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The online world is overflowing with advice. Whether you’re looking to sculpt six-pack abs, plan an impeccable Cuban getaway, grow home-grown veggies, or rekindle an old romance, you’re bound to find an “expert” to guide you. Similarly, the realm of personal finance is saturated with “finfluencers” and self-proclaimed experts. However, their advice isn’t always gold.
Ramit Sethi, a prominent personal finance expert and New York Times bestselling author, has taken a stand against misleading financial advice. In a YouTube video, Sethi highlights several financial gurus who he believes offer detrimental advice. Here are some examples:
“Dave Ramsey: Withdraw 8% in Retirement”
Dave Ramsey, well-known for The Ramsey Show, advised that withdrawing 8% annually from your retirement portfolio is sustainable. According to Ramit Sethi, this advice could lead retirees to financial ruin.
Sethi argues that withdrawing 8% annually gives you a 60% chance of depleting your funds before you die. He suggests sticking to a 4% withdrawal rate, aligning with a study by Trinity University, which indicates a 4% rate can sustain your portfolio for up to 30 years.
Kevin O’Leary: Save by Cutting Small Expenses
Kevin O’Leary from “Shark Tank” advises cutting down on small daily expenses, like your morning coffee, to save money. However, Ramit Sethi believes this advice misses the bigger picture.
The U.S. Bureau of Labor Statistics shows that food expenditures account for less than 13% of annual spending. Sethi argues that neglecting small joys like coffee won’t significantly impact your long-term finances. Instead, focus on substantial actions like investing in low-cost funds and automated savings.
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