Page 115 - Why We Want You To Be Rich - Donald Trump, Robert Kiyosaki.pdf

THERE IsA DIFFERENCE BEWEEN SAVERS AND INVESTORS 109

Invest For The Long Term

"Invest for the long term" has many meanings.

1. Look at this adviceasa salespitch: "Turn your money over to me for
years, and I will charge you fees for the long term." I call it a sales
pitch because "invest for the long term" is like the airlines offering
you a frequent-flier program. They want to keep you as a lifetime,
loyal, paying customer.

2. It also means they can charge you fees for the long term. This would
be like paying your real estate broker a commission for selling you
your houseand then paying the broker a residual commission for as
long as you occupy the house.

3. Mutual funds may not perform as well as other investments due to
the fees paid for management of the fund. While I do not mind
paying fees, I do not like paying fees for sub-par performance.

Many people invest in mutual funds for the long term . However,
mutual funds provide no leverage. As I said earlier, my banker will
not lend me millions of dollars to invest in mutual fund s, simply
because they are too risky.There isalso the lack ofcontrol (a subject
that will be covered later).

One of the differences between mutual funds and hedge funds is
leverage. Hedge funds often useborrowed money. Whydo they use
borrowed money? With borrowed money, you can increase your
ROJ, your return on investment, ifyou are a smart investor. In other
words, the more ofyour own money you use,the lower your returns.

There is a time and place for mutual funds. I invest in them
occasionally. But to me, mutual funds are like fast food ; it's OK
occasionally, but you do not want to make a habit ofconsuming it.

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