The benefit of diversification
Why Robert Kiyosaki’s "Rat Race" Cashflow game is more harmful than useful in Vietnam market:
- Most available passive income sources (dividend yield, coporate bond rate, deposit rate, insurance rate) can’t beat real inflation. Relying on passive income is a gradual decay, a timed death.
- An illiquid corporate bond market plus an extremely risky equity market (read: not for moms and pops) means very few choices of instruments are available to retail investors.
- The personal wealth management industry is underdeveloped. Many lucrative assets that are expected to yield passive income are not available to retail investors.
- Authority: the visible wealth of Kiyosaki comes from selling self-help / motivational books, not from trading financial assets. A question on the authority and validity of his methods exists, at least from a finance professional perspective.
Why harmful? Because in finance, doing nothing (max loss = inflation – deposit rate) is less worse off than doing the wrong thing (max loss potential = 100% capital).
Image source: http://dilbert.com/strips/comic/2008-12-13/