I’m going to be completely honest here and say that I don’t believe in horoscopes in any way. But for this article I looked at my horoscope for the Year of the Dog.

What I learned was that I should a) focus on a prudent capital preservation strategy, b) avoid major salary drops by not changing jobs and c) create a spending plan and keep track of my expenses.

Well, I never knew how insightful horoscopes could be! Don’t take any risks and you will not lose any money. Keep on doing what you are doing and you will not lose any money and thirdly, don’t spend any money and guess what, you will not lose any money. What have I been doing all my life without these helpful insights?

The one thing that gets me about horoscopes, apart from the fact that they are to scientific reasoning as a pizza crunch is to haute cuisine, is that they group together so many different people from so many backgrounds and upbringings just because you were born on a certain day of a certain year. The thing is though, they could be right on this occasion.

A capital preservation strategy this coming year could be a strategy, especially if your risk profile is low to conservative. People seem to have forgotten about the global financial crisis ten years ago. The US markets are soaring now, money is cheap and consumer debt is going up. Sound vaguely familiar?

I am not saying that there will be another collapse, but it may be time to sell out and take your gains. If you are coming to the end of your investment schedule before retirement or if you were invested for a large purchase, weigh up the risks against any potential losses or gains you may make. Also, look at your risk profile. Do you really want the pressure of waiting for your investments to come through to fruition against the time it will take for the value to go back up? If there is a collapse, it may take a few years. If you are fine with this, brilliant as you will actually be in a better position in the long run, but it is your choice.

I am not planning to change jobs in the near future (but if I do I will make sure the chief bottle washer’s job pays well). But even if I don’t change jobs, a spending plan is always a good idea. I have been advocating this for eons. Businesses fold if they do not keep up with their cash flow and so do people. One change I would recommend people do this year is getting back in touch with their own finances. That means only four things: how much comes in, and when; and how much goes out, and to whom. Everything else falls into place after that.

And if you are asking what a pizza crunch is, well it is a delicacy of deep fried battered pizza. But make sure you get it with a tub of curry sauce to dip it into. Bon appetit.

Paul McLardie is a partner at Total Wealth Management. Contact him at Paul.mclardie@t-wm.com

 

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