How to Prepare Your Money for the 2024 U.S. Presidential Election
With the 2024 U.S. presidential election on the horizon, many are wondering how to prepare their finances for the potential economic changes that could follow. History has shown that elections can have significant impacts on the economy, whether positive or negative, depending on the policies enacted and the political environment that follows. By understanding the possible economic outcomes, both good and bad, you can make informed decisions to protect and grow your financial portfolio.
1. Understanding the Potential for Economic Downturn
Presidential elections bring uncertainty, and in some cases, this has led to economic turmoil. The presidencies of James Buchanan and Herbert Hoover offer important historical lessons.
James Buchanan, president from 1857 to 1861, presided over the country during the Panic of 1857, a severe financial crisis that led to bank failures, business closures, and widespread unemployment. His inability to effectively address the economic issues exacerbated the downturn, and the country entered the Civil War shortly after he left office.
Herbert Hoover, president from 1929 to 1933, took office just as the Great Depression began. While the stock market crash of 1929 wasn’t solely his fault, his administration’s policies were widely criticized for failing to alleviate the economic collapse. Hoover’s adherence to laissez-faire economic principles, including tax hikes and cuts to government spending, worsened the depression and led to widespread hardship.
How to Prepare for a Downturn:
- Diversify Your Investments: Spreading your money across various asset classes—such as stocks, bonds, real estate, and precious metals—can help reduce your risk in a volatile economy.
- Hold Cash Reserves: Having liquid cash on hand can provide a buffer if there’s a downturn or a market crash. Cash allows you to take advantage of opportunities, such as buying stocks at lower prices or covering essential expenses during tough times.
- Pay Down Debt: High-interest debt can become a burden during an economic recession. Focus on paying off credit card balances, personal loans, or other high-interest debts before the election.
2. The Possibility of Economic Growth
On the other hand, a strong economy is also a possible outcome, as demonstrated by the presidencies of Franklin D. Roosevelt (FDR) and Donald Trump. Both leaders presided over periods of substantial economic growth, albeit in very different circumstances.
FDR took office in 1933 during the Great Depression, but through his New Deal programs, he oversaw major recovery efforts that included massive infrastructure projects, banking reforms, and the creation of social safety nets. These programs helped stabilize the economy and put millions of Americans back to work, spurring a long period of economic growth.
Similarly, Donald Trump’s presidency, particularly in its early years, saw strong economic expansion. Before the pandemic, Trump’s administration enacted tax cuts and deregulation policies that were credited with boosting corporate profits, increasing job creation, and raising the stock market to new highs. While the economy faced challenges toward the end of his term due to COVID-19, the earlier years were marked by robust economic performance.
How to Prepare for Economic Growth:
- Invest in Growth Stocks: If the economy is poised for expansion, consider investing in sectors that perform well during periods of economic growth, such as technology, consumer discretionary, and financials.
- Real Estate Investments: A growing economy often leads to rising real estate values. If you anticipate economic expansion, investing in real estate—either through direct purchases or real estate investment trusts (REITs)—can offer substantial returns.
- Tax Planning: With the potential for new tax policies following the election, it’s important to review your tax strategy. Consider speaking with a financial advisor to optimize your tax-advantaged accounts, such as IRAs or 401(k)s, and take advantage of any current tax incentives before they change.
3. Stay Informed and Adapt
The most important thing you can do ahead of the 2024 election is to stay informed. Economic conditions are complex, and the political landscape plays a major role in shaping future outcomes. Monitor campaign promises, debates, and candidate policies, as these can give clues about future economic conditions.
In conclusion, preparing your money for the 2024 U.S. presidential election involves both caution and optimism. By learning from history, staying diversified, and adjusting your strategy according to the political and economic landscape, you can protect your finances while positioning yourself to benefit from potential growth.