policy changes

Public Policies and Personal Choices 

Clients, there’s been plenty of buzz in the public sphere. Policy changes are on their way in many arenas, including potential tax breaks, increases in the national debt, and cutbacks in benefits.

Some of you have been wondering what it will all mean for you. It makes sense to have questions, especially when so many issues are in play right now. Here are a few of the policies that could impact you or someone you know:

We know the pendulum swings back and forth, and mandates to change law are sometimes modified before they can even go into effect. But it still can pay to do some planning when changes could be headed our way.

You may have questions about where to start, and the answers will depend on the particulars of your own situation. Instead, we’ll try to speak generally to some of the personal choices you might consider.

  • For those who are years or decades away from retirement, you might commit to higher monthly deposits to your long-term investments. If Social Security benefits could be lower when you reach retirement, you might offset the difference by socking away more now toward a 401(k), Roth IRA, or other long-term investment balance.
  • For those who depend on ACA or exchange health insurance and receive income-based subsidies, you could keep some extra flexibility in your short-term budget until you know how the subsidy cuts will affect you. Premiums may rise significantly for some people.
  • For those who are retired and have resources to spare, you might consider some targeted philanthropy. Individuals and families are facing cuts to health and nutrition programs, cuts that helped fund the tax breaks. For example, our local and regional food banks are under greater stress as some programs and grants have already been eliminated, and reductions in food benefits will only increase the number of people seeking help.

No matter what stage of life you find yourself in, it may be more important than ever to make sure that your long-term money is invested for the long term, meaning that long-term money is invested for growth—rather than stability.

Think of it this way. Higher government deficits may mean higher inflation, which typically makes the value of things go up while hurting the purchasing power of dollars. Rather than burying those dollars in the backyard—where the erosion will be worse!—we put them to work, buying stock.

Stock represents indirect ownership of the real assets of companies—it’s in mining operations and railways, factories and foundries, offices and stores, and on and on. Investing for the long term means we have a chance to capture the growth of dollars out there in the world, at work.

A lot of it comes back to this: so much seems beyond our control, yet it always pays to think creatively. How do we make the most of it?

Call or email us when you’re ready to talk.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

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What To Do With Your Election Portfolio
photo shows U.S> Capitol surrounded by fall trees

Elections matter, they say. People wonder what effect the outcome will have on their finances. We are getting questions and hearing concerns about this election. Perspective is needed, both from history and about our current situation.

For each president since Bill Clinton, one person or another has urgently expressed to us the need to sell all of their investments because of the ruination that was sure to follow. Folks told us that Bill Clinton, George Bush, Barack Obama, Donald Trump were all, in turn, going to herald the end of prosperity.

Yet the markets have persisted, never failing to manifest an upward trend over extended periods—with ups and downs along the way. (For perspective, the Dow Jones Industrial Average is about eight times what it was the day Clinton was elected.)

The past is no guarantee of the future, of course. But many millions of people who wake up every day and go to work in their businesses or jobs seem to have a bigger impact than the one person works as president.

We understand and appreciate government that is supportive of private enterprise, reasonable regulation, and taxes that are not excessive. Many people feel we have that in the current administration; some worry about the erosion of these things. Three points are worthy of mention right now:

  • Individual income taxes may go up no matter who wins. This was baked into the Trump tax reductions, which were written to go away after 2025. Even before the virus hit, we had record deficit spending and an unprecedented debt binge. Then programs to counter the virus increased the deficit. No matter who is president, our national finances may require fresh attention.
  • Tariffs and other trade restrictions generally depress economic growth. We have many trade restrictions now, as we did in the Depression years of the 1930s. Policy changes in this arena would likely be beneficial to our future prosperity.
  • Immigrants and the children of immigrants founded more than 40% of the Fortune 500 companies and have long been a wellspring of American vitality and prosperity. Currently, legal immigration is sharply restricted compared to past years. Restoring America to more of a destination for the best and brightest people in the world would probably be good for the economy.

Bottom line: elections seem to matter less than we think in the course of the American economy and markets. And any outcome in the current election is a mixed bag—some things will be better, some will be worse, no matter who wins. So what do we do now, to prep our portfolios?

Keep the faith; stay the course.

Clients, if you would like to talk about your holdings and the election, or anything else, please email us or call.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.