Financial Gremlins to avoid in 2025

There are only three rules:

1 – They don’t like the sunlight, it might kill them

2 – Don’t get them wet, so no washing!

3 – No matter how much they beg, do not let them eat after midnight

No, this is not rules for the Planning team at Carbon as we approach tax-year end but instead the rules for the lovable Mogwai in classic Christmas Horror film – Gremlins.

Whilst not the most obvious companion to a blog on personal finance, it does segway nicely into what the purpose of our festive blog this year is on – What are the three financial Gremlins to avoid in 2025?

1 – Falling prey to short-termism

The film Gremlins celebrated its 40^th birthday this year, so let’s look back at some of the global events of 1984:

• A global phenomenon finished their record setting tour with the end of the Michael Jackson ‘Victory tour’.
• Russia/Soviet Union did not participate in the Summer Olympics.
• The rise of a scary new technology with concerns around it making workers redundant seemed to take hold with the launch of the ‘Macintosh personal computer’.
• A Canadian Prime Minister named Trudeau was in the last months of office.
• A continued flare up between Israel and Palestine / Hezbollah saw a continued escalation of violent reprisals, culminating in the bombing of the U.S. embassy in Beirut.
• And Ronald Reagan a ‘celebrity’ Republican candidate wins his second U.S. election beating the former vice president and causes shock by also winning the popular vote.

Which is obviously nothing like what we are experiencing in 2024 with:

• The end of Taylor Swift’s record setting ‘Eras Tour’.
• Russia not participating in the Summer Olympic games.
• The rise of Artificial Intelligence causing panic about its impact on the workforce.
• Justin Trudeau is largely expected to be in the final months of office as Prime Minister of Canada.
• Unrest in the Middle East between Israel and Palestine / Hezbollah continues to rage.
• And Donald Trump just won his second U.S. election beating a vice president with a surprising win of the popular vote also.

So maybe not completely different… but a nice segway into one of the hardest financial Gremlins to avoid which is blocking out the short-term headlines.

Geo-politics and world events have generated a near-deafening amount of noise in recent years that seems to create constant uncertainty. However, this is not new. There are always short-term disruptors to the market and if you consider that in 1984 despite the height of the Cold War, despite the unrest in the Middle East, despite the height of the Troubles in the U.K. the Global stock market returned a strong positive performance – as it did in 2024.

So, whether you are delaying that first investment until the short-term headlines seem a bit better, or worse yet bailing on a long-term investment strategy because an article has forecast short-term volatility – try and avoid this financial gremlin and focus on the long-term.

2 – Falling for FAD investments

The main character in Gremlins (other than Gizmo the Mogwai and the Gremlins themselves) is Billy Peltzer whose dad is an inventor who spends most of the time out peddling new, fantastic, once-in-a-lifetime opportunities to investors, the problem? Most of them do not work.

Today the ‘new, fantastic, once-in-a-lifetime’ opportunity can be found from every social media influencer with their very own Non-Fungible Token (NFT), Cryptocurrency and Sub-Reddit to sell you on their fantastical investment that is ‘guaranteed’ to make you a multi-millionaire.

Let’s just look at some sobering facts – of those that invest in Cryptocurrency. According to a study done by Bank for International Settlements 81% of retail investors lost money on Bitcoin between 2015 and 2022 – a wider study of the Cryptocurrency market that also factors in collapses of individual Cryptocurrencies, such as Terra Luna and FTX, put this figure even higher.

NFTs were the investment de jour a couple of years ago with a purchase of one going for as high as $69million – now according to data from Gulf News and Codeless up to 95% of NFT collections now have little to no value.

So don’t be sold on the once-in-a-lifetime opportunity and promise of millions. If you invest in a well-researched, globally diversified investment strategy that exposes you to the returns of the global stock market the returns will take care of themselves.

3. Not considering what ‘your story’ is going to be

Gremlins originated amongst pilots in WW2 complaining about ‘gremlins’ in their plane causing malfunctions. This was popularised by Roald Dahl, who drawing on his experience as an RAF pilot during 1943, published his first children’s book “The Gremlins” about these small creatures.

In this version, The Gremlins are gnome-like creatures who decide that they’ll stop harming Allied planes and join up to defeat Hitler instead. If you have not seen the 1984 film – this is not the plot and instead WW2 is swapped for suburban America during the 80s and Hitler is swapped for a terrible lady who threatens to tumble dry a dog to death.

Although not alike in story, the 80’s film is a direct descendant of Roald Dahl’s book. The book inspired an episode of the Twilight Zone in the 1960s and it was this episode of the Twilight Zone that inspired Chris Columbus to write the 1980s film.

The financial gremlin we can gleam from this is that you can be inspired and look to others for inspiration, but ultimately you need to tell your own story.

The most obvious example from a personal finance perspective would be retirement. A lot of clients will fix on an ‘age’ to retire without considering why they’ve picked that age, and it normally comes down to following an example in their life such as their parents, their work colleague, their next-door neighbour or even the paperwork they get through from their workplace pension.

Instead, work out if you could step away at any point when would you. If that’s “immediately” then working with a financial planner to build a long-term plan can give you the earliest date you could walk away whilst remaining financially secure over your lifetime.

If it is “never” because you love the work that you do or the business that you’ve built, then chances are you may have a surplus of income or wealth and making sure it helps the right people in your life at the right time is again key.

Both are fantastic retirements but just make sure you are writing your own script through the use of a Financial Plan and not following somebody else’s story is the financial gremlin to avoid in 2025.

And those are the three financial Gremlins to avoid in 2025, but if like Billy Peltzer and the townsfolk of Kingston Falls you almost immediately disregard all the rules and find yourself plagued with an abundance of financial gremlins – don’t worry Carbon Financial can help you get back on track.

Merry Christmas and happy holidays from all the team at Carbon.

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This communication is for general information only and is not intended to be individual advice. It represents our understanding of law and HM Revenue & Customs practice. You are recommended to seek competent professional advice before taking any action.

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