October 2020

I am asked on a daily basis what my opinion is about markets and what the outcome of the election will mean to our portfolios.  

…It is a legitimate question.  

After all, there is uneasiness when it comes to presidential elections and while we don’t know what the election results will be, most entrepreneurs and investors want to know what the possible outcomes are to help prepare for the worst.

It makes sense and it is why I am sharing this message…to help you think through the possible scenarios.  Here are a couple of points to consider when thinking about the possible outcome… 

(Now, what I am about to say isn’t meant to be a political message, I am just stating the facts.)

  • A democratic presidency translates to higher taxes and more regulation, neither of which are good for the economy or the markets.  The farther left the administration is the greater the chances are for there to be a negative impact on household incomes, business profits and the economy in general.
  • A republican presidency translates to lower taxes and less regulation, both are good for the economy and the markets.  While people often love to hate on business, the more profitable a business is, the more the business spends which fuels economic growth and stock market gain, which is a positive for household income.

So with all that said, there are a few things you can do now to prepare for the media and political circus that is about to unfold?  

  • You can do nothing and just let your money ride the wave of what ever comes and remain focused on the long term hoping for growth over time.
  • You can be defensive and move money to cash to avoid any possible volatility then reassess on the other side of the election.
  • You can widen your diversification by pulling money out of public markets and shifting those assets over to private markets as a detour allowing you to remain invested during uncertain times.  

Take A Look Into Private Markets

  • You can take a more conservative position within your portfolio by moving to fixed income type of assets.  This doesn’t avoid volatility but it can reduce the peaks and valleys.

What Is An Alternative To Fixed Income

  • You can shift the risk of the market to an insurance company opting for consistency to avoid volatility all together.

How To Use Insurance Companies In A Portfolio

Those are your options and which one you choose or what combination seems right is up to your own discretion and preference.

If your like most people, being presented with these options can be difficult since some of them may be outside of what you know or understand.

…And it is why many people ask me what I am doing with my money.  (After all, it makes sense to ask the one your seeking advice from what they are doing.)

It is what I did recently with my functional doctor about COVID.  I asked him what he is doing for himself and his family to build immunity against the virus.  

Why not follow the footsteps of someone who is trained to give the advice, right?

So, keep reading if you’re interested in what I am doing with my money…

First of all, I keep a thirty-year term on my real estate mortgages and don’t spend time focusing on paying off the loans.  My debt ratio is below 3%, which supports my philosophy to keep payments to banks at a minimum while using the banks money to increase my cash flow.  I focus my resources and assets on wealth creation strategies with a focus on creating income.

Second, I work to keep my tax exposure at a minimum while never deferring taxes into the future.  We are in the lowest tax environment that we are likely ever going to see in our lifetime. And it is my belief that as government spending continues to spiral out of control, it is inevitable that they will eventually reach into our wallets to support their spending by raising taxes.

Third, I contribute six figures per year into specially designed life insurance policies to create uninterrupted compounding predictable tax free growth with easy access to cash when I need it.  The reasons are many but simply, banks are not a safe place to store cash with reserve requirements at zero (Literally) making insurance companies very attractive with higher earnings on my money and 100% reserve requirements.

Fourth, I invest a few hundred thousand dollars per year into private equity and business opportunities with a focus on creating income.  Income is what we are all striving to create for ourselves.  There is independence and freedom from not having to work when the cash flow from your assets supports your lifestyle.

Fifth, I purchase precious metals sporadically in varying amounts depending on the political environment, dollar fluctuation and stock market volatility.  I do this as a hedge against inflation and the possibility of a collapse in global fiat money. 

Again, I am not saying that this is what you should do since everyone has differences in their situation but my approach mirrors what I find many successful people do to grow and protect their wealth.  It is what makes sense to me and it is what I talk a lot about in my podcasts.

So there you have it!  Everything I think you need to know to prepare for the upcoming election.  If you have questions about anything you read feel free to reach out for a conversation.

Brian