Christmas Spending

"Don’t let Christmas card red
"Turn into credit card dread"
Lyn Bell

Christmas seems to come around earlier every year, don't you think? Is it because we are putting the decorations out earlier and earlier. I'm sure that's got a lot to do with it.

Just a warning here, don't get carried away with the credit card as you could be paying off this year's Christmas gifts at this time next year. Planning for Christmas spending throughout the year is a good idea. Such as, putting a little aside each pay day into an interest bearing account and buying a regular sum of Christmas club vouchers each time you buy your groceries. This is actually a great way to have that bit of extra cash for Christmas goodies. The supermarket sells the voucher below the actual value and your return is tax free. Often the supermarket will have a special night where you can spend your vouchers and get extra discounts as an added bonus.

Portfolio Risk: Diversification is not the only way

In a properly diversified portfolio it is important to not only diversify within an asset class but ensure you have assets that work ‘out of tune’ with one another. If you were to have all of your investments performing well at the same time beware as when there is down in the market they’ll all most likely head the same way.

Simplistically let’s look at it this way: you have two investments a winter one and a summer one. They both perform well in season but not so well off-season – they could be positive 10% and negative 10%. By placing the two together you then get the average return of the two.

Investing is About Discipline: Avoid the next HOT tip.

Two of the biggest demons you have to deal with when investing are fear and greed. Both are valid human emotions, but both can get in the way of logical, disciplined investing. If you can manage both your greed and your fear, you can stay away from the lemming-over-the-cliff mentality that grips so many other investors. This applies to any short term comparison between different markets, assets or managed (mutual) funds.

Temptation can be a scary thing and the temptation to run to the smoking hot and fashionable investment of the week is extremely high, so high in fact that many investors take to it like a month to a flame. If you don’t want to get burned, avoid ‘hot’ investment tips from your friends and use discipline as your number one investment strategy.