Financial planning: Coping with an uncertain world
Sorry, but this financial adviser is at a loss for words, said Carl Richards in The New York Times. After Donald Trump’s shocking victory in the presidential election, “I have no idea what to say about the markets, investing, or budgeting.” It’s not clear how a Trump presidency will affect your home price, retirement accounts, or plans to pay for college. But I do know a thing or two about uncertainty, which we all inevitably confront when making decisions about money. The key question is this: “What can you control right now?” Make a list. Consider anything not on your list “something that may cause you anxiety” if you focus on it too much.
“A time of political shock isn’t a time for investing action,” said Jason Zweig in The Wall Street Journal. Rattled investors are being bombarded with advice about which stocks to buy and sell under a Trump presidency. But “little is ever clear about an incoming president,” especially this one. When President Obama took office vowing to impose health-care regulations, you might have expected health-care stocks to plummet. Instead they “ended up resoundingly outperforming the rest of the stock market.” President George W. Bush boosted military spending—a clear signal to invest—but defense stocks lost 19 percent in 2001 and nearly 7 percent in 2002. “The only sensible step for investors to take at a time like this is to do nothing.”
The truth is, there’s no way to “Trump-proof” your portfolio, said Walter Updegrave in Money.com. “You’re better off setting a strategy grounded in the things over which you have the most control—how much you save, how broadly you diversify, [and] how much risk you take.” The tried-and-true investing goal is to build a portfolio that will give you a shot at building a reasonable nest egg under a variety of market conditions. Of course, any plan you make will inevitably rest on forecasts and assumptions, which means you’ll want to periodically check in and adjust your plans to ensure that you’re still on track. But don’t stress yourself out trying “to predict the Fed’s every move or attempting to outguess the markets.”
“The morning after the election, I woke up and started reviewing my budget to figure out how to put more money in my savings account,” said Tiffany Johnson in TheBillfold.com. I work in education, and Trump’s proposed policies for my industry have been varied and contradictory, not to mention the president-elect’s potential impact on everything from my health care to my retirement account. But I’ve found that taking “small, tangible actions” is helping me combat my feelings of unease and helplessness after the election. “I haven’t started building a bunker (yet!), but I am preparing in the best way I know how.”