Elections can lead to turbulent times. It’s the 2024 presidential election as this article goes to press – as well as elections for House representatives and most Senate seats. Many people wonder how the event can affect them financially. Will it change the way people save? Will it change the value of investment and retirement accounts? Although it is impossible to completely predict what will happen. There are some possibilities that you should consider. If you want to make sure you are ready for what the election may bring. Here’s what you need to know.
The Economy Will Still Grow No Matter Who Wins
Regardless of who wins the next election, the economy is still growing.
It is true that the winners of the elections are able to make certain policy moves and decisions that can have an impact on the recovery. However, there is no way to anticipate what it might involve. Mainly, this is because the president cannot decide on his own. Congress also plays a role. Since there is no way to know until election day who will be president and whether each side of Congress will have a Republican or Democratic majority, the situation remains unpredictable.
Long-Term Savings and Investing Are Almost Perfectly Smart
Investing or saving for the long term is a smart move regardless of the state of the economy. In particular, markets have risen over time, regardless of who has been president and whether there has been a shift between parties. The standings are going up, even with a few significant drops here and there.
The main impact of the election may be temporary volatility in some markets. Market volatility is a feature of the stock, bond and crypto markets, so volatility is common. Sometimes, they continue after the election for a period of time, especially if there has been a major change, such as a change in the governing party of the president, the House, or the Senate. Furthermore, when there is long-term uncertainty about who wins an election, markets may also exhibit higher levels of volatility.
Regarding interest rates, the Federal Reserve (here), expects a policy of continued interest rate reductions for the foreseeable future. Although their assumptions are subject to revision given new economic information, savers should consider that interest rates will fall. This situation is good for borrowers because it means that financing may be more accessible in the future. However, it also means that savings interest rates are likely to remain low.
Will People Change the Way They Save Because of the Election?
In general, saving patterns will remain the same. Sometimes, low interest rates can signal that people should rethink their saving habits. For example, if your portfolio is full of low-yield bonds, you may want to rethink your strategy at some point, suggesting that you can tolerate more risk.
However, if your portfolio is diversified, and you have a solid emergency fund, staying fully invested in the market and using your investment plan makes sense. Ultimately, whether an election will have an impact will not be fully known until it happens, so it is best to focus on staying informed about current economic conditions and preparing for the future, as you would normally do.
Do you think the election will change the way people save money? Why or why not? Share your thoughts in the comments below.
Read more:
- What Happens to a Savings Account When It Taps Over the Limit?
- What Are the Benefits of Having Linked Savings Accounts?
- How Much Money Is Too Much in Your Savings Account?
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