Elections can lead to tumultuous times. With the 2024 presidential election occuring as this article goes to publication – as well as elections for House representatives and many Senate seats. Many people are wondering how the event may impact them financially. Will it change the way people save? Will it alter the value of investments and retirement accounts? While it is impossible to completely predict what will occur. There are some possibilities that are worth considering. If you want to make sure you’re 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 in the upcoming election, the economy is still likely grow.
It’s true that the winners in the election do get to make certain policy moves and decisions that could impact the recovery. However, there’s no way to anticipate what that may involve. Mainly, this is because the president doesn’t get to decide solely. Congress also plays a role. Since there’s no way to know until election day who the president will be and whether each side of Congress will have a Republican or Democrat majority, the situation remains unpredictable.
Long-Term Saving and Investing Is Almost Universally Wise
Investing or saving for the long-term is typically a wise move regardless of the economic climate. By and large, the markets have gone up over time, irrespective of who has been president and whether it switched between the parties. The standing trend is upward, even with a few significant downturns coming in here and there.
The biggest impact of the election may be short-term volatility in some of the markets. Market volatility is a feature of the stock, bond and crypto markets, so fluctuations are fairly common. At times, they continue after the election for a period, particularly if there has been a major change, like a switch in the controlling party of the presidency, House, or Senate. In addition, if there is prolonged uncertainty in who wins the election, markets may also show higher levels of volatility.
As far as interest rates, The Federal Reserve (here), anticipates a policy of continued interest rate cuts for the foreseeable future. While their projections are subject to revisions given new economic information, savers should assume interest rates will decline. This situation is favorable for prospective borrowers because it means financing may be more affordable in the future. However, it also means savings interest rates may remain lower.
Will People Change How They Save Because of the Election?
By and large, savings patterns will likely remain similar. At times, the low-interest rates could indicate that people should reconsider their savings approach. For example, if your portfolio is brimming with low-yield bonds, you may want to rethink your strategy for a time, suggesting you can tolerate additional risk.
However, if your portfolio is diverse, and you have solid emergency savings, staying fully investing in the market and executing on you investing plan is sensible. Ultimately, whether the election will have an impact won’t be fully known until it occurs, so it’s best to focus on staying informed about existing economic conditions and preparing for the future, just as you typically would.
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 Savings Account When Tapped Above Limit?
- What Are the Benefits of Having Linked Savings Accounts?
- How Much Is Too Much Money in Your Savings Account?
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