Posted on 11/06/2020 6:56:57 AM PST by SeekAndFind
Dear Chuck,
How do you think a Biden presidency would impact my retirement nest egg? It is hard to know which way this election will go! I can’t afford to lose my savings.
Fearful Retiree
Dear Fearful Retiree,
Thanks for the question. As of this writing on November 4th, the day after the presidential election, there is no certain winner. In fact, it looks as if it could be an election that is settled in the courts before it is all over. So, while I will answer your question, it does not assume that Vice President Biden will in fact be elected president.
Short-Term Perspective
I wrote an article earlier this year about the possible worst-case scenario for investors: a contested election. In it, I stated that markets hate uncertainty and if we have a delayed outcome of our election, I expected the markets to tank. I was wrong.
As of right now, the markets are in fact up in the midst of enormous uncertainty regarding the ultimate outcome of the election. There are three possible explanations for this based upon a near equal split of the popular vote: (1) Investors sense that Vice President Biden will be the victor and that massive amounts of stimulus money will be forthcoming. Essentially, they are going long on government bailouts. (2) Investors sense that President Trump will emerge the victor and maintain his pro-business, pro-growth policies that will remove the lockdown restrictions hurting economic growth. (3) Investors believe a Democratic president and Republican senate will present gridlock or provide checks and balances against radical legislation.
No one truly knows which, if any of these options, is driving the optimism in the markets. We can only speculate and better understand with hindsight.
This is good news for the millions of Americans who do not want to see their investments in public stocks and bonds go into a free fall while we wait for this chaos to be sorted out. Hopefully, in the short term, your nest egg will not suffer.
Long-Term Perspective
When considering the economic impact during a full presidential term, I am in the camp of Steve Forbes. Mr. Forbes, editor-in-chief of Forbes Magazine and two-time GOP presidential candidate, predicted on September 4th that a Biden presidency would be “an unmitigated economic disaster.” His dire outlook is based upon the stated platform position to raise taxes on the rich, which will slow economic growth. Mr. Forbes predicted a return to a state of “stagflation,” which is a paradox of inflationary prices but slow or no economic growth to keep up.
A Shift Away from Capitalism
We also know that the Biden/Harris ticket has a strong expectation to implement policies of the Democratic Socialist platform. This includes the Green New Deal, the return of Obamacare taxes, and punitive policy towards the fossil fuel industry in America.
Socialism and/or communism, by definition, are economic philosophies that embrace centralized control of resources with the idea that wealth is redistributed by political leadership not based upon merit or achievement or personal rewards but based upon a government's definition of what is “fair.”
Sadly, in actual practice, governments often think it is fair to take from political adversaries or those who do not support them to give to their own constituencies or even to keep the resources for themselves. Socialist structures can become a means of coercion that provide a way to take from the producers and give to the non-producers. And usually, those whose resources are taken are first attacked, denounced, and defamed as unworthy and flawed.
The Bible is clear that we must work as unto the Lord if we are able, and with the rewards we earn, be generous toward those who are less fortunate. A socialistic structure turns that on its head. Those who work and achieve can be deemed unworthy; those who contribute nothing can be rewarded for merely being associated with those who have power.
I reached out to my friend and noted economist, Jerry Bowyer, for his help. He noted, “Christians who have fallen prey to socialist ideas tend to fall for the lie that the love of money is to be equated with free-markets. In other words, anyone who prefers free markets is deemed to be implicitly endorsing the love of money. Freedom equals greed. This is a lie, a dangerous one.”
Jerry also added this important insight:
Every system of political economy (which is what we call the study of the proper relationship between the state and the economy) involves money. Capitalist countries have money; socialist countries have money. Both systems have rich people. Both systems have poor people. The difference is that under socialism, it is the politically connected who become rich.
History is replete with examples of how this philosophy ruins economies. We can expect bigger government, more bureaucracy, more federal debt, and slower GDP growth. This will likely be bad for your nest egg long term.
Time to Be Wise
There is valid reason to believe that the fundamental pillars of our nation would be altered during a Biden/Harris term. I do not know how to invest to counteract policies and measures that are yet unknown. I do know that Solomon gave wise advice to investors who were unsure of a looming disaster. He said to diversify:
“Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.” (Ecclesiastes 11:2 NIV)
This is a good time to diversify your investments into asset classes that will perform well regardless of what the future holds. Professional advisors with a kingdom worldview can be beneficial in helping you to achieve this.
An analysis of investing performance also shows that holding steady in a well-diversified portfolio has greater benefits than trying to jump in and out of the market as circumstances change. The yo-yo effect of selling when the market is bad and buying when the market is good causes most investors to buy high and sell low and thus suffer losses.
If you are in your senior years and are concerned about needing funds in the near term, consider moving your retirement funds to very low-risk places like certificates of deposits (CDs), money market accounts, or even cash.
Do not live in fear and anxiety. Regardless of who becomes president, God is in control. He knows your needs and holds your future in His hands.
RE: Biden promised tax increases (39%) on individuals with a million dollars of investments (retirement funds).
Hey, you’re talking about me — amassed after 30 years of patient savings and investments!!
No more than under Obama. Obama wiped out $1 million from my 401(k).
“If/when that happens, I will look at my dim voting spouse and ask her how when she asks me about retirement and travel.”
If she is a typical Dem, she’ll have no idea what you’re talking about, and just blame you for pissing away her future.
Good luck with that.
I know I’ll get nowhere.
Orangeman bad is apparently worth any price to some people.
Not under Communism - right now. Read the fine print on your 401(k) or IRA enrollment documents. If they let you defer taxes, it is their money until you pay whatever they decide you owe.
“Orangeman bad is apparently worth any price to some people.”
It’s absolutely mind boggling to me to see how powerful the TV is in America. Orangeman bad doesn’t even need a basis in reality. They just accept it as fact.
You’ve heard of Antifa and BlLM. Why stress over investments right now. Criminals just hi-jacked our country. You’re now a hostage.
No.
Your 401K won’t protect you from an upcoming war with China.
Biden’s team is probably pre-arranging sale of the football and its codes right now...
The spouse hates the Donald since he apparently doesn’t respect women. His track record isn’t perfect. Nobody is perfect.
Pal joey gets a pass though.
It boggles the mind.
Based on this morning’s stock market - the answer is NO!
I will buy a rental house so I can get the depreciation - hopefully the house will still appreciate some.
There are no words to describe my anger and disgust. I don’t want those bastards to get a nickle from me.
The dollar might collapse under either Trump or Biden.
Fossil fuel companies will get zapped further under Biden.
Nothing is safe under communism.
Under Biden, safe yes, because he won’t remember.
However, when Harris Ascends in February, no - she’ll take it all and make you pay taxes on the lump sum of your investments; gotta pay for the green new deal and tearing down the previous president’s border wall somehow - your investments will do just fine.
One of my neighbors has a rental house for his relatives.
RE: The dollar might collapse under either Trump or Biden.... Nothing is safe under communism.
Why did you have to add Trump to the above statement? A Trump presidency ensures we won’t go Communist.
Nothing is safe under the Biden presidency he’s brain dead owned by China and Harris is an unconscionable idiot.
Neither investments nor your children are safe from Joe Biden.
The Harris/Biden ticket will be looking to implement their version of “leveling the playing field”, stripping away as many assets from individuals and corporations as can be grabbed before what remains of the justice system and the law enforcement entities throw up roadblocks. These roadblocks, of course, are only temporary impediments to wholesale confiscation and redistribution of ALL tangible assets.
BLM and Antifa will be the shock troops sent in to enforce the New Order. Comply, or we will burn down everything you own, and keep the fire departments away.
The first safest investment is to have your home/land and transportation paid for if you live in a solid Red State. (Note: I say red State because Blue states will tax you out of home or just take it away from you)
The second safest investment is a way to produce food and supplies.
The Third is weapons and ammo to defend the first two.
The Fouth is befriending like-minded allies.
No.
Buy land, and guns and ammo if you can find any.
You and your compatriots voted for Biden, embraced vote harvesting and voter fraud.
In the immortal words of San Fran Nan, "embrace the suck."
Take solace in the Socialist plan to open up more soup kitchens for the homeless.
They are tied in the Senate.
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