What Schools Will Never Teach You About Money By Robert T. Kiyosaki

Tom Wheelwright explains:
When you buy mutual funds, you are taxed in two separate ways. First, you 
are taxed on the capital gains when the fund trades (buys and sells) a stock. 
Second, you are taxed when you trade the mutual fund itself. The outcome 
of this taxing scheme is that you can pay capital gains on the mutual fund’s 
stock trades in a year when the mutual fund goes down in value. Imagine 
paying taxes when you lose money. That’s exactly what happens to a lot
of people when they own mutual funds.
There are some advantages to mutual funds. Rather than have me 
discuss the pros and cons of mutual funds, I will let the Rich Dad 
advisor, Andy Tanner, explain paper assets.
Andy Tanner explains pros and cons of mutual funds:
When it comes to the pros and cons of mutual funds, I’d say that 
most of the pros lie in favor of the institutions that sell the mutual 
funds, along with the fund managers who collect fees from the fund’s 
investors. The investors put up the money, investors assume the risk, and 
institutions and fund managers get paid whether the fund performs 
well or whether it doesn’t. Combine that with a program of consistent 
dollar-cost averaging, and you have a constant flow of dollars coming 
into the fund at all times. As Robert says, there are always two sides to 
every coin, and there’s no question that the mutual-fund companies are 
on the more profitable side.
I suppose the appeal of mutual funds, unit trusts, and retirement plans 
like 401(k)s and RRSPs is that, on the surface, they appear to give 
an investor a way to invest without having to have a lot of financial 
education. In addition, they also give the investor a sense of safety because 
they usually diversify the money across several different sectors.
The problem is simply that appearances can be deceiving. I’m not 
convinced at all that investing in a 401(k) filled with mutual funds is 
an alternative to financial education. The type of diversification that 
mutual funds carry gives rise to what I think is a very dangerous false 
sense of safety. In reality, they give an investor no more control than 
investing in a single stock. Risk is related to control. Less control means 
more risk, which is why hope is not a strategy. 

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Chapter Four
Unfair Advantage
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