The future of economic policy in the U.S. hinges in part on the outcome of the upcoming presidential election, but it could be quite some time before that outcome is clear. In a Wells Fargo Wealth & Investment Management client call last Monday, Wells Fargo analysts suggested that there isn’t that much to worry about. If the Democrats win, they say, we already know based on statements from Biden that we can expect tax changes such as the individual income tax rate on incomes over $400,000 bumping up to 39.6%, from 37%.
So although we can anticipate this possible outcome, the GOP and the Dems have a surprising amount in common when it comes to personal finance. “Both parties favor expensive government spending, principally on health care and infrastructure spending,” said Paul Christopher, head of global market strategy for Wells Fargo Investment Institute, as quoted by ThinkAdvisor. Additionally, both parties are focused on the pandemic and the havoc it has wrought on the economy, as well as on reprising U.S. manufacturing and toughening up with China.
Christopher advises to hold off on major moves until at least March as new presidential terms take a few months to stabilize, and to make sure your investment plans are focused on trends beyond the political scope such as economic recovery, increased adoption of digital technology, and heightened challenges for global trade.
The most important thing? Cash is crucial both in one’s portfolio and as an emergency reserve. You can “put it on the sidelines,” Christopher said — and then gradually move the cash back into appealing investments once you feel comfortable.
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