Yahoo Finance If Biden Is Reelected, These Will Be the 7 Best Ways To Invest $10,000
The 2024 presidential election is still a few months away, but it’s never too early to start thinking about your investments. If you have $10,000 to invest and are basing your decision on the election results, you should still exercise caution. After all, the next president might have a short-term impact on your investments, but true wealth comes from playing the long game.
That said, if President Biden is reelected, it could have a greater impact on certain industries than others. Stocks from companies in areas like clean energy, healthcare and education could perform better than they do now — but it’s all still just speculation.
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Still, there are some smart investments you can make right now to secure your financial future. Here are some possible ways to invest $10,000, according to the experts.
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Prioritize Your Needs and Timeline
When it comes to investing, everyone’s situation is different. But one thing’s for sure: The next president shouldn’t dictate your entire investment strategy.
According to Chris Urban, CFP, RICP, the founder of Discovery Wealth Planning, stock market performance over time has remained fairly consistent regardless of who’s in office. If you were already thinking about investing in stocks, don’t do so just because Biden is reelected or for the short term. Do so for the long term.
But while you’re at it, Urban also suggested prioritizing your investments based on what you actually need and your timeline. For example, you could invest in certificates of deposit or high-yield savings accounts if you need the $10,000 within the next few years. If you anticipate having more time before needing that money, consider broad-based, low-cost stock index funds instead. Bonds could also be worth considering.
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Educate Yourself
You don’t need to spend $10,000 to educate yourself, but you might want to spend a little time — and possibly money — in learning more before you actually invest.
“At the end of the day, making wise money choices for your specific situation matters way more than anything else,” said Steven Kibbel, CFP, a financial advisor at Prop Firm App. “However, understanding how political changes could potentially impact different parts of the economy is useful knowledge, too. The key is setting yourself up for success no matter what!”
Consider Municipal Bonds
If you’re looking for a way to preserve your $10,000 while still gaining interest, municipal bonds might be the way to go.
“Biden may increase federal support for state and local governments,” said Spencer Hakimian, founder of Tolou Capital. “Municipal bonds can provide tax-free income and benefit from increased government spending on local projects.”
The exact tax advantages of municipal bonds vary based on where you live and how much you earn in interest. Do you research before choosing this option.
Certain Stocks Could See Significant Growth Potential
It’s rarely a good idea to try to time the stock market, but a Biden win could have a positive effect on certain industries. Provided the companies within those industries are already performing well and have a history of doing so and they align with your values, you might want to consider investing in certain types of companies.
According to Dennis Shirshikov, a finance professor at the City University of New York and the head of growth at Summer, here are some stocks to watch out for.
Healthcare sector stocks. These could include stocks in the pharmaceuticals, biotech, telehealth and other healthcare industries. Another option is a healthcare fund that tracks the sector, like the Health Care Select Sector SPDR Fund (XLV).
Renewable energy stocks. These could include companies like NextEra Energy (NEE) and Tesla (TSLA) as well as solar energy firms.
Technology stocks. These could include companies investing in cybersecurity, artificial intelligence and other cutting-edge technologies, like Amazon (AMZN) and Google (GOOG).
Another area that could be worth investing in, though only time will tell, is social programs.
“Under a Biden administration, there may be an increase in government spending on social programs such as food stamps and healthcare for the elderly,” said Michael Collins, CFA, CEO of WinCap Financial. “[This] could benefit consumer staple companies that produce essential goods such as food, household items and personal care products.”
“The Democratic party has generally pushed for affordable healthcare, environmentally-friendly companies and socially responsible businesses,” Kibbel said. “There could be some opportunities there.”
Invest In Index Funds
If you want a low-cost investment that you won’t need to actively manage, consider investing all or some of your $10,000 in index funds.
“A well-diversified portfolio encompassing the S&P 500 (e.g., Vanguard S&P 500 ETF — VOO) remains a prudent choice,” said Ryan McEachron, a professional in financial advisory with ISU Armac. “It balances both growth and stability.”
Just remember that any type of investment carries risk. Even index funds can see gains and losses over time, so be aware of that when deciding upon this option.
You Could Also Choose Alternative Investments
Depending on your current investment strategy, alternative investments could be another way to allocate $10,000 and potentially diversify your portfolio.
“In the lead-up to elections, market behavior tends to be extremely volatile as investors reallocate based upon which sectors they think will perform the best, depending on which candidate is in the lead,” said Nelson Chu, CEO and founder of Percent. “For investors to hedge against market turmoil, diversification in alternative investments, like private credit, is necessary.”
While not always the case, certain alternative investments could be more resilient in the face of significant economic change — as often happens during an election. They’re also not tied to traditional stock and bond markets, according to Chu.
But you’ll still want to do your research and make sure you choose the right investments for you. This won’t guarantee your returns, but it can help you create a successful investment strategy.
Save Up for Emergencies
If you want to invest in a way with minimal to no risk, put that $10,000 away for emergencies. You’ll want to use a high-yield savings account so as to combat inflation and prevent the possible erosion of your money.
Having $10,000 in a high-yield savings account lets you keep your money liquid while giving you a financial buffer against market volatility, according to McEachron.
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This article originally appeared on GOBankingRates.com: If Biden Is Reelected, These Will Be the 7 Best Ways To Invest $10,000
