3 Things Every Smart Shopper Knows (And every Investor could learn from)

December 20, 2019

Regular readers of this blog will know I am not much of a shopper. With the exception of the gift closet I kept stocked when both my children were in daycare and we were averaging two birthday parties a week, I usually buy things as I need them. I am not a shopper, but I have studied them for years. I’ve marveled at the efficient way they compare flyers, knowing the real deals from the imposters. I’ve admired their resolve when waiting for a final price drop before making a purchase. And I’ve been impressed by their ability to recover a significant portion of their purchase price when it’s time to offload a big ticket item.

And while I am not a shopper, I am an investor. And I’ve noticed some things we two have in common.

Plan Ahead

I swear my Aunt Marg has more than half of her Christmas shopping done…for next year. Every time she sets out on a shopping trip, she’s thinking ahead. Good deal on baby sleepers: When is cousin so and so having her baby shower? Turkeys on sale: When am I hosting the next family dinner? Paint sale: Who do I know who is redecorating? That’s right. She doesn’t just shop for herself. She’ll happily share a deal with anyone.

Early last spring she showed up at my house with six bags of “Hots and Hams” because she found them on sale and she knows we camp. “These get expensive during BBQ season,” she stated as she dropped them off.

Seriously. She’s that good.

Smart investors also plan ahead. They are aware of their sources of retirement income and have a plan to fill in the gaps. They anticipate future risks and have an emergency fund available if they need it. They understand that different types of investments work better than others depending on the purpose for which the cash is intended. They carry enough insurance to replace their income, protect their assets and their loved ones.

Good investors are like Aunt Marg. Always thinking ahead.

Budget First. Bargain Second.

There is still much debate over whether or not investing a set amount of money on a schedule is better than making spontaneous, lump sum investments. Advocates of “dollar cost averaging” say that spreading your annual investments over the year will lower your purchase price, since you will sometimes be purchasing stock in down markets and – therefore – should end the year with more than if you bought it all the same day. Critics (and several online calculators) have shown that – comparing dollars to dollars – this is not necessarily the case. But all agree that for the vast majority of investors, sticking to an investment routine is not a bad thing. I’ve seen more than one well intentioned client miss an annual RRSP top up, but few ever miss a monthly pre-authorized contribution.

The really effective investor does a little of both.

That’s how the smart shopper operates, as well.

They have a clearly set budget for things that must be purchased regularly. Groceries. Gas. Personal care items. They also stock up when the opportunity presents itself.

Buy Low

I always filled my gift closet in January.

After the height of the toy shopping season, retailers slash prices to keep us buying through the slower winter months. And I was happy to take that inventory off their hands. I once got four Leap Pad board games for the price of one. Still makes me a little giddy thinking about it…

This last smart shopper lesson, however, is the hardest for us investors to grasp. Instead of buying low, we typically want no part of a stock market “deal.” We see an undervalued stock and we run in the opposite direction. We stop investing when the market undergoes a correction and prolong the slump.

We might be in for the next slump any day now. And when that day happens, I will be sure my cupboards are stocked, and that I have enough money left over to cash in on the deals.

I think Aunt Marg would be proud.