Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

New Year’s Resolutions, Family & The European Debt Crisis

By Paul Gleeson BBS, QFA, CFP

This article also appears in the Dec / Jan issue of The Celtic Connection

As I sat down to write this piece, I received a text from a friend of mine here in Vancouver – “Quick one for you, what do you make of the possible Euro collapse or is it media hype?”
Not exactly a simple text messaging conversation!

I replied to him that there was nothing quick about this question. The future of the Euro could be a discussion over many hours and I do not have enough space in this article to cover this topic in adequate detail.

I do believe that the euro itself is not really the problem; I think it is more the symptom. The real problem and the real issue here is the underlying debt of all the countries involved. This debt issue will still exist with or without the euro. The media is rightly focused on Europe now, but the U.S. is also in serious debt trouble and I suspect, in time, the media focus will shift back to the problems in America.

A debt crisis (like the one Europe is currently going through) happens because of excess borrowing. Excess borrowing comes about through excess spending – it’s that simple.
European countries have failed to live within their means for many years and this is now catching up with them. Therein lies an invaluable lesson from this debt crisis that I believe we can all apply to our own wealth building efforts: live within our means and get into the habit of saving money on a regular basis.

In the season of family, the holidays and New Year’s resolutions, I thought it would be worthwhile to share some valuable lessons I’ve learned from my father. And perhaps they’re lessons some members of the European Union would do well to learn as well:

1) Polish your shoes

Looking after the things we currently have will not only keep them looking better and help them last longer, but it will also save us money on buying replacement items.

My father worked for just over 40 years before he retired recently. For as long as I can remember, every evening before going to bed, he would polish his shoes for the next day. My dad is a creature of habit and this was one of those habits. He came from a generation that was far less plentiful than what many of us younger thirty-something’s have grown up with, so he had a very deep appreciation for the value of money and I think this has always been reflected in how he looks after his personal items.

He is more than happy to buy quality items, but he always looks after them and they last a long time. It was probably no surprise that he and my mother saved money throughout their lives and comfortably retired a number of years ago.

I’m sure you have heard the expression “how you do anything is how you do everything.” To me “polishing your shoes” – or looking after your personal items – is a state of mind. It’s like looking after your health, some people make time for this and lead a healthy life and some do not. If somebody is consciously trying to look after their “stuff” to make them last, then there is a very high chance that they are also looking after their personal budget and are saving something on a regular basis.

2) Live two years behind your means

Credit cards and easy access to personal loans, lines of credit, etc. have made it possible for many of us to live beyond our means.

We can now easily purchase things that we don’t have the money to pay for – buy now, pay later. Flipping this around and going back to a time pre credit cards where people actually saved for something before they bought it, is another very effective way of building your wealth because it means you won’t rack up credit card and other short term consumer debts.

Instead of paying back debts for things you can’t afford, you can use this money to save for your future. If you don’t have the money in your bank account to buy something, then you can’t afford it so don’t buy it. Buy it when you can afford it.

Many of the clients I work with have built significant wealth over their lives and most of them started with little or nothing, but they got into the habit of properly budgeting and saving something each month. Over the years as their earnings increased, so did their savings.

Many of the younger clients I work with have not yet built significant wealth, but they are following in the footsteps of my wealthier clients and are paying close attention to their budgets and financial plans, saving what they can each month. In time, I know their savings will increase as their income does.

As the New Year approaches, many of us will be making New Year’s resolutions and I’m sure some of these will be around money. I know these two points may seem very simplistic. Quite frankly, they are, and that to me is the beauty of them!

I genuinely believe that building wealth is a simple concept, spend less than you make, save money regularly, and time, compound interest, and a solid tax efficient investment strategy will look after the rest.

Are you working on a financial New Year’s resolution?