Wednesday, September 05, 2012

Ten pay days to go

With the date for my retirement now set for the end of June 2013, I will shortly be dusting off the list of things to do before my last day in the office. One of the items on the list is deciding what to do with the money from my last ten pay days. Financially, I have more or less hit the "number" needed to fund our retirement. Since that number is already grosses up to allow for cost increases and assumes that Mrs Traineeinvestor will not be working (she intends to continue working part time), I have a lot of flexibility in terms of what I do with everything I save out of those last ten payments.

Among the possibilities:

1. add to the portfolio: this is the default option

2. pay down some of our mortgage debt: this is a low return option (our mortgages average out at around 1% pa). It will improve cash flow but wont do much in terms of improving our net worth and financial security

3. increase our contributions to charity: this will happen, but I'm inclined to wait until I have gotten used to not hearing to sound of my salary hitting the bank account each month before I starting parting with more cash

4. buy some collectibles or other hard assets: these are unlikely to be a financially good investment and there are issues with storage (fragile, vulnerable to humidity etc), things like wine, stamps, maps, books, jade, porcelain, art and a few other things have their attractions. Unfortunately, most categories have had very substantial increases in price in recent years and I am reluctant to buy in heavily okay, I am not a fan for a number of reasons, but I do not want to hold lots of depreciating paper money. Sure, paper is useful in the short term for paying the bills, but over the longer term it is a depreciating asset. Is holding some gold a legitimate alternative to holding cash and/or a useful portfolio diversifyer?

One thing I will not be doing is blowing it on increased spending.

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