There’s the “12 Days of Christmas” and there’s also my twisted version, the one I refer to as the “12 Things The Holidays Teaches Us About Investing.” Check it out:

The holidays: While I’m all for the big holiday parties and lavish events, looking back at our most memorable holiday moments, I bet many would agree it’s the simple moments spent with family and friends that are typically the most rewarding.

Investment lesson learned: Learn from the holidays. Simple investments such as the S&P 500 (that typically outperforms most professional money managers) teach us that it doesn’t have to be complicated for it to be effective.

The holidays: Turn on a holiday newscast and there’s a decent chance you’ll see a story about a handful of frenzied shoppers searching all over creation to find that one last Wii. … Who scored them? That’s simple: the persistent ones who refused to give up.

Investment lesson learned: Just like the holiday shoppers who scored this year’s Elmo, it’s those who don’t give up that often find the treasure. Whether it’s a great opportunity or a creative investment with returns that would make even The Donald proud, finding the good stuff takes time, education and, of course, a willingness to never give up.

The holidays: Did you hear about the holiday shoppers going to Target at 4am? Maybe you were one of them. Understanding the value of bargains, many holiday shoppers take their time to start early, compare costs and find the deals. Doing so accomplishes one key thing: give them a better bang for their buck.

Investment lesson learned: Who thought Warren Buffet and my Aunt Harriet would be so much alike? When it comes to finding undervalued stocks, sifting through the market bins of Wall Street for discounts gives you the best chance to maximize upside while trying to reduce investment risk.

The holidays: When it comes to opening holiday gifts, there’s little worse than seeing a kid who regretfully discovers “not all pieces shown are included.”

Investment lesson learned: Learn from Little Billy gone wild. Whether it’s the presents you give or the money you invest, avoiding the surprises is a job well done. Before investing, read the fine print; that stuff is always more important than the window dressing itself.

The holidays: What holiday would be complete without Auld Lang Syne, It’s A Wonderful Life, Times Square and a hangover to boot? There’s a reason those things and more have lasted the test of time: because they do a timeless job of bringing the true meaning of the holidays into our hearts and homes.

Investment lesson learned: Whether it’s Ben Graham’s legendary “Intelligent Investor” or many other timeless principles of prudent investing, the holidays teach us that if it isn’t broken, why try and fix it?

The holidays: High School, New Year’s Eve, 1982. With my mane of hair, A Flock Of Seagulls, Jordache jeans and one beer too many, falling over Crazy Julie and landing in the hospital to get a head of stitches proved that yes, too much of one thing really can hurt you.

Investment lesson learned: The history of investing is ripe with examples of over-indulgence. Whether it was tulips, dot-coms or the current real estate mess, the holidays teach us that while too much of one thing may not give you a head of stitches, it can easily render you broke.

The holidays: While toaster ovens, dishes and socks have their place under the tree, it’s the creative gifts — the thinking out of the box — that is often remembered the most.

Investment lesson learned: Market gone bad? Selling your stock? Remember: every time you sell, there’s someone on the other side to buy. … who’s doing such a thing? Aliens from another planet? … Not quite. Those buying your stocks obviously think differently, take educated chances, get creative and could wind up reaping some great buys.

The holidays: Want to ruin your girlfriend’s gift? Have me wrap it. … To avoid such despair, here’s a better suggestion: take it over to the mall wrapping station. With precision creases, perfect bows and curly color laces, giving your girlfriend a gift with their touch makes a big difference in showing her you really do care.

Investment lesson learned: Want to ruin your investments? Don’t pay attention to fees and taxes. Neglecting those important details will accomplish one key thing: lower your returns. So, the next time you invest, take a moment to think of those nice people over at the mall. Doing so should remind you that whether it’s gift-wrap or your investments, it’s the details that count.

The holidays: Leaving town for the holiday? Whether it was pricing tickets, figuring out a route or making hotel reservations, what trip would be a success without taking the time to plan it?

Investment lesson learned: Looking forward to retirement? In markets like these, I certainly am. And just like planning a trip, not having a financial destination often leads to nothing but regret. After all, this is your life we’re talking about, remember?

The holidays: While a front row ticket to Springsteen, a Pug or a Costco-sized case of Famous Amos are all gifts I couldn’t turn down, the holidays teach us it’s the gifts we give – not the ones we receive — that bring us the most reward.

Investment lesson learned: While charitable donations and tax deductions might be all well and good, it’s a daily act of random kindness that personally turns me on the most. Want to make someone’s holiday? Try my personal favorite: pick a random table at a restaurant and pay for their meal. …Want to really blow them away? … Don’t let them know it was you who did it.

The holidays: The experts on resolutions, whoever and wherever these people may be, tell us the more resolutions you make, the less likely you are to keep them. To make them work, keep them short, simple and attainable. Otherwise, they’ll rarely be kept.

Investment lesson learned: Listen to those nutty resolution experts. Pick one or two investment ideas for the New Year, and if you can’t think of one, try this: save $100 dollars per month and invest it into a low cost, tax efficient and highly productive stock index. At a 7% hypothetical annual rate of return, in 10 years you’ll have roughly $17,000. … How good is that?

The holidays: I don’t know about you, but eleven months, three weeks, six days and a few hours into this year, I need to finally get some rest. With that, the holidays are a perfect time to take a moment to kick back, watch the Jets lose another one, eat lots of unhealthy stuff or do whatever it takes to make you happy.

Investment lesson learned: Recession? Higher oil prices? Inflation? More sub-prime mess? For one fleeting, quick and luxurious moment, take a profound breath to say, “who cares?” … After all, there’s nothing wrong with taking a moment to live this wonderful thing some call “life.”

See me discuss these tips on Fox Business Network 12.24.07

I want to wish you and your family a very happy and successful New Year.
See you next year…

Order my brand new book today and save 5% from Amazon: You Can Never Be Too Rich: Essential Investing Advice You Cannot Afford to Overlook

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If you’re like me, then during this time of year you’re likely thinking about taking some time off, eating lots of food, downing some eggnog, giving and unwrapping a bunch of cool gifts.

But before kicking back to celebrate the holidays, you may want to take a moment to consider the following end-of-the-year money matters you won’t want to miss:

If you’re like me, then not only do you pass out on the couch by nine every night, but you also don’t enjoy paying the mortgage. If that’s the case, consider ending the year with making an extra payment.

Making an extra payment will, over time, cut the amount of interest you’re paying and reduce the number of years before your house is free and clear.

If that’s not a good reason to plant a nice one on your boyfriend underneath the mistletoe, then check this out: an extra payment will also help you maximize itemized deductions for this year.

As an example of how making an extra payment an help you in the long run, suppose you bought a house for $150,000 and took out a $120,000 mortgage for 30 years at an interest rate of 9 percent — at the end of those 30 years, you would have paid over $227,500 in interest alone—in addition to your original $120,000 mortgage. Your total expense will be more than twice the original price of your house.

If making an extra payment is something you can’t do, then adding a few extra dollars each month towards your mortgage can really go a long way. For example, if you could afford an extra $100 every month, in the example above, you’ll save over $82,000 in interest—and pay off your mortgage nine years and two months earlier.

Can’t afford $100 a month? How about an additional $50? Paying an extra $50 each month will cut your payment by five years and seven months and save you $52,000. An extra $25 will shave off three years and three months, saving you $30,000. Even as little as an extra $10 a month will cut your mortgage payment by one year and save you $13,500.

Got the point? … I hope so, but just know this: the above are examples only.
Everyone’s situation will be different and if you want to better understand what making extra payments or monthly contributions will do to your mortgage, then be sure to consult a qualified advisor to help you out.

FSAs are savings accounts for health care purposes. If you know what these FSAs are and you’re currently investing in one, be sure to spend any excess balances before the end of the calendar year or they will be forfeited. One way to use up the excess: stock up on over-the-counter medicines for next year. How good is that?

Maximize itemized deductions by making donations in the form of cash, property, or appreciated stock. The latter could also help you avoid some capital gains taxes as well. Support your local charity and save some taxes? When it comes to creating some good Karma in the universe, life doesn’t get any better than that.

Are you retired? I once asked someone that and they weren’t sure. If you’re aware that you did retire, then not only is your retirement off to a promising start, but you most likely know about these things the IRS calls “Required Minimum Distributions” (RMDs).

For those that don’t know what these RMDs are, it’s something you’ll one day need to address: if you’re currently investing money into an individual retirement account (IRA), then not only does Uncle Sam give you a nice tax deduction on these contributions, but he also allows you to “defer” paying taxes on the account until later on in life… And according to the IRS, this “later on in life” thing happens when you turn 70 ½.

Once you reach this age, Uncle Sam wants you to start paying some taxes on the IRA, and he does this by requiring you to take annual withdrawals from the IRA in the form of an RMD. As for the amount of RMD you’re required to take, I would recommend speaking to the firm currently holding your account.

If you have multiple IRAs with several firms, for simplicity, make sure you take an RMD out of each one.

If you’re self-employed and need to buy deductible business-related items next year, you may want to consider buying them now in order to maximize your deductions for this year.

You can currently gift up to a total of $12,000 per year per person to as many people as you want. This $12,000 may be given to one person, or distributed to any number of individuals.

Gifting accomplishes two things:
it makes people happy and for those with significant net worth, it could lower the taxes heirs might owe when inheriting the estate.

Given current market volatility, you may not want to call your broker these days to find out how your account is doing but you may want to make contact to discuss end of the year tax strategies such as offsetting capital gains and losses.

Understanding gains and losses for the year is an important topic that can really pay off come April next year when you file your return. In discussing your gains and losses with your broker, be sure to take note of any capital gains you’ve realized this year from the sale of stocks or mutual funds. If you own mutual funds, find out if the fund will be distributing capital gains. When you (or your broker) add up the possible gains, check to see if there are any losses you can “carry forward” from prior years to help offset the gains. If there aren’t any losses to carry forward, you might want to consider selling investments that aren’t doing too well.

Taxes should never be the sole reason you buy or sell investments, but it may be possible to improve your tax and investment situations at the same time. Think of end of the year as being a decent time to “clean out the closet.”

If you haven’t already contributed this year’s maximum of $15,500 ($20,500 for those 50 and older) to your 401(k), consider increasing your contribution when receiving the year’s final paycheck. You have until December 31st to make the final contribution for the year, and if you can afford it, tucking away as much money as you possibly can into a retirement plan is obviously a good thing.

A 529 plan offers high contribution limits and significant tax benefits.
Money in the account can grow tax-deferred for years, and withdrawals are tax-free (as long as the money is used for any number of expenses relating to higher education with qualified institutions).

But some people are using these 529 plans for estate planning as well, since the money invested in a 529 plan account is considered “a gift.” These days, each person is allowed to contribute a lump sum of up to $55,000 — which is considered five years’ worth of gifting. Not bad, right?

You can make contributions to your IRA through April 15th, but why not consider getting it done now? For 2007, the IRA contribution limit is $4,000, or $4,500 if you are age 50 before the end of the year.

Don’t have an IRA? Technically speaking, you can set one up and fund it by April 15th of next year (to give yourself the tax deduction for 2007), but as far as I’m concerned, setting up an account now and funding it always gives you a better chance to avoid procrastination.

So, whether you’re hoping for a Wii, iTouch or that new Rolls Royce, hopefully addressing the tips above will help you enjoy your new toys even more knowing some of this stuff is out of the way.

Should you be too busy to read my further posts that will close out 2007, I want to most sincerely wish you and your family a very happy and safe holiday.

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