Making Money Everyone gets this wrong about building wealth
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May 20, 2024 Financial Advisor Chris Bourne debunks common beliefs on wealth building, emphasizing personalized financial planning. Topics include tax-efficient strategies, cognitive biases in investing, starting the wealth-building process, redefining financial planning beyond the 4% rule, optimizing tax efficiency, and exploring benefits of pensions and ISAs.
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Value Creation over Cost-Cutting
- Focus on creating value, not just cutting consumption to build wealth.
- Adding value to many lives is more effective than strict budgeting.
Active vs. Passive Investing
- Index funds are generally best for efficient markets like the US.
- Active investing can be valuable in emerging or fixed-income markets where inefficiencies exist.
Beyond the 4% Rule
- The 4% rule is too generic and doesn't account for individual circumstances.
- Use a cash flow model that considers your income, expenses, and other factors.