Odds are, you've at least heard of Robert Kiyosaki, captain of a cottage industry that began with his book Rich Dad, Poor Dad. I meant to read the book long ago, but within a few years, there were so many sequels that I somehow lost interest. Still, I recently decided that I should look into the guy, at least a little, to see what he has to say.

On the plus side
There are indeed a bunch of good things one can say about Mr. Kiyosaki. His little empire has certainly gotten some people thinking about their finances when they otherwise might not have done so. That's a good thing.

He's got some good advice, too, such as:

  • Spend less and save (and invest) more. It's hard to argue with that.
  • Consider making money in real estate (though I believe he pushes real estate more than he should).
  • Teach your children about money.
  • Protect yourself with insurance. (Learn how, in our Insurance Center.)

But.
Kiyosaki has also offered a lot of advice that I don't agree with. For example, here are some things he said a few years back in an interview on TheStreet.com. The most startling thing I read was this:

"I am very concerned, personally, about the number of people [who] will never be able to retire in their lifetime. Because these 401(k)'s and mutual funds... are so risky, I don't think people will be able to retire on them. And that's really sad. . But most people don't have a prayer -- because there's no Social Security and these mutual funds are so risky. . I was able to retire at age 47, after just nine years of putting my money to work in businesses, real estate and options, all without owning a single share of a stock or a mutual fund."

Yikes! He's slamming 401(k)s and mutual funds. That seems very unfair to me for several reasons:

  • 401(k)s are terrific ways for people to sock away money for retirement, often gaining some free money along the way, via employer matches.
  • Though many mutual funds certainly underperform, they are a wonderfully effective way for many people to invest -- particularly those who don't have the time or interest to study and select individual stocks (or real estate or business investments, for that matter) on their own. With a low-cost index fund, you can earn the market's average return painlessly. With some top-notch mutual funds, you can even top the market handily. This is all nothing to sneeze at. It's a very sensible way to put your money to work.

Meanwhile, Kiyosaki's preferred growth vehicles -- real estate, businesses, and options -- can be just as risky, if not much more risky than a simple index fund. Sure, real estate has made many people rich, but it has also wiped some people out. The long-term average annual growth rate for the stock market is around 10%, and for real estate it's around 6% (over the past four decades). More than three-quarters of small businesses fail in their first five years. Options investing can have you lose more than you invested. Risk, risk, risk.

Odd logic
Kiyosaki added that mutual funds "are only good for about 20% of the population, people making $100,000 or more." When the interviewer asked why, he explained, "I hate to tell you this, but over the last several months, mutual funds have lost huge amounts of money."

Hmm. well, over lots of days or months, many or most stocks and funds will be down. What matters is how they do over the time -- usually years -- that you're invested. And getting back to his 20% comment, I fail to see how an investment like a mutual fund that might go up 10% or down 10% (or some other amount) in a given year would behave differently for someone who makes $100,000 or more vs. someone who makes less. If you have $200,000 invested and it rises 10%, you make $20,000. If you have $50,000 invested and it rises 10%, you make $5,000.

Smart dads
If you're interested in real estate, by all means look into it. If your dream is to start a business, then give it a shot (after a lot of due diligence). But don't discount mutual funds. There are plenty of absolutely wonderful ones run by smart people (many of them dads!) with integrity, who have established respectable track records.

You can find these great funds on your own -- or you can just settle for a broad-market index fund, which is nothing to be ashamed of. Warren Buffett has even recommended them.

We can help you zero in on top-notch funds, though, via our Motley Fool Champion Funds newsletter. I have found some terrific ideas in it and am sleeping better knowing that some smart money managers are managing some of my money for me. Try it for free for a month and you'll be able to access all past issues, plus see which funds our analyst Shannon Zimmerman has recommended -- and why. Together, his picks have gained an average of 17% versus 8% for benchmark indexes. As of the last time I checked, more than half of his 40 picks were up more than 15%, and 16 were up more than 20%, which is darn impressive for mutual funds.

Learn more about mutual funds in our Mutual Fund Center, and check out these articles, too:

Longtime Fool contributor Selena Maranjian owns shares of no company mentioned in this article. For more about Selena, view her bio and her profile. You might also be interested in these books she has written or co-written:The Motley Fool Money GuideandThe Motley Fool Investment Guide for Teens. The Motley Fool is Fools writing for Fools.