How A Contested Election Can Affect Your Retirement Plan

November 3rd is getting closer and closer and people are beginning to cast their votes for the 2020 presidential election. Regardless of who you want to win, not having an election result could be worse for your retirement plan than your favored candidate losing.

Markets prefer certainty.

As has always been true, the stock market prefers certainty over uncertainty, meaning that we need a winner—any winner—in this election to protect us from another market crash.

Each candidate has espoused his own plan for the economy in 2021 and beyond, and either plan, if enacted by Congress, would require careful planning to navigate for all investors. Knowing the way legislation is likely to occur will provide investors a sense of what’s coming and a chance to begin preparing – even taking some steps before the end of calendar year 2020. But if the election result is contested, the influx of uncertainty would make some advance planning impossible and may not bode well for your investments.

Tax planning won’t be possible.

At the end of each year, there are important decisions to be made regarding taxes for individuals and businesses and there will be a very small window of time in which to make those decisions between the election and New Year’s Eve. Both candidates have plans for changing the current tax code, so not knowing what the tax code will be will halt any possible tax planning.

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Making strategic decisions to save on taxes is both legal and wise but making decisions according to a rulebook that has not yet been written is impossible.

Gridlock is better than a steamroller.

If we have a Red or Blue wave in November, either one will likely be bad for markets in certain ways. It will be much better if Congress and the White House are not all dominated by one party.

Having a bipartisan mix requires compromise and cooperation on both sides and prevents either party from forcing their agenda on the country—which either side would attempt to do given the opportunity. Progress will be slower, but at least it won’t mirror a dictatorship.

The lesson:

When you’re rooting for election results in November, forget what “team” you’re on. We’re all Americans. At the end of the day, what I’ll be rooting for is balance between Congress and the White House and election results that are uncontested so that we can begin planning accordingly based on what we anticipate the rules will be.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regards to your individual situation. Comments concerning the past performance are not intended to be forward looking and should not be viewed as an indication of future results.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Brotman Financial Group, Inc. and BFG Financial Advisors are not affiliated with Kestra IS or Kestra AS.

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