For most of my clients, 2011 proved to be a year of getting on more solid ground (paying down debts, getting out of underwater homes, building up an Emergency Fund, and even taking a vacation). This was predicted for the Year of the Rabbit (2011), in which you were able to rest and have a little peace. Well, I hope you took the time to get prepared for the Year of the Dragon (2012)!

The Dragon is said to create excitement, unpredictability and intensity. This can bring out some wonderful behaviors like enthusiasm, but throwing caution to the wind can lead to unnecessary risks. Personally, I am ready for some excitement but want to steer clear of drama. So, what does this Year of the Water Dragon mean for your financial future over the next year?  Here is some advice based on Chinese interpretations of the year to come:

  1. This is a great year for innovative businesses and ideas. Technology (Fire element) will be robust, and new trends are predicted to help this sector do well. Some astrologers warn that a few of the old school technology companies (e.g. HP) will not fare well. What does this mean for you? If you have a new usiness venture idea, now is the time to act on it. Make sure you have planned ahead, know what you need to pay your bills and invest in the business, as well as a timeline for evaluating your success. Also, if you have not looked at your retirement and brokerage accounts recently, take a look and make sure you have some     exposure to the tech sector and growth segment of the stock market. You do not need to directly own Apple stock to do this (it’s in most mutual funds). Check out low cost ETFs like iShares S&P Growth Index (IVW) or tech sector specific ETFs like Vanguard Information Technology ETF (VGT).
  2. The economic crisis will not end during 2012 and markets will remain volatile. However, you can still make money this year, and Metal and Earth elements are predicted to do well.  What does this mean for you? The Metal and Earth elements indicate that gold and silver, the energy sector and real estate will do well. Again, look at your portfolio and evaluate your holdings. In addition, I do not see the U.S. housing market improving any time soon, but it could be a great investment opportunity if you have cash burning a hole in your pocket.
  3. The energy of the Dragon might cause you to spend more than normal, so be careful!  What does this mean for you? If you STILL do not have a pro-active spending plan and way to track your expense, stop making excuses and do it. Free online services make family money management easy and a little fun. Check     out mint.com or learnvest.com (geared towards women).

In my article last year “Three Cheers for the Year of the Rabbit”, I wrote that you needed to get prepared for 2012’s Year of the Dragon when caution is said to be thrown to the four winds and all kinds of overly
ambitious and daring projects are undertaken.  I am excited and ready for new opportunities but am taking the next month to assess my current position and set boundaries for the unpredictable year to come.