Contrary Financial Decisions

By definition a contrarian is a person who takes a contrary position or attitude, i.e. a person who goes his own way and doesn’t follow the crowd.  The most common view is of an investor who buys shares of stock when others are selling, and sells when others are buying.  There are some other instances where it makes sense to follow your own judgment or instincts rather than take the “accepted” or common route.

Home Ownership

While owning your own home is desirable and is often the cornerstone of building financial assets, a 25-year mortgage isn’t always in your best interest and sometimes it makes more sense to rent than to buy.

Someone in a mobile career who doesn’t expect to remain in the same city for more than a couple of years can often be enriching their realtors rather than making good financial choices if they purchase a residence in every move.

When house prices are high, people with low income or non-stable jobs just can’t afford to take on a mortgage and all the other costs of buying a house – being “house-poor” isn’t all that much fun.

Deferred gratification or life avoidance?

The fact is contributing the maximum to RRSPs and TFSAs can take a big chunk out of your net earnings.  Yes, save for the future, but not at the expense of enjoying your life today.

What if you save for 40 years, putting off all kinds of pleasure and opportunities, then get hit by a bus the day before you retire?  If you like having a latte every morning, going to a nice restaurant, taking regular mini-vacations, or any other experiences – then go ahead.  The key is to enjoy the things you value.

Buying equities for growth

It’s a known fact that adding stocks to your portfolio provides the potential for higher returns.  However, some people are not comfortable with the risks they associate with owning shares and prefer “safer” investments.  My father invested in nothing more than Canada Savings Bonds and GICs all his life and still managed to pay cash for all his homes other than his first one, retire at age 59 and spend several years travelling around the world.

Cutting expenses

Every budgeting program will tell you to look over all your expenses and cut out anything unnecessary.  But, instead of cutting expenses to the bone, why not increase your income?  Get a higher paying job, ask for a raise, do consulting on the side or turn your hobby into a part-time business.

Higher education

I am a strong proponent of post secondary education especially since it’s one of the best ways to earn a higher income, but some people are not cut out for the routine of classes.  Highly ambitious entrepreneurs, inventors and artistic people work hard to become successful by pursuing their own unique talents.  I don’t think Bill Gates ever returned to college to earn his degree.

Don’t retire

You may want to retire from a particular job and then move on to something else.  Many people don’t necessarily want to stop working altogether when they reach retirement age and it may have nothing to do with earning money.  Just because you turn 65 doesn’t mean you can’t have new interests or new goals to work toward and 25+ years of leisure just isn’t appealing to some.

When I was young and wanted to do what my friends were doing, my mother used to say the ubiquitous “If everyone jumped off a bridge, would you do it too?”  The old saying is still true.  You don’t need to do what everyone else does.  Be a contrarian and do what’s best for you.