Worried about what the elections will mean for you and your money? Relax. When it comes to your money, you’re better off paying attention to these ten other things, all of which are more important. Unlike politics, you can actually exert more direct control.
Here are 10 ways you can help change your future today:
1. Your stock market expectations
U.S. stock prices — as measured by the Standard & Poor’s 500
SPX, +0.27%
large cap index, the Russell 2000
RUT, +0.25%
small caps, and others — are at elevated levels when compared to fundamentals like corporate revenues, assets, dividends and underlying earnings. When they have been at similar levels in the past — such as the late 1920s, or 1960s, or 1990s — their subsequent returns have been disappointing. Regardless of who wins the election, investors need to be braced for the chance that may happen again.
2. Your asset allocation
How much of your money do you have in stocks? What about cash, commodities, government bonds, corporate bonds, and real estate? Historical analysis has repeatedly shown that most investors have the wrong asset allocation. We tend to accumulate stocks, funds and other investments sporadically, without a plan and often at the wrong times too. Experts say we would do far better setting a plan and then sticking to it.
3. Your global diversification
Cambria’s Meb Faber says investors typically have far too little money international and emerging stocks. They are missing out on easy diversification. Even better, he says, many of those markets today offer much better value than U.S. stocks, and are likely to produce better returns in the long-run — no matter who wins, say, the Senate race in Texas.
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4. Your skills
When was the last time you signed up for a class or new professional skills training? Our most important investment is in ourselves. And we need it. Regardless of which politicians lose their jobs this election, there’s a high chance that the rest of us will need a new job or a new career at some point, and maybe sooner than we think. According to U.S. government data, even in this booming economy 1.2% of people are getting laid off every month, or more than 14%.
5. Your credit card debts
Maybe the next House of Representatives will clamp down on the deficit. Maybe not. Who knows? But as the Federal Reserve winds down its post-crisis emergency policies, it looks like interest rates are heading up anyway. According to the Fed we owe more than $1 trillion on our credit cards, and the average interest rate is already around 17%. We pay that interest with after-tax money, too. No investment is likely to match the returns of paying off your credit card debt.
6. How much you save
We can debate all we want why the economy is strong at the moment. What isn’t open to debate: In an environment like this we should be taking advantage of the boom to sock away more money for the future. And yet we aren’t. According to U.S. government data the personal savings rate has been falling lately, to just 6.4 cents on every dollar we earn. Back in the 1960s, 1970s and 1980s, the post-war generation routinely saved more than 10% a year.
Also see: How Trump’s tax cuts helped the Waltons family more than Walmart workers
7. How much money you’re hemorrhaging
Think all those direct debits and regular monthly expenses don’t add up? Think again. Based on mathematics, someone who cuts their expenses by one dollar a month — $12 a year — and saves the money at 4% will end up with another $600 in the bank 30 years later. Your cellphone bill may end up depriving you of tens or even hundreds of thousands of dollars. How much do you spend on your car? If you’re driving new, chances are it’s more than $8,000 a year, says the AAA. Even if you’re only spending $5,000 a year, say, that’s costing you about $280,000 over thirty years.
8. Whether you should own or rent your home
And no, it’s not just about whether the results of the election mean America is going to hell in a handcart and you will need to move to New Zealand, Italy or wherever. No matter who is in power, there are multiple analyses that argue you are often better off rentingthan owning.
9. All the benefits available at work
The most obvious and best-known is the company’s 401(k) — or equivalent — tax-deferred savings plan. According to Vanguard data, just 13% of us are making full use of this by maximizing our contributions. The likely benefits on offer don’t end there. They may also include tax-advantaged transportation and medical expenses, education and training assistance and other benefits. No matter what happens at the ballot, it’s all free money (to you, anyway).
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10. Whether you have long-term care insurance
Yes, the party you support is the only one talking sense about “entitlements” such as Medicare and Social Security, and the future costs of taking care of elderly Americans. Yes, the party you don’t support is evil, crazy, selfish and stupid, and if they win control we’re all doomed. But putting that aside for the moment, even today Medicare won’t pay for your future nursing home or nursing care, and the chances are slim that the situation is likely to improve.
Instead under current rules covering those costs will come down to Medicaid, and only once you’ve blown through all your assets. That means that you’d be wise to look into getting long-term care insurance — even if the beautiful, sainted political party you support wins the election.
Source : MTV
