I, for one, love reading a good personal finance book. Back in the day, when I first picked up The Total Money Makeover, I vowed to follow Dave Ramsey’s advice to the letter.
Through personal finance books, I learned how to pay off my debt faster, the importance of saving for an emergency, and why I needed to start saving for retirement now. Over the years, however, I’ve also learned that clinging on to every piece of advice that “finance gurus” throw out can backfire.
Here are three personal finance gurus who have recently come under fire.
Dave Ramsey has been criticized for his “oversimplified investing advice.” Ramsey advises his clients and readers to assume they’ll get a 12 percent annual return on investments when saving for retirement. He originally claims that the annual return of the stock market has been 12 percent since 1926, even after adjusting for inflation. (He has since changed the language on his website to say 12 percent without saying anything about inflation.)
This advice has caused a stir among financial advisers claiming that Ramsey’s advice is far from accurate.
I was completely consumed reading Kiyosaki’s book, Rich Dad, Poor Dad. Kiyosaki has a unique perspective when it comes to personal finance. Some of his most controversial pieces of advice are: your home isn’t an asset, and you should leverage debt to grow your riches.
It seemed that Kiyosaki’s debt leveraging was working quite well — until he had to file bankruptcy for his company. After a court ruling in 2012, one of Kiyosaki’s companies, Rich Global LLC, was ordered to pay the Learning Annex nearly 24 million dollars. That’s when the Rich Dad, Poor Dad author was forced to file bankruptcy for that company.
Leverage can grow your wealth, but you are also increasing the risk of losing everything. It doesn’t work for every situation!
I have to admit I’ve never been able to read one of Suze Orman’s books all the way through. Nevertheless, she’s still seen as a financial goddess by her followers. She preaches financial advice, yet her special prepaid card is far from ideal.
“The Approved Card” by Suze Orman is meant for those who have too low of a credit score to get a regular checking account and can’t deposit $1,000 a month for the lower-fee Green Dot Card. The Approved Card charges users a hefty $3 purchase fee, $3 monthly maintenance fee, and $2 ATM fee. Great deal, right?
The Bottom Line
Have these “finance gurus” helped millions of people climb out of debt, save for retirement, and learn personal finance basics? Undoubtedly. Could people get hurt following every single advice from gurus? Absolutely.
You can pick up a few nuggets of wisdom from all three of these finance gurus. That doesn’t mean you need to follow all of their advice to the letter. Remember to follow finance basics and formulate your own plan. Everyone’s financial situation is different, and you should always take financial advice with a grain of salt.
What do you think of “finance gurus”? Have they helped or hindered your journey to financial independence?