Why Do Experts Recommend Diversification?
Warren Buffett, one of the world’s richest investors, says that people often spread their money into many investments (called diversifying) when they don’t really understand what they’re doing.
Instead of guessing and hoping something works, Buffett chooses one great company at a good price and invests in it. He focuses on getting great results, not just average ones.
Robert Kiyosaki believes many financial advisors suggest diversification not because it’s the smartest strategy, but because they don’t know how to find truly good investments. They’re usually employees, not business owners, so they play it safe and give average advice.
Why Do Smart People Still Fail?
In 2007, during a big stock market crash, many investment funds lost a lot of money—even though they were managed by highly educated people using advanced computer tools.
What went wrong? These experts were all taught the same way and followed the same strategy. When their systems said “buy,” they all bought the same stocks, which created a bubble. When the systems said “sell,” they all sold at once, which made the crash worse.
So, even if someone is very smart in school, that doesn’t always mean they’ll make smart choices with money. Being financially smart is different from being book-smart.
Are You Truly Diversifying Your Investments?
Robert shares a story about two of his classmates who were very smart and thought they had diversified their investments. They put their money into stocks, bonds, and mutual funds. But Robert says this wasn’t real diversification—because all those investments were connected to the same thing: the stock market. When the market went down, everything they owned dropped in value.
Real diversification means putting your money into different kinds of investments—like real estate, small businesses, or oil—so when one thing goes down, the others might not.
In short, they thought they were safe, but they weren’t. They were smart in school, but not financially.
How Robert Found His Own Genius?
Between 1974 and 1984, Robert started and failed at several businesses. But like a baby learning to walk, he kept trying until he succeeded. He wanted to truly understand how business works.
Then, from 1984 to 1994, he and his wife Kim started a company to teach people about entrepreneurship and investing—but in a way that was fun and different from traditional school. Even though Robert didn’t like school, he loved learning.
In his classes, there were no boring lectures or competition. Instead, people learned through games and teamwork. This led to the creation of his famous cashflow board game in 1996, which helps people learn about money in a fun and easy way.
Over time, Robert realized that the traditional school system can make even smart kids feel “not good enough.” He learned that the problem wasn’t with him—it was with the way schools teach.
And finally, We All Know About Intelligence… But Have You Heard of Multiple Intelligences? Get ready to explore that next—you might just discover your own hidden genius!
