Think of Next Christmas

It’s a horrendous thought I know, but whether you are an investor, a saver, or in debt, now is the time to start thinking about next Christmas and beyond. For investors, 2009 may not be a good year and now is the time to stay focussed on the longer term. Short term thinking this year may well lead you down a path that is not in your best long term interests. Through the period of turmoil over the last year or so, many investors abandoned their long term investment strategies to take shelter in less risky investments such as bank deposits. Some investors panicked and sold share investments at a loss; others found themselves stuck with frozen finance company investments. It was not a good year. Patience will be needed over this next year as market stability is restored. Focussing on next Christmas and not worrying too much about the events in between will be the key to successful investing in 2009. By the end of next year we should have seen some upward movement in share markets and repayments starting to trickle through from finance companies in moratorium. Over the next three to five years, a diversified portfolio of investments is likely to produce a higher rate of return after tax than bank deposits, and those investors who are positioning themselves to take advantage of that will do better than those who focus only on short term returns. If you want to stay in fixed interest investments, lock in a good rate until at least next Christmas because interest rates are likely to fall further.

For savers and those with debt, now is the time to reflect on lessons learned with your money management through the Christmas period and to take steps to be better prepared for next Christmas. If you’ve overspent on your credit card, then put it in the freezer and pay off the balance owing as quickly as you can. That means paying more than just the minimum payment each month. January sales are a good time to buy presents in advance at discounted prices for next year. Buying gifts throughout the year when you spot a good bargain helps to spread your spending as well as saving you money. Around this time of year Christmas hamper companies start their advertising. If you do the sums, you will usually find it is much cheaper to save money in a bank account and buy your own hamper rather than give money each week to a hamper company. Don’t be fooled either by offers from furniture and white ware retailers to buy goods now with no payments for the next year or so. It’s very tempting when your credit card is maxed out to take up offers to have what you want now and pay later, but you will soon find, once the no payment period has passed, that you have created a huge financial burden for yourself. If you can’t afford the repayments now, then you are probably not going to be able to afford them next year either. Set yourself some clear goals for what you want to achieve with your money by next Christmas. Make your goals realistic and start taking small steps towards achieving them on your next payday. It seems that as we get older, Christmases seem to come around more and more quickly. Don’t let next Christmas catch you by surprise.