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Election years often bring a sense of uncertainty in varying degrees, and this year’s election was no different. With a new Administration and a different mix to both chambers of Congress, you may be wondering how to adjust your finances in the face of this governmental turnover and the changes the future years could bring.

While policy and legislative changes could certainly have an effect on your financial situation, election years rarely mean a significant overhaul to your financial plan. Small adjustments may be made, but only when the above changes become a reality. With all the variables that affect the financial world, revamping your own financial strategy too hastily is not recommended.

Some Historical Perspective

It may surprise you to learn that a new government, regardless of political party, has little direct effect on the financial markets, especially when considering election versus non-election years, with data going back over 100 years. In fact, where the economy sits in the business cycle is a greater factor in how financial markets behave after an election year. Unfortunately, there is great debate as to whether the current U.S. economy is poised for further growth or if that has peaked and a downturn is around the corner. The same economic metrics (e.g., inflation, economic growth, productivity, Federal Reserve policies, and interest rates) are the primary influencers in election years as non-election years.

And just because the Republican Party seemed to have won an overwhelming mandate this year doesn’t necessarily mean a future boost or disaster in the financial markets either. According to Morningstar research, over the past century, the markets have had both outstanding returns and severe declines regardless of which political party was in charge.

Strategies to Preserve and Grow Your Wealth Amid the Uncertainty

If you’re feeling overly anxious about the election’s implications (real or imagined), here are some steps you can take:

1. Boost your emergency fund to cover living expenses in case of a market or economic downturn. Having these extra reserves may help avoid having to sell investments in a down market when cash is needed and provide an extra financial cushion to your day-to-day living expenses and cash flows.
2. Resist the panicky urge to “take control and do something” ahead of an imagined Armageddon. Reacting to fears borne of our anxiety about the future seldom result in prudent financial decisions, and most often, the anticipated financial disaster seldom occurs.
3. Stay diversified. After the election this year, there is rampant speculation in the financial media about where the opportunities lie for investors. Many of these forecasts turn out to be pure speculation and don’t materialize in a meaningful way for investors. Certainly some sectors may benefit more than others under the new Administration, but so much else can affect sector returns that it’s better to remain broadly diversified, rather than put too much emphasis on a few areas of investment.
4. Be tax-aware in the coming years. The new Congress and Administration may work toward changes in the tax laws that could benefit your financial plan and objectives. Be sure to work with your tax professional and financial planner to take full advantage of any tax breaks you are allowed.

Why Staying Focused on Your Long-Term Objectives Is Crucial

A financial plan typically spans over many decades—time filled with changing economic conditions and upheaval, political drama, market volatility, and international incidents, all of which can challenge even the most carefully crafted plan and intentions. History has shown, however, that many of such events, while certainly unnerving, often have little direct long-term effect on fundamental factors that dictate whether you reach your financial objectives (or not). Successful individuals and families stay on course and try not to let the occasional storms deter them from focusing on their goals and maintaining their course of action: saving, diversified investing, and prudent debt and risk management.

How McGregor Wealth Management Can Help

At McGregor Wealth Management, I’ve worked with many high-net-worth individuals to guide them through the ins and outs of market cycles and opportunities. Woven into my clients’ overall financial plans, that makes it easier to align short-term and long-term objectives, retirement income, and risk management needs with their legacy plans in a tax-efficient way.

No matter what stage of life you’re in, we at McGregor Wealth Management can help. Let’s create a personalized plan that helps you pursue financial independence and prepares you for whatever the future holds. To learn more, contact me for a consultation.

About Mark

You probably have people helping with your investments, legal matters, and taxes…but who makes sure you are getting all the benefits you’re owed? I do. My name is Mark McGregor. I scour federal, state, local, and corporate databases to find benefits you are owed but NOT receiving. That’s what I do. Yes, we do all the other things as well, such as providing investment management, tax planning, long-term care planning and other services. Those are the big things, but I also help to make sure the little unknown things are taken care of for you. It’s also making sure that the little things don’t become big problems for you down the road.

I got into this business to fill a void I noticed after the passing of one of my friends’ parents who was experiencing hardship due to poor planning. I saw the issues they had to deal with firsthand, and this left me feeling that there were lots of financial salespeople, but not many true advisors making sure people were getting all the available benefits they had worked so hard for.

I use the skills I gained from my bachelor’s degree from California Polytechnic State University and 24 years of industry experience to get all the benefits my clients are owed. I live in Castle Rock, and we are actively involved in sports and charitable organizations, such as Unbound, which provides personal attention and direct benefits to children, youth, the aging, and their families so they may live with dignity and achieve their desired potential and participate fully in society.

Disclaimer: Investment advisory services offered through Brookstone Capital Management, LLC (BCM), a registered investment advisor. BCM and McGregor Wealth Management are independent of each other. Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents.