Year of the Rat

Today is Chinese New Year 4706, the Year of the Rat. A rat may seem kind of gross, but it holds a place of honor in the Chinese lunar calendar, because it is the first creature in the 12-year cycle. Legend has it that the rat was the first one to arrive when Buddha summoned 12 animals to name a year in each cycle after each one of them. With global markets in turmoil, I conducted some quick research about Chinese New Year and the symbolism associated with the Rat to help provide some much-needed guidance for, if you excuse the pun, rattled investors.

According to legend, a Rat Year is a time of hard work, activity, and renewal. As the US economy slows to a crawl and maybe into recession, the idea of renewal was particularly interesting to me. While making a fresh start is appealing, the lore also warns that the rewards may not be immediate. A new job, relationship, business venture, or even an economic recovery begun in the Year of the Rat may not yield fast returns, but opportunities will come for people who are well prepared and resourceful. The best way for you to succeed is to be patient, let things develop slowly, and make the most of every opening you can find.

How can you be well-prepared? Start with another Chinese New Year tradition: clean your entire house. In your financial life, that means reviewing all aspects of your wealth management plan, especially your approach to your portfolio. Is it time to sweep away your nonchalant management style or your unresponsive broker who only calls when there is a product to sell? The clarity that can arise from putting old “buy and hold” strategies in the trash could be freeing and allow you to prepare for the coming opportunities that the Year of the Rat will present.

On a more basic level, Rats are considered cunning and thrifty, with the ability to save for rainy days. Considering that the rain is already coming down in our economy, the Rat is an ideal model---a great money saver, who in tough times knows how to make something out of nothing or how to make things advantageous for himself.

Finally, one of the symbols of the New Year is to pass out red packets called Lai See Hong Bao (or Hongbao) with money tucked inside to provide good luck. The packets are a great metaphor for “paying yourself first” to help you achieve financial good fortune. The Chinese believe that the amount should be an even number as odd numbers are regarded as unlucky—we can live with either an even or odd number if it means saving more. Gung Hey Fat Choy! (Wishing You Prosperity and Wealth!)