How to Come Out Ahead in the Election
Be proactive instead of reactive this election season
This election cycle has been an interesting ride, but it's almost over. Come Tuesday, we'll have a new President headed to the White House, and whatever the outcome, you can make sure you come out on top.
Political uncertainty can have a ripple effect on various parts of the economy, including consumer confidence and the value of currency. According to the 2016 Bank of America Small Business Report, "Sixty-seven percent believe that the upcoming presidential election will affect their business 'a lot' or 'somewhat,' while 53 percent believe congressional elections will have an impact."
In addition, both candidates have contrasting plans regarding economic growth, meaning we are looking at two very different economic landscapes in the next four years.
So instead of being reactive, and waiting to see who gets elected, it's time to be proactive and turn your focus towards making sure you come out a winner after the election.
Revisit your goals
The best way to start preparing for the next four years is by revisiting your financial goals. Both presidential candidates have a plan for America's finances, and now it's your turn to make sure you have a plan of your own.
Start by envisioning your ideal day, week, month, year, and decade. How much money will you need to generate to pay for that vision? How will you get there?
For example, let's say you want to be debt-free by the end of next year. How much money will you need to do that? Break the total sum down and come to a number you'll need to set aside each month to pay off your debt.
Now, how will you create that amount each month? Will you invest in a new passive income stream? Will you start a small business selling online? Once you have a clear end goal in mind, you can put a plan in place to get you there.
The coming years could change the way our economy functions. When the markets shift, people tend to make emotion-based decisions that come back to haunt them. Having a solid financial plan in place, with clear goals, makes your reaction to crisis much more levelheaded. Every action and reaction you make should bring you closer to accomplishing your goals.
Set a plan in motion today that you can follow so you aren't scrambling in reaction to any potential changes. Make sure to leave room for flexibility in your plans as problems and new developments arise, but always keep your gaze on the end vision.
If you need more help setting goals, just remember to be SMART about it: Specific, Measurable, Attainable, Realistic, and Timely. I've written more about setting SMART goals here.
Stop saving, start investing
With economic uncertainty comes a lot of emotional responses to money. For many, that emotion is fear, which can lead to some quick and poor investment decisions.
For example, as uncertainty increases, the desire to hold onto your money for security goes up. I'm sure you've heard this advice a lot: "Don't risk your money, just put it in a savings account where it's safe."
What most people don't understand is that simply saving is the biggest risk you can take with your money. Your savings are susceptible to inflation and lack of interest, both of which render your money virtually worthless.
Instead of letting your money sit and lose value over time, focus your efforts on investing to generate more wealth.
Start by increasing your financial education. Pick an asset class that you're interested in and dig deep. Read books, find mentors, conduct research, and learn everything you can about the investment vehicle of your choice. Investing always carries an element of risk with it, but the greater your education and knowledge, the less risk you personally take on.
Two of my favorite investments are real estate and gold. Both are solid investment vehicles for times of economic insecurity.
My favorite investment, real estate, is a solid choice for many reasons. Real estate markets are slower to react to economic downturns. Plus, the biggest benefit of real estate is that it's always needed. People will always need offices and homes and retail centers. Good locations and quality buildings will always be lucrative investments for savvy investors.
If you are unsure of where to start, begin by looking for prime locations near you. Take a drive and get to know your neighborhood and the opportunities available. Meet with a mentor, someone who has invested successfully in real estate and who can help guide you through the process. Gather information about demographics and vacancy rates to learn the market, so you can make informed investment choices that are based on knowledge, not emotion.
Gold is another great investment to consider in times of economic uncertainty. Gold is currently at an all-time high. People recognize that the US dollar is in turmoil with our current tense political climate, so many investors are starting to collect gold and have it on hand in case the dollar's value drops.
And article from the Wall Street Journal writes,
According to James Steel, chief precious metals analyst at HSBC, a victory for either Republican candidate Donald Trump or Democratic candidate Hillary Clinton would be good for gold prices, although the metal would get more support from a Trump presidency.
"This U.S. election may be particularly important in setting the course of U.S. economic policy and foreign policy and hence for gold prices, given the severity of the challenges facing the economy," he wrote in a Tuesday note.
Investing in gold now is a wise decision that could really pay off in the future, no matter which candidate wins.
You shouldn't rule out investments in paper stocks either. Even as the stock market faces potential crises and political upheaval, you can still make it work for you. With the right education, mentors, and mentality, you can find ways to stay ahead of the game in the stock market.
Whatever investment strategy you decide on, remember to take a long-term and balanced approach. Don't let emotions guide your investing decisions, but remain confident in your financial plan, and neither candidate will have a drastic effect on your investments.
Move to the right side of the quadrant
As with every election cycle, the possibility of income taxes going up is prevalent. Don't wait around until they do. If you are on the left side of the quadrant, an Employee or Self-Employed, you stand to lose the most to higher income taxes.
Making the move to the right side of the quadrant as soon as possible can help you not only mitigate the effects of taxes, but use taxes to your advantage. The rich have scores of tax breaks offered to them by the government to encourage investing and business development--which generates more jobs. B's and I's can make millions of dollars and pay virtually nothing in taxes, legally.
The biggest excuses I hear for not making the move across the quadrant include: "I don't have the money to invest." "I just don't have the time to start a business." "It's too risky."
Letting these fears and excuses hold you back will cost you big in the long run. So take it one step at a time. The move from the left to the right side doesn't happen overnight; it's a journey.
You can start by building your own business online. All it takes is an idea and an internet connection. Once your business begins taking off, you can use the profits from your sales to invest in an asset of your choice. The passive income from that investment can help you grow your business more, or lead you to bigger and better investment opportunities.
If you have an investment you're interested in right now, consider using Other People's Money (OPM) to fund it. If you properly research and source a quality investment opportunity, people will want to invest with you. They'll be begging to give you their money! Using OPM and good debt to finance an investment opportunity will help you move into the quadrant you want to be in.
Whatever you choose to be, a Business Owner or an Investor, or both, start taking the steps to make that switch right now.
Vote yes to yourself
As we enter the final days leading up to the election, take this time to start laying out your financial strategy for the next four years, and beyond. Don't let emotions of fear, despair, or even excitement guide your decisions. Implement a plan that is grounded in smart financial education that can see you through to your ultimate goals.
You are the ultimate master of your finances. Don't live in fear of the election results. Be confident and ready to take control of your financial future. And of course, don't forget to cast your vote this coming Tuesday.