Ever since Donald Trump became President of the United States (and even before), he’s been making headlines for a variety of reasons. From his immigration policy to his weird handshakes, people can’t stop discussing Trump.
The problem with these kinds of headlines is that it creates a lot of uncertainties. What the President says or doesn’t say can shift the markets because traders and investors make reactive decisions. If you’re worried about how Trump is going to affect your portfolio; I’ve got the perfect solution for you to ride out his Presidency.
The perfect Trump Portfolios
- Canadian Bonds – 70%
- Canadian Index – 10%
- U.S. Index – 10%
- International Index – 10%
- Canadian Bonds – 40%
- Canadian Index – 20%
- U.S. Index – 20%
- International Index – 20%
- Canadian Bonds – 25%
- Canadian Index – 25%
- U.S. Index – 25%
- International Index – 25%
- Canadian Bonds – 10%
- Canadian Index – 30%
- U.S. Index – 30%
- International Index – 30%
If these recommended portfolios look familiar, it’s because I copied directly from the Canadian Couch Potato Model Portfolios page.
Wait, didn’t I say I had the perfect solution for Trump? I do, I gave you four options above.
But they’re the same? That’s right, there’s no reason to change your portfolio just because there’s a new President down south. Let me explain why.
Things happen to the markets all the time
When Trump became the Republican nominee, I heard from a few different people that they sold all of their investments because they were worried what would happen if by chance Trump won the Presidency. There were some “expert” concerns that the markets would tank since he would throw the world into turmoil.
Well, when Trump won, the markets actually went up, heck, they’re at record highs right now. Let’s be clear, Trump can’t claim credit for the current levels of the US stock. There are so many different factors that determine the price of the stock market that not a single person can take credit.
That being said, if Trump were to say something negative about a company, their stock price could drop.
The point is, markets go up and down all the time; this is nothing new. Thinking you can do something to prevent these swings is called timing the markets. This strategy almost never works so why do we do it?
Don’t let emotions affect your portfolio
We’re instinctively terrible investors. We’re literally wired to do things that will make us lose money. Think about it. When certain investments are going up in price, we rush out to buy them e.g. real estate or hot stocks. When prices start to drop, we sell in fear of losing money.
With that rationale, we’re basically buying high and selling low; that makes no sense.
When you go to the grocery store, do you prefer to buy your groceries on sale or at full price? How about when you buy electronics, wouldn’t you rather buy your TV on sale?
Smart investors know to buy low and sell high. That means every year they’ll sell some of their investments that have been doing well and buy more of what hasn’t been performing as well. They don’t care what’s going on in the world, they just stick to their regular investment plan.
Sticking to your plan
Hopefully, by now you’ve gotten the point that it doesn’t matter that Trump is the President and it doesn’t matter how the markets are doing. The only thing that matters is sticking to your plan.
When creating your investment plan, you need to factor in your age, risk tolerance, and investment strategy. This may sound complicated, but it’s surprisingly simple if you take the time to read just one book on personal finance.
The good thing is, there are so many options available now to make investing easier. You can learn to become a do-it-yourself investor, use the Tangerine investment funds, and there’s also robo-advisors.
Heck, for the majority of those choices, you can just automate things and not worry at all.
Things are constantly changing around us and we have no control over them. What we do have control over is how we manage our own finances and how we choose to invest. Keep things simple and we’ll be rewarded in the future.