Walking along happily and suddenly stepping into broken glass is horrible. Much the same sort of feeling when you spend happily on your credit card and suddenly find the bonus you were expecting – and which you thought would cover the spending – is less than half. So our message to you today is twofold
Watch your Debt
- Be careful to use debt to fund your lifestyle in the current economic climate. It is more and more difficult to keep up with payments.
- Do not spend until the money is in your bank account, even if it means you are one of the frazzled shoppers on the 23rd of December!
That cut in your foot which could take a month or two to heal is fairly successfully avoided if you have shopped with cash, left your credit card at home and enter the New Year debt-free.
The potential “ouch” of financial is difficult to avoid. The returns on investments are currently muted, and it is difficult to have a conversation regarding your future plans if the growth on your investment is below what you have been receiving over the last 7 years.
Although we like to think we are special, South Africa is not unique in the world when it comes to a general low return expectation for 2016. After approximately 7 years of raging markets, we need to take stock of what “normal” is when it comes to investment returns, and revise our expectations downwards.
Regardless of what the markets do (or don’t) do in 2016, wouldn’t it be nice to start the year without that painful cut in your foot which takes up to March-April to heal?