Beyond Market Returns: Managing Wealth During Political Turmoil

FULL EPISODE AND SHOW NOTES @ www.sunnybranchwealth.com/blog/money-and-politics

My market commentary this quarter is going to hit a little different.

Instead of the usual recap of what the market did over the past three months, and what might be coming in the future, I'm covering the real questions I hear from my clients. 

Should I be opening a foreign bank account?

Do I need to stop investing in the US? 

How can I prepare if the US economy and/or political system falls apart? 

I've got the answers you need about emergency planning, recession-proofing your portfolio, and the things you should absolutely NOT be doing.

There's a lot of bad, fear-based advice out there. 

Don't let it trap you in a doom spiral that leads to financial mistakes. 

Hang with me instead, for the answers you need and the reassurance you can't find anywhere else. 

Sunnybranch Wealth LLC (“Sunnybranch Wealth”) is a registered investment advisor offering advisory services in the State of Oregon, the State of California, the State of Washington, and in other jurisdictions where exempt. Registration does not imply a certain level of skill or training.

The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This information should not be relied upon as the sole factor in an investment making decision.

Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal any performance noted on this site.

Transcript

Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors. Each episode of this podcast, I'm breaking down a different topic related to generational wealth and inheritance. My goal is that you can stop trying to figure out how to manage your investments or figure out what to do after inheriting by asking Google or ChatGPT what to do, and instead come here for the real answers that you need with no jargon, no confusing terms, just plain English that you can actually understand and do something with.

Why This Episode is Different

This episode of Heir Necessities is supposed to be my quarterly market commentary. The end of every quarter I do a recap of what we saw last quarter and what might be coming up. But that didn't feel super right to me this quarter. I live in Portland.

We have the threat of federal troops coming into Portland. We have Trump saying this morning that even if these court challenges are successful that keeps National Guard troops out of Portland, he's going to try and use his emergency powers to bring in troops. It feels like we're in a different moment as a country.

When you're in that different moment, how useful is it for you for me to tell you, the market was up last quarter and it'll maybe keep going up again or maybe it'll tank or maybe something else will happen. I don't think that the questions people have right now about investments are questions about the S&P 500 and whether it's going to be up another 6, 10, 20 percent or if it's going to be down two or three percent. The questions that I'm hearing from my clients, from my friends, from my community are so much bigger in scope than a quarter of market returns.

And so I want to take some time in this market commentary to talk about the sort of doom worst case scenarios that I'm hearing and what you should or shouldn't do to prepare for those different scenarios. If there's some sort of fundamental shift in the underpinning of US democracy or the US capitalist system, what am I supposed to do with my investments to prepare for that? And that's a really hard question, and there isn't a great answer, but I want to talk you through my thinking, what I'm telling my clients, and hopefully it makes you feel a little bit better, or if not, you can accept well there's nothing I can do so we're just going to think about something else and let this roller coaster run.

Emergency Planning: What to Do If You Need to GTFO

Diving right into the first and most common question that I'm getting: I'm worried that at some point I might not feel safe in the US. That might be because you're a member of a group that is coming up against a lot more persecution currently. It might be because you're a member of a group that has historically been a target of persecution and you worry that the tidal wave of hate is going to turn for you next.

Whatever the case, if you're thinking that there might be a quick need to get out of the country in the future, how do you plan for that? A lot of people are asking me about opening foreign bank accounts. Opening foreign bank accounts is A, not something that you're probably going to be able to do, and B, probably not something that you actually want to do, even if you could.

The reason it's hard to open foreign bank accounts is because of the layers and layers of banking restrictions that different countries have. And the reason that you might not want to is because if you have a whole bunch of money in a foreign bank account and you're still in the US, then there are a bunch of additional regulations and headaches that you're going to have to deal with.

Why Foreign Bank Accounts Aren't the Answer

You might hear about people who have Swiss bank accounts and who have their money kind of across the globe. Those are people with a lot more money than you have. We're talking 50 plus, 100 plus million dollars or more.

If you are worried that you might need to get out fast, then one of the best and easiest things you can do is have a quick and ready source of cash. So that might be cash that you literally keep in a duffel bag. It might be cash that you have in a high-yield savings account.

Whatever it is, it's a place where you have cash and you know that if you need to get out quickly and you need money fast, you will be able to get to it. There are also options like a Wise account that let you move money pretty easily into other currencies. That might also be something you want to consider.

But if you're not really at the later stages of this, if you're like, well, I'm just worried I might need to go at some point, the best thing you can do is have a quick and ready supply of money that you can grab and get out of town with. You don't need to overcomplicate this by trying to open up a bank in Switzerland or Austria or any of these other countries. It's going to be a dead end.

They don't want your money unless you have millions and millions of dollars, and even then, they don't really want it. They have plenty of wealth on their own. So focus instead on making sure that you have access to a ready supply of liquid cash and that you have a plan in place.

How to Create a Practical Exit Strategy

Where are you going to go? What are you going to do when you get there. If you have pets, what's going to happen to them?

Go through the logistics of what this plan actually looks like because it's not that easy to just immigrate to another country. It requires some legwork. If you think this is something that's realistically in your future, start planning now.

Having a stash of dollars that you can easily get to is one part of that plan, but it's definitely not the end of what you need to be doing to prepare.

Should You Change Your Investments Because of Politics?

The second question I get a lot of is: are my investments going to react if the US crumbles? Should I have more exposure to international companies? Should I be doing something different in my investment portfolio because of the political instability and the threats that we're seeing within the US political system?

Short answer: no. But let me explain why. First, if you're a Sunnybranch client, you already have quite a lot of your portfolio invested internationally, so with companies that are domiciled outside of the US.

In addition to that, when you're thinking about US versus international exposure, remember that the majority of the large companies that are in your portfolio, that are domiciled in the United States, actually do a huge amount of their business overseas. It's not like they're just working within US markets.

Understanding How US Companies Are Doing Right Now

It's also important to remember that right now, US companies are doing really well. Yes, there are a lot of political threats, there is a lot of instability, but so far it looks like the US economy is continuing to hum along. Yes, that could change on a dime, but the question then becomes, how is it going to change?

Are we going to enter a recession, in which case, we're kind of in a recession for a few years and then we climb on out of it, or are you talking about us entering a civil war?

Recession Investment Strategy: Stick to the Basics

If the thing you're worried about is a recession, then the answer becomes pretty easy. It's the same answer that you would have before any recession throughout the history of the US. Make sure that you're invested in an allocation that matches your personal risk tolerance.

If you have a lesser risk tolerance, make sure that you have a higher allocation to bonds. Make sure that the cash you need, whether you're living off the portfolio or planning for a major expense in the future is liquid and not invested in the stock market and just get ready to ride it out. The best investment strategy is a long-term buy and hold strategy.

What If There's Total Economic Collapse? The Hard Truth

If you're not asking about a recession, you're asking about the possibility of a civil war or a total US economic collapse, then the answer becomes much more complicated because I, as an investment advisor, can't do anything to protect your portfolio from the total collapse of the US economy. And anyone who says they can is lying to you. You could pull your money out of the market and have it all in cash.

But that strategy has its own real risks. And I would argue that given where we are right now, the risks of having all that money in cash and potentially eroded based on what inflation does next are much greater than the risks of keeping your portfolio in the market.

The Best Investment Strategy When You Can't Predict the Future

I can't predict the future, but neither can anyone else. Your best bet right now is to stay invested in what works, what has been proven over the course of the past 100 plus years to work within the market. Make sure that you have the cash you need that you have your emergency fund, that your portfolio is in line with your risk tolerance, and then just keep watching and waiting to see what happens.

I keep an eye on all my client portfolios, I keep a close eye on what's happening in the news, and that's all we can do right now is just watch and wait and respond to events as they happen. But if you get caught up in this loop of trying to respond to things before they actually happen and anticipate what may happen next in this crazy time that we're living in, there's a big chance that you're going to make a mistake, you're going to take a swing for the fences, and it is going to go in totally the wrong direction, which is not something that I want to see happen to you or to your money.

Staying Hopeful During Turbulent Times

Bear with me as we go through these turbulent times. It's hard to see how we are going to get out of this situation, but at the same time, a year ago, it would have seemed impossible that we would have ended up in this situation in the first place. Even if you can't see through to the other side, remember that this world is full of committed, hardworking people who are fighting against fascism, who are fighting against authoritarianism, and it really only takes one roll of the dice for things to change significantly.

Whether you think that's going to be for better or worse, I don't know. But the best thing we can do right now is to stay calm, to focus on bringing joy and helping people where we can within our own lives, sharing the privilege that we have as younger inheritors, and keep doing what we can to protect the people and the ideals that are most important to us.

A Financial Advisor for Inheritors to Address Your Real Concerns

If you feel like your advisor isn't giving you the answers that you need to make it through this time and isn't helping you position your portfolio the way you want to see it, please reach out to me, katherine@sunnybranchwealth.com. Send me a DM on Instagram. If you have any questions, same way to get in touch with me.

I've got the full show notes below. Just click on the link and I'll look forward to talking with you on the next episode of Heir Necessities.