How Will The Election Change The Way We Save Money?
Elections can lead to tumultuous times. With the 2020 presidential election on the horizon – as well as elections for House representatives and many Senate seats. Many people are wondering how the event may impact them financially. Will it change the way people save? Will it alter the value of investments and retirement accounts? While it is impossible to completely predict what will occur. There are some possibilities that are worth considering. If you want to make sure you’re ready for what the election may bring. Here’s what you need to know.
The Economy Will Still Be Trying to Recover No Matter Who Wins
Regardless of who wins in the upcoming election, the economy is probably going to still be in recovery mode, at best. The COVID-19 pandemic had a major financial impact, one that isn’t going to correct quickly regardless of how the elections turn out. In most cases, financial decisions – including savings and investment rates – should focus more on that than who wins the big office.
It’s true that the winners in the election do get to make certain policy moves and decisions that could impact the recovery. However, there’s no way to anticipate what that may involve. Mainly, this is because the president doesn’t get to decide solely. Congress also plays a role. Since there’s no way to know until election day who the president will be and whether each side of Congress will have a Republican or Democrat majority, the situation remains unpredictable.
Long-Term Saving and Investing Is Almost Universally Wise
Investing or saving for the long-term is typically a wise move regardless of the economic climate. By and large, the markets have gone up over time, irrespective of who has been president and whether it switched between the parties. The standing trend is upward, even with a few significant downturns coming in here and there.
The biggest impact of the election may be short-term volatility in some of the markets. With any election comes uncertainty. In the weeks leading up to election day, fluctuations are fairly common. At times, they continue after the election for a period, particularly if there has been a major change, like a switch in the controlling party of the presidency, House, or Senate.
As far as interest rates, those will likely stay low for some time, predominately due to the economic conditions created by the post-COVID-19 landscape. This is ideal for prospective borrowers, as loans and other forms of financing may be more affordable. However, it also means savings interest rates may remain lower, as well.
Will People Change How They Save Because of the Election?
By and large, savings patterns will likely remain similar. At times, the low-interest rates could indicate that people should reconsider their savings approach. For example, if your portfolio is brimming with low-yield bonds, you may want to rethink your strategy for a time, suggesting you can tolerate additional risk.
However, if your portfolio is diverse, and you have solid emergency savings, your methods will likely be reasonable for the interim. Ultimately, whether the election will have an impact won’t be fully known until it occurs, so it’s best to focus on staying informed about existing economic conditions and preparing for the future, just as you typically would.
Do you think the election will change the way people save money? Why or why not? Share your thoughts in the comments below.
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