Making Cents: What the elections don't mean to your personal finances
By: John P. Napolitano, CFP®, CPA, PFS, MST
In these last few days before the election, everything seems to be on edge, or even on hold. Financial markets are concerned, investors have fear in their eyes, and many seem to think that attending to anything regarding their personal finances must wait.
My feelings are just the opposite. This isn't the first controversial presidential campaign of our lives and it won't be the last. But whomever occupies the White House in the next four years may certainly influence policies that impact your personal finances, there is still plenty of blocking and tackling that you must continue to do regardless of your election worries.
Contributing to your 401K plan, for example, has nothing to do with the election. You control how much you invest in your 401K and you control where it is invested. If you fear a financial market meltdown or even a short term correction, invest accordingly. But remember that you have no crystal ball and are not likely to perfectly time your return to investing in more risk based assets. Conventional wisdom would suggest that you allocate your accounts in a manner that suits your tolerance for risk, meets your investment objectives and keeps you sleeping at night. Also beware that your guaranteed choices in today's environment are not likely to keep pace with inflation which may cause you to fall short of your goals.
The election also has nothing to do with how much money you spend and how you spend it. This is purely in your control, and something that you should always be aware of regardless of your age or how much money you have.
Risk management in terms of protecting you and your family from catastrophic loss has nothing to do what the elections. Take charge today to address the risks in your life and to be sure that you can absorb the possibility of that loss or that you have transferred it in the form of insurance or other protection.
The income and estate tax laws seem most vulnerable to change under either candidate’s tenure. But that doesn't give you the right to walk around with outdated wills or not having trusts to protect against taxes or overzealous beneficiaries. Furthermore, the tax code is a behemoth of a document and any changes will not happen immediately.
To plan for estate and income taxation, you will have the rest of the year in most situations. Make sure that any of the fixes that you get motivated to implement is based on a holistic plan, taking into account the delicate balances and tradeoffs between possible estate taxes or income taxes.
Things may be different post-Election Day, but when it comes to your personal finances don't lose sight of the reality that you control most of your potential outcomes. Don't let November 8th become just another reason for your prolonged procrastination.
John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA. Visit JohnPNapolitano on LinkedIn or uswealthnapolitano.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.