With the election over, you may be concerned about post-election volatility as we enter 2021. Regardless of politics, short-term stock market results can vary depending on factors, including gridlock in the House and Senate and a newly elected future President Biden, who will take office in January 2021.
Some stock market analysts view a Democratic President and a Republican-controlled U.S. Senate as the ‘best of both worlds’ when it comes to stock market performance:
But it remains unknown how the two sides will work together through COVID-19 and Biden’s proposed policy changes in early 2021.
Earlier in 2020, the COVID-19 pandemic created volatility in the stock market. Even today, it is uncertain how long the pandemic will last and how quickly we will have vaccines available. However, the stock market responds positively to the news that a vaccine will be available to the public in 2021.
Investors who are nearing or in retirement may have portfolios comprised primarily of securities that are not immune to stock market swings. During periods of volatility and uncertainty, investors often look for safety by purchasing U.S. Treasury bonds. However, bond returns can be diminishing when interest rates are low, not protecting portfolio needs against risks during retirement.
The impact of post-election volatility, future inflation, and tax increases due to COVID-19 will continue over the next months and years. For this reason, you must prepare for your financial future during this volatile market environment. If you are nearing or in retirement, meet with your financial professional now to plan a strategy to deal with potential market volatility.
Disclosure: This information is provided as general information and is not intended to be specific financial guidance or tax advice. The source used to prepare this material is believed to be true, accurate, and reliable, but is not guaranteed. An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.
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