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Want to change plans after Trump win? Relax

By Jill Cornfield · Bankrate.com
Wednesday, November 9, 2016
Posted: 1 am ET
Scott Olson/Getty Images

Scott Olson/Getty Images

If you had a retirement plan before Tuesday’s election, stick to that plan.

No matter of your thoughts on Donald Trump’s presidential victory, don’t react emotionally. Stay with a strategy that will meet your long-term financial goals and suits your own appetite for risk.

Political outcomes should not drive your decisions on how to invest, says John Sweeney, executive vice president of retirement and investing strategies at Fidelity in Boston.

"Think about your age, time horizon, risk tolerance," Sweeney says. "As people go through these (election) cycles, they learn – and won't whipsaw their portfolios."

Trump’s win likely will mean a quick market decline because his financial policies are not as well known as Hillary Clinton's, but Will Branch, investment analyst for Millennium Investment & Retirement Advisors in Charlotte, North Carolina, believes the markets will bounce back once everyone gets used to the idea.

In short, don't vary from your long-range plan -- but make sure you have one.

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Take the long view

Long-term perspective is key.

"It doesn't matter who gets in or what Congress looks like," says Matt Sommer, director of the retirement strategy group for Janus Capital Group in Denver. "The playbook for retirement investing pretty much remains the same."

Sommer says people who can save through a workplace plan, such as a 401(k), should take advantage of saving that way, especially if a match is available. If you're choosing between a Roth and a traditional IRA, run through the numbers to see which would work better for you.

Younger workers have decades to save, but someone nearing retirement might like to take some risk off the table. For people at either end of the savings spectrum, target-date funds could be a good fit.

"The nice thing about some retirement strategies, like TDFs, is that they automatically adjust over time," says Fredrik Axsater, global head of defined contributions at State Street Global Advisors in San Francisco.

They do the rebalancing for you, which keeps your portfolio diversified and allocated correctly between stocks and bonds.

Take risk off the table

"If you're 100% invested in stocks, move the needle to make it more comfortable," Branch suggests, by putting more of your money into bonds to ramp down investment risk.

This is especially good advice if you're moving into the retirement zone. The seventh year of a bull market means seven years more heavily allocated to stock, and seven years closer to retirement.

"If I had a 60/40 (allocation) in 2009, I'm substantially more allocated to equities than bonds," points out Sweeney. "And our best guidance for folks entering retirement is to go up on bonds, and cut back on equities."

The best plan, however, is to look ahead at the next four years, not the next four days, Sweeney says.

"We have presidential elections every four years, and congressional elections every two years," Sweeney says. "It's important but not the main driver of our economy. There are other factors much more important for making sure people stay the course."

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