The No. 1 Financial Planner Lie

  • The words “safe” and “risky” need to be redefined when it comes to investing…
  • Don’t listen to what financial planners tell you… 
  • Here’s how to start your journey toward a safe investment strategy…

Dear Reader,

Warren Buffett says, “Risk is not knowing what you are doing.” Now, the keyword here is you, not the investment.

My wife Kim defines risk as Reckless Investing Sans Knowledge

For instance, my stockbroker friend Tom offers this rule when it comes to investing in stocks: If you don’t understand how the company makes money, then don’t invest in it. As always, if it looks too good to be true, then it probably is.

Rich dad explained to me the importance of knowing the risks, the rewards, and having a winning strategy that included losing. 

He was also aware of the nine-out-of-ten failure rate of most start-up businesses and that the reward for making it only one out of ten times far outweighed the risk of losing nine out of ten times. 

Rich dad further explained his position by saying, “Most people think only in the realm of what is smart and what is risky. Financially intelligent people think in terms of risk and reward. In other words, instead of immediately saying something is too risky, or right or wrong, good or bad, financially intelligent people weigh the risks and they weigh the rewards. If the rewards are great enough, they will come up with a strategy or a plan that will increase their chances of success, regardless of how many times they will lose before they will win.

“Safe” Can Be Very Risky

The words “safe” and “risky” need to be redefined when it comes to investing. Here are three places you can “invest” your money that typical financial advisers have advocated as safe.

  1. Savings
  2. Mutual funds
  3. 401(k)s

Are these safe or risky? The typical financial planner will tell you they are safe. I say they are risky. 



With the dollar and other global currencies decreasing in value, your currency is worthless and will buy you less in the future. On top of that, the interest you are paid by the bank for your savings may earn you less than the fees and expenses you have to pay to keep your money in the bank. By saving money, in many cases, you are losing money. 

Would you call that a safe investment or a risky investment? An investment that consistently loses money is a liability.

Mutual funds and 401(k) plans

A mutual fund is simply a collection of stocks, bonds, and other similar securities. It could also be a company that pools the money collected from many investors and then invests those funds in stocks, bonds, and other similar paper assets.

A 401(k) is a retirement plan, often considered a retirement savings plan, set up by employers that allow employees to contribute a portion of their salary to this plan. A 401(k) plan invests the employee’s contribution into mutual funds. Similar plans exist in other countries under other names such as a superannuation plan in Australia and New Zealand, an RRSP in Canada, a 401(k) in Japan, and a pension scheme in the United Kingdom.

The mutual fund companies, the managers, and the salespeople — they all make money whether you do or not. Most are not concerned with the actual performance of the fund. They are mainly concerned about their fees.

Now ask yourself, is that safe or risky? I call it risky.

What’s Actually Risky

Regularly, I hear, “I just hate risk. I’d rather play it safe. I have enough challenges.” In their avoidance of risk, people lead lives of extreme risk.

In the world of investing, there are no investments that are 100% guaranteed. No investment is safe from losses. There is no risk-free investment. When you invest your money, you will win and you will lose. That is a guarantee. 

Yet there certainly are things you can do to reduce the risk and increase safety.


  • Having no financial education.
  • Blindly turning your money over to a financial planner or adviser.
  • Not understanding the investment and the returns on the investment.
  • Putting up the majority of the money and the risk and letting others walk away with the majority of the returns.
  • Having no control over your investments.
  • Depending heavily on a financial adviser.


  • Getting financially educated.
  • Actively investing your money and gaining hands-on experience.
  • Understanding the investment and the returns on the investment.
  • Putting up the majority of the money and the risk and getting the majority of returns.
  • Having control of your investments.
  • Becoming your own financial adviser.

Knowledge Goes Up, Risk Goes Down

If the investor is uneducated, anything he or she invests in will be risky. It’s ultimately the investor who is the asset or the liability. I’ve seen many so-called investors lose money when everyone else is making money. They may get lucky now and then, but generally, in the long run, they end up giving most of the money they make back to the market. 

I have sold businesses to many so-called businesspeople and watched the businesses soon go bust. I’ve seen people take a perfectly good piece of real estate, real estate that is making a lot of money, and in a few years, that same piece of real estate is running at a loss and falling apart. And then I hear people say that investing is risky. It’s the investor who is risky, not the investment. A good investor loves to follow behind a risky investor because that is where the real investment bargains are found.

An Educated Investor Is an Insured Investor

It’s no secret that I avoid the aforementioned “investments” and instead focus on different asset classes — namely real estate investing, commodities (gold and silver), and cryptocurrency. 

But, regardless of what you choose to invest in, you need to understand insurance or protection from losses. Investing is far less risky when you have insurance and that’s why successful investors make it a part of their strategy.

It’s important to note that there is more than one kind of insurance when it comes to investing. There is insurance…

  • for people and property,
  • against market cycles, and
  • against mistakes, omissions, and lawsuits

Professional investors are always concerned about protection. When you turn your money over to a financial expert, one very important question is, “How safe is my money?” Professional investors don’t simply “invest for the long term, buy, hold, diversify, and pray.”

The rich also use legal entities as forms of insurance. My poor dad was very proud that his house, his car, and his other belongings were in his personal name. In contrast, my rich dad held most of his valuable assets in the name of legal entities such as corporations, trusts, and limited partnerships. 

Because we live in a litigious society, he wanted to personally own as little as possible. To rich dad, a legal entity was a form of insurance. Today there are even more types of entities available. Different entities are appropriate for different types of assets.

Play it smart,

Robert Kiyosaki

Hard Assets Alliance was created as a cooperative of investment professionals who believe there's a better way to invest in precious metals. This is a guest perspective on the markets from one of these partners; we hope you enjoy it.