Prepare your investments for the 2020 presidential election in 4 moves

Prepare your investments for the 2020 presidential election in 4 moves

Stocks could be volatile following the election. Here’s how to prepare.Maurie Backman
 |  The Motley Fool
Top 5 investing mistakes that are easy to avoidEven seasoned investors make mistakes at times. But when you start investing, you’re prone to letting your emotions take over.Many people are understandably anxious about the results of this year’s presidential election. Whoever’s voted into office will face the daunting tasks of dealing with the coronavirus pandemic, saving the economy, and reuniting a divided nation.The political stakes are high, but there’s also the personal financial angle to consider. The results of this year’s election could cause the stock market to plummet. As an investor, you’d be wise to gear up for that possibility. Here’s how.1. Make sure your portfolio is diversifiedA diverse portfolio could help you ride out an upcoming stock market storm. In the weeks leading up to the election, make sure you’re happy with your investment mix. If you’re not, make changes before the stock market potentially takes a turn for the worse. If you don’t own a large enough variety of stocks, consider adding index funds to your portfolio. They’re easy ways to diversify without incurring costly fees.2020 Election: Can the stock market predict whether Joe Biden will be the next president or Donald Trump wins a second term?Want to invest like a pro?: We got you. Here are 6 tips to followThese 3 stocks are better buys: Don’t waste your money on penny stocks2. Dump stocks that are already losingWhen the stock market tanks as a whole, you should avoid selling off investments and locking in losses. However, there’s a difference between a general downturn and a few stocks in your portfolio that are grossly underperforming, even when the rest of your investments are up. You may want to unload sluggish stocks before the broader market is impacted by this year’s election results. That way, you’ll minimize your losses – losses that you should use strategically for tax-saving purposes.3. Stockpile cashStock market crashes offer money-making opportunities for investors. If the market tanks following the election, you may get a chance to load up on quality stocks that previously were too expensive for you. For that, you’ll need money, so now’s the time to reserve a little cash.You don’t have a ton of time between now and the election, but spending more conservatively for a few weeks could give you more buying power in early November (as could unloading a losing stock).4. Practice the art of not panickingSeeing your portfolio balance dive following a major political event can be alarming, but remember: You only lose money in stocks when you sell them at a loss. The market may crash in the coming weeks, but if you stay calm and sit tight, you might be surprised at how quickly your investments recover. Reminding yourself of these facts now can help you keep a cool head even in a difficult situation.There’s no way to predict how the outcome of this year’s election will impact the stock market. Stock values could even rise once results are announced. Still, it’s best to prepare for the worst.The Motley Fool has a disclosure policy.The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.Offer from the Motley Fool: 10 stocks we like better than WalmartWhen investing geniuses David and Tom Gardner have an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*David and Tom just revealed what they believe are the ten best stocks for investors to buy right now… and Walmart wasn’t one of them! That’s right – they think these 10 stocks are even better buys.See the 10 stocksStock Advisor returns as of 2/1/20


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