We’re inundated with coverage of the 2020 election. So it’s understandable for you to wonder how the outcome might affect your financial plan and the achievement of your long-term financial goals.
For instance, different tax proposals could warrant changes in your retirement calculations, charitable giving, estate planning, and other elements of your financial plan. Right now, you can’t be certain which changes, if any, are the right ones to make. That’s because no one knows exactly how or if the proposals of today will shape up into finalized policies in the future.
This is one of several reasons to take a measured approach in reviewing and preparing for any adjustments to your plan, no matter who wins at the ballot box. Other points to consider:
- Senate races play a big role, too, adding uncertainty about the direction of future policy.
- The COVID-19 pandemic and availability of a vaccine pose yet another variable. Tax policy could be affected if the economy is recovering from the virus or some other crisis.
- Changing strategy to accommodate anticipated policies can have negative results if those policies turn out differently than expected. We don’t want premature actions to result in a large tax bill or a delay in reaching your retirement goals.
- In general, the crafting of policy is a long and drawn-out undertaking. In fact, it typically takes a year—and often longer—for a significant policy change to become the law of the land.
The chart below illustrates how long it took for several presidents’ signature policies to go into force.
A long road to realization
Days from inauguration to fulfilling flagship campaign promise
This all suggests you have time to make a deliberate plan in anticipation of policy changes after the election—rather than make immediate changes based on current, imperfect information.
And as a reminder, it’s always a good idea to stay invested—and to stick with your financial plan—no matter what’s happening in the news.
The importance of staying the course
Returns for a $1 million portfolio consisting of 60% stocks/40% bonds
All investing is subject to risk, including possible loss of principal. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. We recommend that you consult a tax or financial advisor about your individual situation. Past performance is no guarantee of future returns.
Investments in bonds are subject to interest rate, credit, and inflation risk. Prices of mid- and small-cap stocks often fluctuate more than those of large-company stocks.