What should you do on your investment while awaiting the US presidential election?

It is not easy to predict what will happen to the share market due to the US presidential election. Some views are being broadcasted on news. Some say market will move up if Trump wins, some have the contrary view. Being a financial planner, experience tells me that whatever we predict stays as prediction. Market can react upwards or downwards regardless what the news said. So, while we might not be able to predict the market right, what we should do?

First, we can evaluate our risk tolerance. The high market volatility during this period is almost certain. The share prices hence can swing up and down very fast during this period of time. If we cannot take the volatility (swing in investment value), it is time for us to trim down some of the equities on our investment portfolio. It is prudent for us to include fixed income (bond or cash) within the investment portfolio.

Second, if we are long term investor, it is time to prepare more cash to buy cheap and fundamentally good shares and funds if the market crashes during the election period. Volatility also means opportunity, market is always emotional. If Trump wins, US China trade war is likely to continue which gives us chance to enter more onto China market. Stay with good and fundamental stocks and funds. If the technology stocks / funds are dropping, it is a good chance for us to accumulate more if we have not had the chance to buy previously.

Third, it is time to have an investment plan to decide what to do for both scenarios as a smart investor. It is time to think about this before things happen. When you have done the preparation that the market will drop or rise, you are likely to stay calm. When market is dropping, panic selling will not do you any good. If market is moving up, continue to do buy bit by bit. Good businesses always go up. FOCUS on the BUSINESS and IGNORE the market price. If the investment horizon is long, the key is still to accumulate more investment at a regular interval (as market generally moves up in long term) and accumulate MORE when the market crashes.

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