In the current global business environment, which is stressed by European sovereign debt problems and a stagnant U.S. economy, Tina Tehranchian sees both risks and opportunities for Canadians.

Tina Tehranchian

When asked about her predictions for 2012, the Certified Financial Planner with Assante Capital Management Ltd. commented, "There's not much clarity right now and a lot of anxiety. I don't think that we're through with the extreme volatility that we've been experiencing in the last few months. So, we definitely should brace ourselves for more volatility."

In a recent interview with CreditCards.ca, Tehranchian clearly explained how Canadians can improve their lives during these treacherous times through prudent financial planning.

CreditCards.ca: What are your top consumer tips for 2012?

Tina Tehranchian: Now is a golden opportunity for people to take advantage of the low-interest rate environment and try to pay down as much debt as possible. Because when interest rates are at 50-year lows, more of your money goes towards paying down the debt principal. Rates may stay this low for one or two years, but not forever.

As for consumer spending, ask yourself before making any buying decision, "Is this something that I need, or is this something that I want?" Try to concentrate on the things that you really need.

CreditCards.ca: Is it better to pay down debt, even when there are so many great bargains out there?

Tehranchian: You have to always think of the consequences. It's kind of like controlling your weight, when you see some tantalizing pastry. Yes, it will taste delicious when you eat it, but you have to work so hard to burn off those extra calories. It's the same thing with managing debt, which also benefits from long-term thinking. Being lured by the latest gadget or toy is short-term thinking which ignores consequences. So before you buy something, ask where that purchase will put you after five or ten years.

CreditCards.ca: What are your top personal investing tips for next year?

Tehranchian: In terms of 2012, it's a great time to take advantage of the opportunity that a panic-stricken market offers. Thinking back to January and February of 2009, the market was veering towards its lowest point of the financial crisis that hit in March 2009. There was nothing but doom and gloom at that point, but in hindsight, that was the best time to invest. Going forward, it's important to remember these examples from the past, because even high-quality stocks can go down dramatically in the short term.

Dollar cost-averaging is a fabulous strategy for volatile markets, because when the stock market goes down, you're happily buying more units. Dollar cost-averaging is one example of taking advantage of the opportunities that market volatility presents.

Another top investing tip is to always consider the after-tax, after-inflation return. People are lured by bonds and other fixed-income investments these days, because they're scared of stock market volatility. But if you look at a 10-year government bond that yields 2 per cent right now, and assuming that inflation stays low at 1 per cent, the real rate of return on the 10-year bond is just 0.07 per cent [for a top income earner, after adjusting for taxes and inflation].

CreditCards.ca: What do you see as the most dangerous financial risks and traps for Canadians in 2012?

Tehranchian: When it comes to investing, I think the number one thing that Canadians should try to avoid is falling prey to their emotions. We are all human beings, and it's very normal to feel anxious and nervous when all you hear all day long is negative and worrying news. It's really important to remember the long-term aspect of investing, and to not just focus on the short-term market risk, which is what's happening a lot at this point. Investors fall completely prey to their emotions and lose that long-term focus.

CreditCards.ca: How do you take your emotions out of making important financial decisions?

Tehranchian: While tough to do, taking emotions out means to think rationally. In Chinese, the character used to represent risk is the same character used to show opportunity. The other side of risk is always opportunity, like the glass half-full or half-empty. You can focus on the negative and become paralyzed by fear, and then pull the trigger at the wrong point in time and make your losses permanent. Or, you can try to keep a cool head. In this environment, you have to be able to make rational decisions.

CreditCards.ca: Is there anything else that you'd like to add?

Tehranchian: I would like to add is that this [the current financial chaos] too shall pass. We've had many situations like this before. I personally believe in human ingenuity and positive thinking. Yes, there are many negatives in front of us right now, and nothing is going to be solved overnight. It will take time.

But, I think after we see some positive steps taken -- especially by politicians in North America and in Europe -- some confidence will come back into the market.

See related: Expert Q&A: How to get debt under control; Author Q&A: Debt and the "Happiness Equation"