Gen X: This Is What You Shouldn’t Do With Your Money Before Trump Takes Office
Written by
Joel Lim
Edited by
Zuri Anderson
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With a new administration coming into power, it’s often people’s first instinct to think about their finances.
Gen X, as the generation entering middle age and starting to think more about retirement, may be inclined to cash out retirement funds, stop contributing or make some other rash move. The reality, however, is that as politicians come and go, the stock market, in the long term anyway, remains fairly predictable and stable.
For advice on what to do in the immediate situation, with Donald Trump coming into office in a matter of days, we turned to the experts for this take on how Gen X, and everyone else, should treat their money. Or, rather, what you shouldn’t do.
1. Don’t Panic
David B. Horne is a PwC-trained, chartered accountant and founder of Add then Multiply. Horne has been in the business of money for decades, and his biggest piece of advice is to relax when it comes to your money.
“People need to resist the urge to worry about what the future might hold and maintain the status quo,” he said. “Don’t make any major changes or new expenditure until the dust settles. Stay focused on business as usual and don’t fret about the uncertainty — you can’t do anything about it.”
Again, the stock market may rise and fall in a year, two years or even five years. But over time, your money is more likely to continue to grow regardless of who’s in office. If you’ve been making smart investments up to this point, there’s no reason that should change.
Talk to your financial advisor about what practical moves you might want to make in a year or two to come, but keep your money growing on the market for the long term.
2. Don’t Liquidate
What’s next? Don’t try to liquidate your assets.
William Veltre, executive vice president at Deerfield Agency, has advice similar to that of Horne. As someone familiar with looking at the big picture, Veltre insists Gen Xers and everyone else will be just fine settling into market volatility rather than reacting to it.
“It’s usually more beneficial to ride out the storm, considering you have positioned your investments strategically, focusing on long-term goals,” he added.
Liquidating your assets could lead to major losses, with you left holding cash that could have rebounded in the market and grown. Don’t let your fears lose you money.
As long as you leave the money in the market, in most cases, it will grow. As cash in your hand, it has zero potential for growth.
3. Don’t Stop Contributing to Retirement Funds
Veltre also advised you to continue your regular contributions to your retirement fund, whether it’s a 401(k) plan or an IRA.
“Continual investment into these accounts allows for dollar-cost averaging, which can yield significant benefits in the long run,” he noted. “Remember: Financial decisions should be made based on individual risk tolerance, financial goals, life stage, and the general economic climate — not political transitions.”
Leaders come and go, and the after-effects of their time in office rarely upset the constant growth of the stock market. This reality holds and has held true for decades upon decades because it’s just the nature of capitalism.
We live in a country where businesses provide products and services, people pay for those products and services, and so those businesses continue to make money. When we back those companies in the market, we make money, too.
It would take much more than a simple regime change at the presidential level to topple this way of life. Do your retirement fund, and by extension, yourself, a favor and keep adding to it.
4. Don’t Make Big Changes
Finally, and perhaps most importantly, don’t make any big changes just because you feel like big changes are coming.
For the vast majority of people, the stock market is not intuitive. You can’t really have a “gut feeling” about how your money will do regardless of how your gut responds to a changing president.
It’s important to remember that the United States is a giant, unwieldy country when it comes to politics and the economy. While Donald Trump’s presidency might “feel” like a big change, it takes a long time to make real, lasting change to any of the institutions that have been in place for hundreds of years.
Making big changes with your money because of big political changes is more likely to harm you than to help you.
“It’s essential not to act impulsively and avoid making significant changes to your investment strategies,” Veltre said. “Market fluctuations are bound to happen with any political transition, but it’s crucial to remember that these ups and downs are typically short-lived.”
Whether love or hate the president, you want to be smart with your money. The smart thing to do is to make practical, long-term decisions and remember that those decisions should be based on the individual situation (that’s you), your goals and your timeframe in terms of withdrawal (like how soon you’ll retire).
In almost every case, you’re dramatically better off financially with your money in the market than out of it. And you’re better off keeping your money in trusted investments rather than frantically moving it around.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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