Robert Kiyosaki of 'Rich Dad, Poor Dad' Says Fastest Way To Lose Money Is Investing In What You Don't Understand

Robert Kiyosaki, the author of "Rich Dad, Poor Dad," has long been an advocate for financial education when it comes to successful investing. He recently took to Instagram to warn his followers of the risk of investing in things they don't fully understand. 

Kiyosaki’s Advice: Learn First, Then Invest

In his Instagram post, Kiyosaki stated, “Don’t invest in what you don’t know. Learn first then invest.” He reinforced this message in the post's caption, writing:

“Want to lose money fast? 💸 Simple: Invest in what you don't understand. The poor and middle class chase hot tips and gamble in markets they don't study. The rich? They invest in their education first.”

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Kiyosaki's main message is that many people enter the market without a clear understanding of how it works. They may follow advice from friends, social media, or financial news without doing their own research. According to Kiyosaki, this approach is more like gambling than investing, which can lead to significant financial losses.

Why Education Matters in Investing

Kiyosaki's philosophy centers on the idea that financial success comes from knowledge and strategy, not luck. His company, Rich Dad, emphasizes the importance of understanding different asset classes and investment strategies before diving in. 

According to the Rich Dad blog, there are five major asset classes to take into consideration when investing: 

1. Real estate
2. Commodities
3. Business
4. Paper assets (like stocks and bonds)
5. Cryptocurrency

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Kiyosaki encourages investors to focus on the types of assets they are most interested in and start educating themselves more on that area. For example, stock market investors should learn more about specific methods of investing. 

"The interesting thing is that most people only know of one way to invest in the stock market, so they never ask the question of how they should do it," the Rich Dad blog says. 

Common Pitfalls of Investing Without Knowledge

Kiyosaki's warning reflects the reality that many investors make decisions based on market trends or emotional impulses rather than sound financial principles. According to a Magnify Money study, 66% of investors have made impulsive or emotion-based investing decisions that they later regretted. 

The study also reports that 58% of investors agree their portfolio performs better when they leave emotions out of the equation; however, nearly half say that it's difficult to keep emotions at bay when investing. 

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Some common investment mistakes include:

• Chasing hot stocks – Investing in companies because they are popular rather than because of their fundamentals.
• Following bad advice – Acting on tips from friends or influencers without independent research.
• Overdiversification – Spreading investments too thinly without a clear strategy, which can dilute potential returns.

Key Takeaway: Knowledge Before Action

Kiyosaki's message is straightforward: education comes before investing. Understanding how markets work and having a clear investment strategy can help prevent costly mistakes. For investors, this means taking the time to study asset classes, market trends, and financial strategies before putting money on the line.

As Kiyosaki puts it, “Learn first. Then invest. That's how the rich get richer.”

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