Suddenly, company pension plans are being replaced by 401k plans. Social Security is obviously in trouble and cannot be looked at as a source for retirement. Panic has set in for the middle class. The good thing today is that many of these people have recog- nized these issues and have begun buying mutual funds. This increase in investing is largely responsible for the huge rally we have seen in the stock market. Today, there are more and more mutual funds being created to answer the demand by the middle class. Mutual funds are popular because they represent safety. Average mutual fund buyers are too busy working to pay taxes and mortgages, save for their children's college and pay off credit cards. They do not have time to study to learn how to invest, so they rely on the expertise of the manager of a mutual fund. Also, because the mutual fund includes many different types of investments, they feel their money is safer because it is "diversified." This group of educated middle class subscribes to the "diversify" dogma put out by mutual fund brokers and fi- nancial planners. Play it safe. Avoid risk. The real tragedy is that the lack of early financial edu- cation is what creates the risk faced by average middle class people. The reason they have to play it safe is be- cause their financial positions are tenuous at best. Their balance sheets are not balanced. They are loaded with lia- bilities, with no real assets that generate income. Typically, their only source of income is their paycheck. Their liveli- hood becomes entirely dependent on their employer. So when genuine "deals of a lifetime" come along, those same people cannot take advantage of the opportunity. They must play it safe, simply because they are working so hard, are taxed to the max, and are loaded with debt. As I said at the start of this section, the most important rule is to know the difference between an asset and a lia- bility. Once you understand the difference, concentrate your efforts on only buying income-generating asse|s. That's the best way to get started on a patrTtoSecoming rich. Keep doing that, and your asset column will grow. Focus on keeping liabilities jnd expenses down. This will make more money available to continue pouring into the asset column. Soon, the asset base will be so deep that you can afford to look at more speculative investments. Invest- ments that may have returns of 100 percent to infinity. In- vestments that for $5,000 are soon turned into $1 million or more. Investments that the middle class calls "too risky." The investment is not risky. It's the lack of simple financial intelligence, beginning with financial literacy, that causes the individual to be "too risky." If you do what the masses do, you get the following pic- ture. As an employee who is also a homeowner, your work- ing efforts are generally as follows: 1. You work for someone else. Most people, working for a paycheck, are making the owner, or the share- holders, richer.