For CRE brokers who have positioned themselves with the most optimal business structure (S-corp.) and are maxing out retirement plans (401(k), Roth IRA, Defined Benefit Plan), worrying about the policies of whoever occupies the White House may be tempting, but should not be a real concern. As dramatically different as most administration’s policies can be, fortunately they do not have a serious impact on the long-term upward trend of the stock market.
It is natural for investors to look for a correlation between who wins the White House and how stocks will perform, but nearly a century of data tells us it does not matter. The stock market’s continued upward march has occurred during administrations of both parties.
Your retirement accounts are investing in mutual funds that own stocks. These small investments in publicly traded companies have you participating in the success or failure of thousands of companies. Companies focus on serving their customers and growing their business, regardless of who occupies the White House. So, as a shareholder in the companies, you are not an investor in any given political party.
Many millions of people work for and run these companies and will navigate challenges presented by economic, political, and legislative conditions, as well as any unanticipated circumstances (as we have all seen living through this year). Not all companies will make it, but most will successfully adapt and continue to grow. You will participate in this growth, although sometimes uneven and inconsistent.
The president and his or her policies do have an impact on markets, but so do thousands of other variables. Stocks have rewarded disciplined investors for decades, no matter which party is in the White House or in control of Congress. You would not sell your home based on who becomes president and you should not alter your portfolio either, because both are long-term assets you will need for the rest of your life.
The differences between administrations most likely to impact your financial planning are tax policies and retirement savings legislation. We do see these laws change constantly and just like the publicly traded companies and their employees having to successfully navigate those changes, so will you. Our team of financial advisors and tax professionals come together in one office to help you determine the best strategies to meet your long-term goals, even as tax policy and other laws change.
