雖然股息和權金都是左袋換右袋, 但一樣依一萬美元的投資金來計: $424.72(4.25%) vs $2842.11(28.4%) (360-day calendar)
Rich Dad Scam #8: Invest Diversely in the Long Term
This is the final post I’m writing in a series on what I call Rich Dad Scams, scams designed by the rich to keep you in your place. They are the “rules” you’re supposed to follow that will keep you an employee and keep you from getting rich while the rich get richer.
The reason why so many people buy into these scams is because some of them, like working harder and saving money, used to be viable. If you followed them, there was a reward, but not anymore.
As we’ve seen in other scams like paying off debt, living within your means, and saving your money, the Rich Dad Scams I’ve identified keep you from truly putting your money to work. They keep you from turning your money into more money. In other words, they keep you poor.
Today, we’ll take a look at Rich Dad Scam #8, “Invest for the long term in a diversified portfolio of stocks, bonds, and mutual funds.”
The investment illusion
If there’s anything to be learned from the last few years of financial mess, it’s that nothing is guaranteed. And that includes all the long-term investments that your financial planner will encourage you to buy, such as mutual funds, stocks, and bonds.
It’s worth noting that financial planners didn’t exist until about forty years ago, when people were forced to take control of their own retirement funds through vehicles like the 401(k). Financial planning is an industry created by the banks to make money off the financially illiterate. It takes only thirty days of training to become a financial planner. You have to go to school for more than a year just to become a massage therapist.
Nearly every financial planner will tell you that in order to be financially secure, you must diversify. By this they mean to invest in stocks, bonds, and mutual funds. Unfortunately, this is not true diversification. Rather it is diversification in only one asset class, paper assets—the class where banks make big money in the form of fees. Virtually ignored are the other asset classes, real estate, commodities, and business.
The diversification trap
But, you say, my financial planner helped me plan wisely. We invested in lots of different things, so that if one company’s stock or one mutual fund takes a hit, there are others that will go up. This is one of those scams that make sense on paper. Of course, the more spread out you are, the more protected you are from losing money.
Except for the fact that everything you’re invested in is still on paper, it’s based on the same fragile economy, and the same investment model. When the stock market goes down, it goes down everywhere, not just in certain places. Investing in Microsoft and McDonald’s won’t make any difference if the market tanks and everything goes down. Widely investing in different mutual funds spreads that risk around even more, but the risk is still the same and the hit will be the same when things go south.
True diversification is investing across different asset classes, not different stocks. This holds true with any of the asset classes. If I’m invested in condos, apartments, and houses, my portfolio looks diverse, but they’re all still real estate assets. So I have real estate assets, commodities assets like gold and silver, business assets like my companies, and yes, I have some paper assets as well. But I know they’re not going to make me rich.
The real issue here is that by buying paper assets at all, you’re putting control of your money in someone else’s hands. A CEO makes a bad decision, and you’re left holding the bag for his mistake when the stock drops. The only control you have over paper assets is to sell them. Holding on to them, you’re just playing a waiting game and crossing your fingers. And it’s even worse if you put those paper assets into a 401(k), you have even less control, they’re locked in, and you’re penalized for taking those funds out or borrowing against them.
True diversification requires financial intelligence, which comes from financial education. If you don’t have the desire to increase your financial intelligence, then by all means continue using your financial planner and investing in only paper assets, as those investments are set up so that even a monkey could do them. If, on the other hand, you want to be rich, I encourage you to ignore Rich Dad Scam #8, “Invest for the long term in a diversified portfolio of stocks, bonds, and mutual funds,” and instead increase your financial education and begin working towards true diversification.