Investing for the Future in the United States of Agita

Four years ago, I didn’t have a plan. Donald Trump was the surprise winner of the 2016 presidential election, and I wasn’t quite sure what to say to the people who were on the verge of losing their minds.

In the wee hours of Nov. 9, 2016 — as futures trading suggested that the U.S. stock market was going to fall an awful lot when it opened — I sought to encourage the discouraged. Continue to bet on capitalism, I advised. You can still count on it to deliver the same sort of long-term returns to investors that it had for decades.

Then, within hours of the opening bell in the United States, there was a reversal. Shares ended up rising that Wednesday. That calm-down column that I wrote in the middle of the night needed some revising.

So this time, I’m writing things down ahead of election night. And I’ve had daytime conversations with financial planners who had, in previous careers, worked in government jobs under both Republicans and Democrats. They offered a few helpful pointers.

First, a maxim of sorts about our collective state of anxiety — whether you’re pulling for four more years or a new occupant in the Oval Office. “Emotions are really good at raising questions and really bad at answering them,” said Zach Teutsch, a financial planner in Washington, D.C. It’s true in life, and it’s certainly true with financial decisions. Try not to make any big ones anytime soon.

Second, it’s easy to overestimate how much change is possible in the first year of any presidential term, especially for things that can hit you squarely in the wallet, like taxes, retirement rules or health care. Mr. Teutsch learned all about that during his time at the Consumer Financial Protection Bureau, where he worked from 2013 to 2017.

As Mr. Teutsch tells it, many people working in government spend their careers focused on a single problem within a specific policy area that they would love to fix. They make plans and have memos in their back pockets and are ready when the legislative, executive or judicial clouds part.

“Mostly, what you do is think and wait for those brief moments when you can move the thing to fix the problem that you’ve been obsessed with,” he said. It tried his patience enough that he found another line of work.

But here’s the problem for those policy lifers and for those of us who pay the taxes that keep them employed: Only a tiny fraction of them finally get to do their thing during any presidential administration, and it isn’t possible to predict who will get their shot or how successful they will be. It would be foolish to, say, fundamentally alter your retirement savings strategy in anticipation of a change to some or another tax rule.

But what if Joe Biden wins and the Democrats regain a majority in the Senate? Don’t assume anything, warned René Bruer, who worked for Jeb Bush when he was governor of Florida and Republicans controlled both houses of the State Legislature.

“Governor Bush told us not to bet on any legislation passing or failing based on Republican politics,” said Mr. Bruer, now a financial planner in Colorado Springs. “He said it will very much surprise you.”

While it feels like a long time ago now, we should not forget the John McCain thumbs-down moment, which sank the legislation that would have gutted Obamacare in 2017. That was with one party in control of both chambers and the presidency, a reminder that even two years of control over Congress and the White House may not be enough time to fulfill a long list of legislative wishes. Now imagine chastened Republicans reframing their pitches to voters and taking back the House in 2022, again dividing the government.

Mr. Bruer is a Marine Corps veteran who spent part of his childhood in Africa seeing people burn banks on his way to school. He actually takes some comfort in what to others feels like a heightened level of American governmental chaos.

“The last few years are a good lesson of the power of bicameral legislatures, and the judicial branch being equal to the executive branch,” he said. “You need to let good ideas rise, and it may take a while. It’s designed to be this raucous.”

All of this may be cold comfort if you are feeling existential anxiety. Maybe your citizenship status is unclear, or you have a pre-existing medical condition or work in an industry decimated by the coronavirus or have lost your job. Mere words can’t erase your deserved fear, although I hope they can take the edge off.

But maybe you are lucky enough to have less important worries. Perhaps you are focused on the short-term direction of the stock market and the money you’ve been fortunate enough to put into it. Take a moment to step back and remember why you invest in the first place.

Stocks can lose a lot of value in a short period. But over decades, they tend to deliver enough growth to allow you to achieve long-term goals, like being able to retire and live off the money. That, however, happens only if you have the courage (and discipline and leftover income) to save regularly and don’t yank money out when you think something scary is going to happen.

If you have money in stocks that you will need in the next few years, you should rethink that — but not because of what could happen on Tuesday or because of the way politics or policy might affect the markets. It’s simply better to put money you know you’ll need soon into something less volatile.

“We want growth-oriented investments in the part of someone’s portfolio that they are planning to hold for the long term, precisely so we don’t have to worry about what is going to happen in an election,” Mr. Teutsch said.

Then, focus on the things you can control. That’s the opening line of the script Mr. Bruer uses with clients who just want out of the markets for now, regardless of whether their team is going to win. Then, he asks if there is some fundamental health or career change that might necessitate a change in course.

If not, the conversation continues with some reminders and a review of the basics. “Do you have a financial and investment plan? Yes. Are your investment costs low? Yes. Diversified? Yes,” he said.

Simply reminding yourself of your own good planning can have a calming effect.

And if the stock market has been good to you — from the Obama administration into the Trump administration — maybe there is some money left over for others whose paths have been rockier. That’s one area where Mr. Teutsch hopes his clients are thinking hard about a possible change in strategy.

“After an election can be a great time to assess your social impact plan, especially around charitable strategies,” he said. “Because the world is going to need very different things depending on who wins.”