This ‘Rich Dad, Poor Dad’ Author Says Not to Sweat Investment Losses. Is He Right?


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Man tracking downward performance of asset on a laptop.

Image source: Getty Images

It pays to listen to what he has to say.

Key points

  • Robert Kiyosaki’s Rich Dad Poor Dad has helped many readers improve their financial literacy.
  • Kiyosaki insists that investment losses don’t have to be a source of concern.

It’s an unfortunate fact that financial literacy isn’t something that’s taught broadly in the U.S. (though lawmakers are fighting to change that). Often, those who want to be financially informed have to take matters into their own hands. And they can do so by reading books like Robert Kiyosaki’s Rich Dad Poor Dad.

But being financially literate won’t necessarily spare you from investment losses when the stock market has a tough year. Such is the case for many investors right now.

A lot of brokerage account, IRA, and 401(k) plan balances are down these days due to the volatile market we’ve experienced over the past 12 months. And it’s hard to say when the market will recover.

But in a recent tweet, Kiyosaki said that those sitting on investment losses shouldn’t sweat it. He also made a point to say, “It is times like this the smart and informed will grow richer.” And his advice is pretty spot-on.

Don’t stress over investment losses

If you’re looking at a brokerage account, IRA, or 401(k) balance that’s lower now than it was 12 months ago, you’re in good company. But also, it doesn’t mean your portfolio is doomed.

One thing every investor should know is that you don’t actually lose money in the stock market unless you actively sell investments at a price that’s lower than what you paid for them. So, let’s say your IRA was worth $40,000 in January 2022, and now it’s only worth $32,000. That’s an upsetting thing to see.

But it doesn’t mean you’ve lost $8,000. It just means that right now, at this very moment, you’d only get $32,000 for your assets. But if you wait another year, you may find that your IRA balance comes up to $42,000.

So in a nutshell, the only thing you really have to do to avoid permanent investment losses is do nothing. And that’s pretty easy, right?

It’s a good time to invest

You might think that investing during a down market is a risky move. But actually, it’s a savvy one.

Right now, it’s possible to buy stocks and other assets at a lower price than what they’d normally trade at. And if you add stocks to your portfolio and their value increases down the line, you stand to make money.

Now, if you’re unsure about buying individual stocks at a time like this, a better bet may be exchange-traded funds, or ETFs. That way, you’re not putting money into specific companies, but rather, you’re effectively buying up a bunch of different stocks with a single investment.

But either way, there’s no need to break into a sweat because your portfolio has lost value. All you’re looking at is a snapshot of this moment in time.

The amount you see on screen today isn’t the amount you’re going to be looking at by the time you’re ready to cash out your investments or withdraw from your IRA or 401(k) in retirement. And the more you keep that in mind, the less stress you’re apt to suffer from.

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