Last Minute Moves Before The Elections

We are less than one week away from the elections, and frankly, we’re looking forward to putting this watershed moment behind us. There has been no shortage of commentary in the media, and for background on the elections and what they might mean (or not mean!) we would direct clients to previous articles we’ve posted on the subject.

We’ve had frequent conversations with clients over the past few weeks regarding investment strategy, year-end tax moves and potential policy changes, so let me just take a moment to outline what we’ve been doing to prepare and position client portfolios for the final quarter of 2020.

We are going into this final quarter well diversified. Diversification cannot of course eliminate risk, but it can help reduce it by ensuring your assets are not all in that one proverbial basket. We have always believed in the importance of portfolio diversification, and the elections have not changed anything in that respect. Most portfolios do include bonds, which are there to provide consistent income and act as shock absorbers during potential market pullbacks. Some clients ask us why we own different types of investments, and the simple answer is we are trying to prepare you and protect you from possible adverse events in what is an uncertain future.

We have been reallocating portfolios as we always do after quarterly reviews. As part of the normal quarterly portfolio review process, we have trimmed some positions that were not performing as well as expected or that have grown too big, added to areas that were underweight, and sold positions to manage the year’s capital gain and loss totals. This has been a year of significant changes in the market environment, and we want to make sure that your portfolio stays relevant give the new pandemic realities.

We have raised cash or increased liquidity as needed in accounts that provide clients with periodic income. Our crystal ball isn’t giving us a read on what to expect after the elections, or in the upcoming months of the COVID pandemic (darn!), so in many cases we are raising extra cash so your income needs are satisfied without interruption regardless of the course of events.

There are still a few items on our 4th Quarter agenda. Just like Santa, we have a list and we’re checking it twice. But our list has reminders about who wants to make charitable or family gifts before the end of the year, who is doing a Roth conversion, and who has scheduled Qualified Charitable Distributions (QCDs) from their retirement account. We’ll also be looking for tax-saving opportunities to manage your capital gains and losses before year-end.

And finally, let’s all take a deep breath and stay calm. There may be a market reaction to the election results (or lack of prompt results). Take a deep breath and turn off the TV and laptop. The worst time to make investment decisions is in a moment of 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,” wrote a recent columnist in USA Today. We will be reaching out to clients shortly after the elections to provide analysis, guidance, and a plan for any end of year actions. Remember that your investments are designed to provide for you throughout a thirty-year period or longer. What happens in one week in November is not even a blip on the screen. To discuss your financial plan, please reach out to us at any time. We are always available to answer questions or help put your mind at ease.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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