On Money & More – June 2024

CUTLER ADVISES OVER 2000 INDIVIDUALS. As you can imagine, we have clients across the political spectrum. And they are all worried about the election. Democrats are worried about Trump, Republicans are worried about Biden, and Independents are worried about both of them! As we get asked on a daily basis what investors should be worried about, here’s our quick thoughts on investing during an election year:

Step 1. Know your goals. Are you retired? Perhaps a less volatile portfolio with a higher percentage of bonds is appropriate. With bond yields near 5%, you can rely more on current income than when you were younger and the stability from these higher yielding bonds might provide you some comfort. Are you over 10-years away from retirement? Remember, there have only been two periods in history where stocks were negative over a 10-year rolling period: the 1930’s and 2008. The Great Recession was bookended by the Tech Bubble, making this particular measurement an anomaly and stocks quickly recovered. Where you are in your investing journey can have a big impact on what your portfolio looks like—and how much risk you should have if “the other guy” wins.

Step 2. Know your plan. While your asset allocation is a big part of your financial picture, so is your plan. What accounts are you drawing cash from? Are you a candidate for a Roth conversion? What tax brackets do you anticipate being in during your retirement? These questions can help you determine if action should be taken today. For example, the Tax Cuts anda Jobs Act is set to sunset at the end of 2025. Unless Congress collaborates on a replacement, this will change tax rates on income and the Federal Estate Tax exemption will drop from $13.61 million to around $7 million. While still a very large number, this is an example of changes that can have a very real impact on your money.

Step 3. Know your biases. At Cutler, we are biased toward stocks! The S&P 500 began in March 1957, and has an average compound annual growth rate (CAGR) of 7.4% (before dividends!). Under a Democratic President?
The CAGR is 9.8%. Under Republicans? 6%. OK, what about the median growth rate? For Democrats, this number was 8.2% and for Republicans this number is 10.2%. (source: Motley Fool). The point is that stocks have typically gone up no matter which party holds the Presidency. Apple wants to sell more iPhones and McDonald’s wants to sell you a Happy Meal no matter who is running Washington! Keep in mind, however, that American’s economic outlook is increasingly clouded by politics. That is just the state of our country at the moment. Our advice is to not let your politics get in the way of investing for your future, regardless of who wins.

Investing in an election year can be stressful, and we understand that anxiety. But our job as counselors is to help see the big picture, and from where we stand equities remain the best vehicle to grow your wealth. Knowing your goals, your plan, and your biases will help you to weather the storm this year (and next). If you need help working through any of these items, please give us a call and let’s talk!

All opinions and data included in this commentary are as of May 14, 2024 and are subject to change without notice. The opinions and views expressed herein are of Cutler Investment Counsel, LLC and are not intended to be a forecast of future events, a guarantee of future results or individual investment advice including the asset allocation provided. Nothing herein should be construed as tax advice. This article is provided for informational purposes only and should not be considered a recommendation or solicitation to purchase or sell securities. This information should not be used as the sole basis to make any investment decision. The statistics have been obtained from sources believed to be reliable, but the accuracy and completeness of this information cannot be guaranteed. Investing involves risk, including the potential loss of principle. Neither Cutler Investment Counsel, LLC nor its information providers are responsible for any damages or losses arising from any use of this information.