I honestly didn’t know that Robert Kiyosaki was in town. Not that I would have gone to hear him speak since I’ve learnt quite a bit about investing and personal finance since the time I first bought the book that made him famous- ‘Rich Dad, Poor Dad’.

Like all gurus and motivational speakers, I think they have something usful to share but because of the inherent conflict of interest present, there is a need to trust but verify the things they say. Take for example this gem taken from the Straits Times interview linked above:

He recounted the time when he and his wife Kim bought a few hundred dollars’ worth of silver at US$3 an ounce in the 80s

In the article, it goes on the say that Silver is worth US$34/ounce right now.

First off, I can’t find the exact prices for Silver in the 80s but I found this.

Silver prices in the 80s. source:http://www.kitco.com/charts/historicalsilver.html

As you can see (if the source is right), the yearly average for Silver in the 80s never went to $3/oz so either Robert Kiyosaki is a damn good timer (perhaps it was at $3/oz at a particular period in a particular year) or his memory is a little fuzzy. And even then, if he started buying at $3/oz, given that the yearly average in the 80s, his average price should have gone up to somewhere in the $5-6 region. Pssst, by the way, Silver hasn’t been at $34 for a few months now either (go the kitco.com to check those out too).

 

Anyway, even if he did buy all his Silver at $3/oz and somehow cash out at $34/oz, assuming no transaction fees and or storage costs over the last 30 years, his grand return would have been approximately 9.4% p.a. Respectable returns most definitely. The S&P500, from 1985 to date, only delivered about 7.5% p.a. in capital gains. Oh wait, dividends usually account for anywhere between another 2.5-3.5% in returns p.a.*

Suddenly, Robert Kiyosaki’s Silver investment doesn’t seem like such a genius move. Even going by the numbers he supplied, the investment in Silver,at best, matched the returns from the S&P500. Nowdays, one can easily buy a passively managed ETF to track the S&P500, so why do you need to heed a guru’s call to invest in Silver if it’s not going to provide one with Buffett style returns?

Remember folks, always trust but verify.
*I took the S&P500 at 180 which looks like a reasonable starting point for the year 1985.

edit: I realised the links don’t work so I took them out.

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