The Wise Investor
These chances may not come along very often, so make
the most of them while you can.
If the amount is small, you may want to spend up to half
of it on yourself.
If a larger amount is involved, then you may want to
spend only 5 or 10 percent of the total on enjoying yourself,
but ensure that you spend something as a sense of balance is
essential to happiness.
Becoming obsessed with saving distorts your perspective,
and many people with this attitude have poor financial
success and suffer needlessly.
The money that remains after this should be split into two
The first half should be used to repay your debts. Repay
the debts with the highest interest rates first.
If these debts were for personal spending, then cancel
the credit agreements otherwise you will just spend the
money again and it will have been wasted.
Once the high interest loans have been repaid, the
remaining money from the first half should be paid onto your
Having used half the money to repay debts, the other half
should be invested.
If possible, try and maintain an equal split in the three
sectors: property, shares and interest-bearing.
If you are already biased into one particular sector, such
as owning your own home as a form of property investment,
then invest the new money in the other sectors.
You should always have a portion of your money in all
three sectors, and the closer you are to an equal three-way
spilt, the more secure your long-term returns will be.
The next situation we will consider is a person with a
large home mortgage.
Assuming that they are able to save some extra money,
the question becomes whether they should pay off the
mortgage early or invest the money elsewhere.
From a purely mathematical point of view, repaying the