A best and worst investment can often be the same.
For example, one of our family's best investments was to pay off non-deductible debt as quickly as possible because of the guaranteed non-taxable return this strategy provides and the increased flexibility of being debt-free. But this strategy also meant we didn't set aside money for a second car when our son Matt was born which would have made my wife Mandy's life so much easier, and would have enabled us to visit Disneyland before Matt turned 21!
Definitely a best move was to have a "don't invest past your sleeping point" mix of investments: from low-risk guaranteed instruments to higher-risk equities and (on a small scale) residential and commercial property, from a lower-risk combination of having regular employment plus our own business to the higher risk of 100 per cent self-employment.
But those were only the best and worst financial investments. Far more important was the investment of time and money in our education; the "investment" I made in a date with Mandy, the nurse I met at Lions Gate Hospital; the investment in Matt's education; our investment in family travel.
While the various experts and famous people will sometimes name specific stocks, pieces of real estate and so on as a best or worst choice, more often they will point to the really meaningful, large-scale and often non-financial "investment" decisions.
Many experts will cite the importance of investing in appreciating assets rather than depreciating "stuff." For example, if you had spent several hundred dollars on an iPod in 2001, the device would now be obsolete. But if you had put the money into Apple shares you'd now have more than $30,000.
Personal and financial success comes from a mix of the different types of investments mentioned above - a mix that suits you and your situation. As we head into the annual RRSP and income tax season, see what you can learn from both your own and also others' best and worst investments.
Mike Grenby is a columnist and independent personal financial advisor. Email [email protected].
