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

5. Income from a 401(k) is withdrawn at ordinary-income tax 
rates, the highest of the three types of income, which are:
• Ordinary
• Portfolio
• Passive
The sad truth about most financial advisors and pension-fund 
managers is that they are not investors. Most are employees in the E 
quadrant. One reason why so many government pensions and union 
pensions are in trouble is because these employees are not trained to be 
investors. Most do not have any real-life financial education.
To make matters worse, most financial “experts” advise uneducated 
investors to “invest for the long term in a well-diversified portfolio of 
stocks, bonds, and mutual funds.”
Why do these financial “experts,” employees in the E quadrant 
or sales people in the S quadrant masquerading as investors in the I 
quadrant, advise you to do that? It’s because they get paid, not by how 
much money they make for you, but by how much money you turn 
over to them for the long term. The longer your money is parked with 
them, the more they get paid.
The reality is that real investors do not park their money. They move 
their money. It is a strategy known as the “velocity of money.” A true
investor’s money is always moving, acquiring new assets, and then
moving on to acquire even more assets. Only amateurs park their money. 
I am not saying that 401(k)-type plans are bad, although I would 
never have one. For me, they are too expensive, too risky, too tax-
inefficient, and not fair to the investor.
I am saying there are better ways to invest, but they require
financial education. 
What Is the Best Investment?
The average investor does not know the difference between 
investing for cash flow and investing for capital gains. Most investors 
invest for capital gains, hoping and praying the price of their stock or 
home goes up. As long as you have more cash flowing in than flowing out, 
your investment is a good investment.
Keep in mind that it’s not the asset class that makes a person rich
or poor. For example, when a person asks, “Is real estate is a good
investment?” I reply, “I don’t know. Are you a good investor?” Or if
they ask, “Are stocks a good investment?” again my answer is the same,
“I don’t know. Are you a good investor?”

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Five Levels of Investors
Unfair Advantage
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