Well, the election is over. Now what? It was a wild campaign season, and I’ve got some post-election retirement tips to help in any year.
It might be a few days or even weeks until the final vote tally is counted. As I’m writing this, it’s still too close to call. But however this is decided, we still have retirements to plan for.
This was a strange election. Honestly, I’ve never seen anything quite like it, at least not here in America. It went beyond political. It got tribal.
I was having a drink with a friend of mine from Lebanon a few weeks ago, and he made an offhand comment that really stuck with me. He said that the U.S. political system was starting to look Lebanese.
I laughed at first, and then I realized he was being serious. The political system in Lebanon is based on tribal identity (technically religious identity). Policy is an afterthought. It’s an “us vs. them” mentality, and if the country burns, so be it.
I hate that America is starting to look that way, but it’s important at times like these to keep perspective.
So, today we’re going to go over a few post-election retirement tips.
Post-Election Retirement Tips
Tip #1: Keep your politics and investing separate.
Your grandmother wisely advised you to never bring up politics or religion at the dinner table. I would take it a step further and say don’t let politics or religion seep into your investment discussions either.
I understand being morally or ethically opposed to a particular company or industry. Some people won’t buy tobacco or alcohol stocks. I personally hate social media. You might hate Swiss chocolates for some obscure reason. Whatever. Everyone has their thing.
But don’t let political dissatisfaction keep you on the sidelines. I have friends that missed most of Obama’s bull market — and the 181% cumulative returns — because they believed his policies would blow up the economy.
Other friends sat out the entire Trump bull market — and the roughly 50% gains since his inauguration — for similar reasons.
Don’t do that.
However much you might love (or hate) the man in the White House, you should love making money more.
Post-Election Retirement Tip #2: Loving (or hating) a politician will always be unrequited love (or hate).
Along the same lines, remember that the president doesn’t know you and likely doesn’t care if you live or die. No offense, of course, but he’s a busy man. He doesn’t have time to care.
If you don’t matter to him, he shouldn’t matter to you either. We should all spend less time obsessing over presidential politics and spend more time taking care of ourselves.
My wife is from Peru, a country whose politics are a big enough train wreck to make ours look normal by comparison. I once asked my father-in-law what he thought of the incoming Peruvian president. He shrugged and said, “I still have to go to work tomorrow. And I would have had to go to work tomorrow had the other guy won too.”
That’s precisely the attitude we should take in our financial planning. Let’s focus less on things we can’t control and focus more on taking care of ourselves.
Tip #3: Focus on the specific policies that affect your portfolio.
The vast majority of what any president does will never affect you on a personal level. You may care for high-minded ideological reasons. But it doesn’t actually affect your life.
But certain things absolutely can. And taxes are a fine example.
It’s still early, and we don’t know what the tax regime will look like in 2021 and beyond. But now is the time to take a look at your portfolio to see if it is tax efficient. If possible, try to put your least tax-efficient assets — bonds, actively traded funds or strategies, etc. — in your IRA, 401k or other tax-deferred account. Try to put your most tax-efficient assets — index funds or stocks you plan to buy and hold forever — in your taxable account.
Most of us won’t be too heavily impacted by any changes to the tax code. That’s fine. We can still use this as an opportunity to tweak our portfolios and make them more tax efficient. Every dollar saved on taxes is a dollar more in your bank account.
Money & Markets contributor Charles Sizemore specializes in income and retirement topics. Charles is a regular on The Bull & The Bear podcast. He is also a frequent guest on CNBC, Bloomberg and Fox Business.
Follow Charles on Twitter @CharlesSizemore.