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4 Most Over-Hyped & Misguided Personal Finance Books

by on July 23, 2012

4 Most Over-Hyped & Misguided Personal Finance Books

Here’s a fun fact for you: there’s no such thing as a “certified” personal finance expert. There are no requirements to become an “expert” in the field, no licenses to obtain and no regulations in place to ensure that the information an “expert” provides is actually valid. Crooks can publish. Your grandma can pose as a finance guru, even though the granny-approved “here you are honey, buy something nice” $10-handout investment strategy has for decades paid out in mere hugs. Hugs are actually free in other sectors. How did this lady get a book deal?

What we’re trying to say is that there are a lot of shady people out there, a bunch of self-styled experts who are out to make a killing on the personal finance craze. These snake oil salesmen hope to line their pockets by selling consumers the “secrets” of making money or escaping debt – secrets that are misguided, over-hyped, dangerous or even plagiarized from another book.

As a result, consumers need to be careful about who they turn to for financial advice. While there are certainly helpful personal finance books out there, there are just as many that should be avoided at all costs. Here are four of the worst to hit the shelves so far.

1)    Nickel and Dimed: On (Not) Getting By in America. Barbara Ehrenreich’s bestselling book claims to be both a manifesto on the dark side of American poverty and a how-to guide for surviving on minimum wage. It is neither. “Nickel and Dimed” is, in reality, little more than the account of a talented but biased writer attempting to explain something she doesn’t seem to fully understand.

Ehrenreich’s various accounts of minimum wage employment are weakened by the fact that she spends more time ridiculing classism than she does actually trying to “get by.” Instead of seeking help from services like WIC, she uses her pages to remind us that Wal-Mart and church are for poor, stupid, fat people and that the middle and upper classes are terrible for making these people so poor, stupid and fat. Interesting? Not really. Helpful? Nope.

2)    Rich Dad, Poor Dad. Who gave Robert Kiyosaki access to a printing press? Here’s a guy that has been over-hyped in the media and talked about incessantly by many of the personal finance bloggers out there but there are a few recommendations that just don’t seem to pass muster, in my opinion. In the author’s “totally true” guide on how to generate and manage wealth, he encourages readers to “go broke big,” to ask rich friends for insider trading tips – a felony – and to pay yourself before worrying about your bills or taxes because coming up short will motivate you to work harder.

Most of the actual investing advice in the book is abstract and nebulous. The one point he seems to make is that real estate is amazing – a truth that no longer applies in this economy.

3)    Why We Want You to Be Rich. Robert Kiyosaki strikes (out) again, this time with the assistance of America’s favorite quaffed billionaire, Donald Trump. “Why We Want You to Be Rich” is essentially a re-hash of “Rich Dad, Poor Dad,” but with the added bonus of Trump’s own misguided commentary. The authors’ main talking points are as follows: invest in real estate, invest in pyramid schemes and freak out about Medicare.

The techniques aren’t really applicable any more. But the real irony of the book is that Trump and Kiyosaki didn’t actually follow the steps they lay out to earn their own respective fortunes. Trump inherited his money from his father and then used real estate to elevate his status from “rich” to “mega-rich.” Kiyosaki made his money by selling “Rich Dad, Poor Dad” to a bunch of saps. So while the authors may want you to be rich, they do a damned poor job of helping you get there.

4)    Hazardous to Your Wealth. What do you get when a mutual fund manager writes a book about exposing the secrets of mutual fund investing? That’s what the world wanted to know after the late Robert Markman, then head of Markman Capital and the Markman Trust Funds, published his Wall Street tell-all “Hazardous to Your Wealth.”

The initial sales of the book were impressive, mostly because Markman’s advice – to avoid diversified portfolios and index funds – contradicted the strategies promoted by every other wealthy investor at the time. Unfortunately, the author  promised more than he could deliver. After the stock market bombed in 2009, it was revealed that Markman’s against-the-grain investing empire was only staying afloat because he had been running a desperate Ponzi scheme behind the scenes.

While the traditional funds recovered, Markman’s portfolio continued to dwindle.   In February 2010, the manager committed suicide that was ultimately used to repay some of his defrauded investors. He wasn’t an evil man, just a desperate one who made poor choices. But since “Hazardous to Your Wealth” promotes the failed strategies that got him into trouble in the first place, we have to recommend against it.

The authors of these terrible personal finance books don’t really mean to ruin your life. They just want your money. Unfortunately, that doesn’t make their advice any less invalid. While we will always big advocates for good personal finance books, if you happen across any of these titles on the shelves we suggest you simply move along. You’d find better financial advice in an Ayn Rand novel.

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