As is the case with Election, people are understandably anxious about the results of this year’s US election. Whoever wins the election will face the daunting tasks of dealing with the coronavirus pandemic, saving the economy. He will also have to work on reuniting a divided nation.
Politically, the stakes are high, however, there’s also the personal financial angle to consider. The results of this year’s US election could cause the Stock market to plummet. As an investor, it would be wise to gear up for that possibility. Here are a few ways to that.
Diversify your portfolio before the US Election
A diverse portfolio could help you ride out an upcoming Stock Market storm. In the weeks leading up to the US election, make sure you’re happy with your investment mix. If you’re not, make changes before the stock market potentially takes a turn for the worse. If you don’t own a large enough variety of stocks, consider adding index funds to your portfolio. They’re easy ways to diversify without incurring costly fees.
Dump stocks that are losing
When the stock market tanks as a whole, you should avoid selling off investments and locking in losses. However, there’s a difference between a general downturn and a few stocks in your portfolio that are grossly underperforming.
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You may want to unload sluggish stocks before the broader market is impacted by the US election results. That way, you’ll be able minimize your losses — losses that you should use strategically for tax-saving purposes.
Stockpile cash before the US Election
Stock market crashes is always a money-making opportunities for investors. In case the market tanks following the election, you may get a chance to load up on quality stocks. These are stocks that previously were too expensive for you. For that, you’ll need money, so it is wise to reserve a little cash.
You don’t have a ton of time between now and the election. However, spending more conservatively for a few weeks could give you more buying power in early November. Same goes for when you unload a losing stock.
Do not Panic
Seeing your portfolio balance dive following a major political event can be alarming but remember: You only lose money in stocks when you sell them at a loss. The market may crash in the coming weeks. However, if you stay calm and sit tight, you might be surprised at how quickly your investments recover. Reminding yourself of these facts now can help you keep a cool head even in a difficult situation.
There’s no way to predict how the outcome of this year’s US election will impact the stock market. Stock values could even rise once results are announced. Still, it is best to prepare for the worst.
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