It is time for clients to revisit and rethink their investment portfolios. The post-pandemic period will create new opportunities, but the post-election climate has created new risks. This may call for a higher level of diversification for investors, as well as more frequent portfolio rebalancing and added defensive measures. Below find the suggestions we feel are worth consideration.

Review investments more frequently –

Economic recovery from the pandemic is already underway, but there will still be periodic volatility. Review portfolios more frequently to be sure that if allocations have shifted you can rebalance where necessary. You may also wish to stay flexible in order to capitalize on new investment opportunities that present themselves in this rapidly changing economic environment.

Keep step with a changing world –

Digital transformation is expanding at record speed due to the pandemic effect. The pandemic has given a boost to industries such as robotics, automation, and 3-D printing.  Remote work and social distancing are creating investment opportunities in e-commerce, tele-health, artificial intelligence and cybersecurity. Important trends in virtual meetings, online shopping carts and streaming media have kept the economy humming and present investable opportunities that should be considered. For long-term investors this means making sure your portfolio has a healthy dose of companies involved in disruptive technologies.

For those wanting a more concentrated approach to innovative companies there are numerous mutual funds and ETFs whose mission is to invest in companies offering new products and services that change the way the world works.

Consider ways to diversify more broadly –

High-quality stocks and bonds help balance market volatility. Amid low interest rates, a weaker dollar and a rise in economic uncertainties, investors may turn to precious metals. Long term, tangible assets such as real estate timber, and farm and ranch land may also help diversify a portfolio. Sustainability has become popular in these pandemic times, look to ESG investing as well for social impact.

Take a disciplined approach –

Markets today move from relative calm to calamity at much higher speeds than in the past. Investors should not risk too much at market peaks, but should also be sure they are not missing opportunities. The way to do this is to establish long-term goals, invest accordingly, periodically analyze risks, and stick to the strategy even when market volatility rises in the short run.

Plan for higher taxes –

President Joe Biden has proposed tax hikes on corporations, on individuals earning $400,000 or more, on long term capital gains of those with income above $1 million, and on estates worth more than $3.5 million. Don’t panic in the short term, but the long term is another story. With the federal debt-to-GDP ratio reaching such high levels, and the Trump individual tax cuts ending in 2025, rate hikes on high earners and a minimum corporate tax seem inevitable.

Consider realizing some long-term gains while rates are historically low and the market high. Where you hold assets is important — bonds providing ordinary income and funds that bring short term gains should be in tax deferred retirement accounts. Diversify your long-term tax risk by saving for retirement in special Roth accounts where all withdrawals in retirement are tax free.  High-net-worth individuals should consider making gifts to family members to make use of 2021’s generous $11.7 million per person ($23.4 million per couple) estate and gift tax exemption.

Reset your retirement plan –

This is a good time to take a fresh post-pandemic/post-election look at your retirement plans as well as your portfolio, even if you didn’t panic and sell when stocks recently tanked. COVID fallout could accelerate your planned retirement date. Try to save more, and look for holes in your retirement portfolio. With interest rates so low, the traditional bond-heavy portfolio for those approaching retirement may not be best. Depending on your situation, holding more stocks may be smart if you are hedging risk. Before you decide on an asset allocation, discuss how much risk you’re willing to take in your portfolio with your TFG Financial Advisor.

Get educated on what impacts your options –

The post-election landscape is often quite different than the pre-election landscape. Rather than strictly focusing on “politics,” investors should keep an eye on the landscape created by an accommodative Federal Reserve that still will be driving market returns until conditions change.

COVID vaccinations are finally gaining momentum and creating optimism, despite regional surges in infection rates. Our strategic research partners tell us that for equity markets, the “re-opening” trade is largely priced in, as is much of the economic stimulus put forth by Congress. What may not be priced in is the possibility of higher taxes on corporations and higher income individuals.

Assuming the global economy comes back in 2021, we’re likely to see compelling data around GDP growth. As mentioned, much of that is priced into markets already.

It’s likely analysts will lower corporate earnings expectations. It may take some surprise to the upside in order to keep the bull market moving forward. Disinflationary forces weighing on growth pre-COVID will likely resurface, which all means “stay flexible.”

As President Biden’s tax reform package moves forward, investors may be wise to adjust their portfolios in anticipation of higher income and capital gains rates.

Contact us: Our optimism is based in part on fiscal and monetary policy continuing to be generous. Pandemic-related trends have been beneficial to technology, and other high-quality companies with strong growth prospects seem attractive in a period of low returns. A focus on portfolio diversification seems prudent post-pandemic and post-election.

We offer a complimentary portfolio review – if you wish to take advantage of this analysis to identify strengths and weaknesses in your investment strategy, contact us directly at 561-209-1120. We are committed to providing the right products for your needs, explaining the potential risks and returns, and keeping fees at a minimum. Our goal is to educate you, so you can make informed decisions.

TFG Financial Advisors, LLC is a registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.