The US election results rocked the world markets as the result was not what everyone was expecting, in the same way that it did after Brexit. However, what does that mean for the future of our own personal finances?
Markets are always very jumpy and so if there is a significant (or sometimes an insignificant) happening that could change the markets then people panic and start to act quickly, making very quick changes. In the case of Brexit this meant that people stopped investing in sterling, shares dropped and businesses wondered whether to move their headquarters, among many other reactions. However, things have started to settle down again now, with the stock market recovering quickly, businesses waiting to see what trade negotiations can be made before reacting and the pound value is now recovering. Markets do go up and down anyway and so this reaction was not unexpected.
The US election is likely to see a similar reaction with panic moves to take money away from the US while there is uncertainty. However, this will settle down, but once the new president steps in, there could be more panic, depending on what changes are made and how quickly. It can be difficult to know what will happen and this is why it is hard to know how to react.
The best thing is not to overreact. It is worth remembering that if you have investments, then these will go up and down anyway and should do well in the long term. Do not panic and sell, but if you can, hold onto them and even if things are changeable for the next four years, there will a new election soon enough and things could change all over again.
It is wise to make calculated risks when investing and do not invest everything in one thing, just in case that suffers. Keep some money that is easy to liquidate and tie some up so that you have money you can get to if you need it but you will also have some that is earning more interest. It is really what you should do in all circumstances, making sure that you are thinking about your short term and long term financial needs.
It can be tempting to think that you should put your money in safer investments and that you should have more money accessible just in case. However, unless you think that prices will suddenly rise or that you will have the need to suddenly spend a lot of money for another reason, you should not need to worry. If you have a financial advisor then talk to them about your options, they should be able to let you know what the wisest decision will be. If you do not have an advisor and are worried then it could be best to find one and ask them. As everyone has different specific needs with regards to their finances, they will be able to let you know what will be the wisest decision for you personally.