With Cyber Monday upon us, consumers everywhere are ready, credit card in hand, to take advantage of some very attractive deals which come around once per year; that said, many industry experts are urging consumers to save or invest as much as is spent on holiday shopping as a way of curtailing spending and buffering against the long-term need for capital down the road.
Consumption is traditionally viewed as the inverse of investment; spending today allows for less money to spend tomorrow, and getting into a spiral of spending rather than investing can be a very dangerous trend for many Canadians.
After all, the average Canadian now holds a record amount of debt (approximately $1.68 in household debt for every $1 of disposable income), making the prospect of piling on more debt one which can be very dangerous for those without the ability to see significant income increases in the years to come.
Iconic investors such as Warren Buffett have touted the importance of “spending what you have after saving, not saving what you have after spending” as a way of ensuring financial security and avoiding debt pitfalls which befall even the most astute money managers.
This holiday season, shifting the focus away from the flurry of deals available at one’s fingertips and toward investment in long-term income-producing assets is one way investors everywhere can mitigate the long-term impacts short-term debt (and associated interest payments) can have on long-term cash flows.
Invest wisely, my friends.
