Published by Kauders Portfolio Management, Authorised and regulated by the Financial Services Authority
Investors place too much emphasis on tax planning and not enough on minimising investment risk. The counterpart of this is that investors overvalue the benefits of gambling tax saving schemes in stock markets, and undervalue the benefits of compound interest.
Tax planning based on investment schemes is great when markets are rising. At other times it is a complete waste of money. Compound interest that keeps rolling in even though you pay some tax on it, is the sure way to get rich steadily.
These psychological errors are well understood outside financial services. Perhaps advisers and commentators ought to give them more attention so that investors could make rational, rather than emotional, decisions.
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