In economics, the Pareto principle is the idea that 80% of the effects come from 20% of the causes. This principle has been observed in many areas of life, but perhaps nowhere as much as in the field of wealth management where following a few simple ground rules can lead to massive growth in your net worth over time.
This guide outlines the essential wealth management concepts every retail investor needs to be aware of:
1) The importance of having a written retirement income plan.
2) The concept of asset allocation.
3) The concept of asset location.
4) The limit to diversification.
5) The impact of fees on investment performance over time.
