Last week, a bunch of us were asked to make a prediction on the US Presidential election in The Business Times’ “View From Top”. Here’s mine:
“I believe that the common sense of the American voter will prevail. The facts are clear. The handling of the pandemic has fallen woefully short of the expectations of the American people. The rising case counts of COVID-19 are an acute embarrassment for American pride.
I also believe that voters invariably ask if they are better off this time compared to four years ago, when they are just about to put their cross in the box. If they believe they are, they will vote for the incumbent. If not, they will vote for the “other guy”. I think the “other guy” will win.”
What I wasn’t asked about was how the outcome of the US election might affect the way that I invest. And my answer would have been … not one jot.
US presidents will come and go. But what will not go away is the harsh reality that we need to build a sufficiently large nest egg for the time when we want to start enjoying the days when we stop working.
For many of us, that day could be decades away, if we are still young and economically active. So, who might occupy The White House for one or two terms should be an irrelevance.
What is more important is where we can put our money to work now to generate an acceptable rate of return for us over time. We should bear in mind the “Rule of 72” when we are doing this.
If we can achieve a 7% return on our money, then we should theoretically be able to double our investment in 10 years’ time. But that would mean putting our money to work immediately ….
…. if we delay, then it could push back the time required for us to achieve our goals. And for us income investors, the sooner we put our money to work, the sooner we start collecting those dividends that we can compound.
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Disclosure: David Kuo does not own shares in any of the companies mentioned.
