocks and bonds for years….but no one said anything," he wrote.
Kiyosaki insisted that he preferred real assets like gold, silver, Bitcoin and Ethereum to bonds or stocks. He said his preference is due to these assets holding value and allowing an investor to build wealth through tangible assets that generate cash flow.
The "Rich Dad Poor Dad" Author urged his followers not to trust the old financial system, as it was built on debt and weakening fiat currency. However, he reminded them to find an investment plan that works best for them.
Digital assets fluctuating, but long-term outlook remains strong
Interestingly, this recent message comes after Robert Kiyosaki, within the last 48 hours, pushed for the adoption of Bitcoin and Ethereum. He claimed that the U.S. dollar was collapsing and that holding cash is not profitable in the long term.
Despite Kiyosaki’s advice, some investors have expressed concerns over the volatility of digital assets. As of press time, Bitcoin is changing hands at $121,396.33, which represents a 1.13% decline in the last 24 hours. The trading volume has also dropped by 28.49% to $58.44 billion.
Similarly, Ethereum has shed 3.21% and exchanges hands at $4,343.70 within the same time frame.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team