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

6. Diversified Portfolio 
Most people are not diversified—they are 
de-worsified.
The four basic asset classes in the world of investments are shown 
in the asset column of the financial statement below.
Most people who believe they have a diversified portfolio are 
not diversified because they are primarily in only one asset class: 
paper assets.
Paper assets are made up of stocks, bonds, mutual funds, ETFs, 
insurance, annuities, and savings.
Again, they are not diversified, they are de-worsified. Even more 
hideous, mutual funds by definition are diversified, made up of a 
basket of different stocks, bonds, and paper assets. When a person has 
a diversified portfolio of mutual funds, he or she is beyond diversified.
When the stock market crashes as it did in 2007, most of the paper 
assets crash in unison. This is why even Warren Buffett’s mutual 
fund, Berkshire Hathaway crashed in the crash.
Third is the question of fees. While most fees that go to the financial 
system can be found somewhere in the fine print, most of the investors 
I talk to have no idea what those fees are and how they will affect 
the outcome of their investments. In my soon-to-be-released Rich 
Dad’s Advisor book The ABCs of Investing in Stocks, I dedicate 
nearly an entire chapter to helping investors understand the crippling 
ramifications that these fees bring to a person’s 401(k) plan. When 
those who most vigorously defend the status quo of 401(k)s filled with 
mutual funds bray their message, consider how much money they are 
making with the status quo.
Fourth is the question of beating the market. Today it’s not too hard to 
find financial instruments that are readily available to the individual 
investor that will at least mimic the market. Products like exchange-
traded funds allow an investor to do pretty much everything that 
most mutual funds can do in terms of tracking an index market. Why 
should I pay huge expense ratios for a portfolio that is simply going to 
do whatever the market does anyway? If my 401(k) or 403(b) plan or 
IRA is simply going to mimic the market, what value does professional 
management bring? If a person examines their own IRA or 401(k), 
chances are they have done well when the market has done well, and 
they have hemorrhaged when the market has hemorrhaged. Sadly, most 
people find they’re talented enough all by themselves to lose money when 
the market falls. 
There’s much more to the discussion than just these pros and cons. 
For many, the decisions they make will have a great impact on their 
financial future. In my opinion, this warrants a frank discussion with 
an advisor and serious consideration of a plan for financial education.
As Andy explained, mutual funds, banks, and pension companies 
are important because they provide the money that those in the
B and I quadrants use to invest.
For the uneducated investor, mutual funds are an oxymoron, 
because they are one-sided funds, and are not mutually beneficial.