Blog - August 26, 2021

Elections & Your Finances

A Ten Point Plan to Get Your Finances In Order Before the Election!


Canadians are excited. We have entered another election cycle where our choices will impact the fate of our species.

 In this piece, we’re going to layout a ten-point plan for you to get your finances in order before the election!

 Okay. We’re kidding. We’re not that kind of people. There is no ten-step plan, no five-step plan; in fact, all you need to do to get ready for an election is figure out who’s getting your vote.

 The media spends a lot of energy making people believe there are essential actions you have to take concerning finances on the approach to every election. But, as you may already know, we tend toward healthy scepticism when it comes to predicting the future.

 Instead of telling you what you need to do, we’re going to dispel some popular misconceptions about what political parties stand for and give you the lowdown on what it means if one party succeeds over another.

Firstly, there’s a misconception that the political party in power directly impacts your investment portfolio. The belief tends to be that a right-wing government will be an intelligent investment. Maybe more centrist governance isn’t that good for your bottom line, and it’s generally believed that going left will be disastrous for your investment portfolio. That means most people seem to think that putting conservatives in power is best for business, stock markets, and the economy.

 These beliefs form, at least partly, because each party influences how it wants to be perceived. There are many reasons why they do that, but chief among them is to find voters who align with that perception. They need a distinct identity. To have an identity, the party has to be opposed to someone else’s identity. This manoeuvring results in the impression that each party stands for something specific to them, and they do go to tremendous measures to make people believe that.

 Historically, our leaders have been either conservative or liberal. If you go back 50+ years, it might surprise you to learn that the liberal party’s stock market performance has outperformed conservative leadership.

 Whoa. Hold on, there, put down the pencil. We are not saying vote liberal because the stock market will improve. We’re saying, in terms of your portfolio, the election isn’t something to get worked up about. Governments get elected, they do some politicking, they make up some policies which may or may not have been a part of their original platform, then they form study groups to discuss the policies.

Of course, they do, eventually, establish policies, which are frequently long-lived. We’ve had income tax since the conclusion of WWII, for example. Thus, reminding us once again that the original government that implemented it does not take credit  – or responsibility –  for a  policy that continues to exist today.

 And tax is an excellent example of another mythical belief. It’s commonly held that greater taxation, especially on individuals, slows economic progress. Either because people believe it decreases spending or because big government is bad for the economy. However, since the 1950s, the highest tax periods have coincided with the highest growth years. Not a direct correlation because this is contrary to economic theory. Causation is difficult to prove because the income tax increase coincided with the widespread adoption of personal computers in households and significant differences in the workforce. It’s pretty much impossible to isolate specific policies and assess their impact.

 Even that becomes part of the game, allowing anyone to interpret data in various ways that may suit their agenda. So it’s like WWE in some ways. It’s all about the show, not the substance.

 Finally, as most people know but tend to forget around election time, a party’s platform does not guarantee action. Instead, they’re trying to convey a marketable message. But does that mean it’ll be policy?

 Regardless of the answer to that question, policy changes take time to implement, which means that there’s no real need to panic irrespective of policies that may impact your financial situation. It will be less like a stampede of buffalo and more like a meander of tortoises; you’ll be able to stroll out of the way with plenty of notice.

 We live in a democracy, remember. Any government with the attitude of, “Hey, I’ll take that.” And commandeering citizens’ money to pay down the national debt won’t get elected a second term, which is, of course, their primary motivation.

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