Donald Trump’s win will have zero effect on my investment choices

DON’T get too upset about the possible consequences of Donald Trump’s win. The US election result has zero effect on where I am investing my money right now, writes Barefoot Investor.

We can’t control what goes on in the White House.

DON’T get too upset about the possible consequences of Donald Trump’s win. The US election result has zero effect on where I am investing my money right now.

BETH ASKS: I can’t believe the Americans could vote in such a loose cannon as Donald Trump. The experts are predicting he will be an absolute disaster. The share market has been a rollercoaster and I am wondering what I should do with my shares, given I am 10 years off retirement.

BAREFOOT REPLIES: There are many things we can learn from the US election, but the most important one is something I wrote a few weeks ago: experts are no better at predicting the future than my golden retriever, Buffett. The experts predicted Clinton had an 87 per cent chance of winning. Wrong. The experts also predicted that if Trump was able to pull a miracle, the share market would drop 13 per cent. Wrong. The US market has hit all-time highs this week, and now the media is going back to these so-called experts and asking them what happens next! And they say Donald Trump is crazy! The truth is the US election result has zero effect on where I am investing my money right now. Again, as I said a few weeks back, I just don’t think it matters who is in the White House in the short term, and in the long term compound interest takes care of itself. However, I’m not surprised that the share market is hyped up because Trump is clearly pro-business (even though he’s not a pro at business himself): First, he likes building things, and has promised to embark on one of the biggest infra­structure spends in history. Second, he’s not afraid of debt (as shown by his string of corporate bankruptcies), so I wouldn’t be surprised if he pushed things to the limit. Third, he’s committed to dramatically slashing taxes in the most capitalistic country on earth. Like Ronald Reagan, he’s planning on a “trickle down” approach — allow rich people and companies to pay less tax and they’ll stimulate growth that will eventually trickle down to the workers. Or at least that’s the idea. The final thing I’d say is this: the man lacks character. Whether it be the coach of a footy team or the CEO of a business, if you have a fundamentally flawed leader — whose decisions are based on their own vanity and ego — history has proven it rarely works out well. Still, I can’t control what goes on in the White House … the only thing I can control is what goes on in my house.

MY BROKER SENT ME BROKE

LINDA ASKS: My husband died in September 2014. I was too emotional to invest the money I received, so I thought I would go with a broker to reduce my stress in those raw, grieving days. In April 2015 I gave $30,000 to a broker — and by the end of August it was down $27,000, with just shy of $3000 left in my trading account! I was livid. Obviously I had words with the broker. He now has my account standing at $8000, saying he will make it back up to the $30,000, but the damage of trust has been done. I am between a rock and a hard place. If I take out my money, he has no chance of recouping what he has lost. If I leave it there I am afraid to do any trades in case it all disappears. I suppose my question is this — do I have any rights to recoup my losses from him?

 

BAREFOOT REPLIES: You may as well have given your money to Tom Waterhouse to go bet with. Your broker has zero credibility and you should deal with this immediately. As in right bloody now. Write a letter of complaint to your broker’s compliance manager that paraphrases what you told me, and attach copies of your statements. Sign off with the following: “Immediately withdraw all my remaining funds and compensate me for my losses.” Under the dispute resolution process the broker has 45 days to respond to your complaint. So to give them a gee-up, follow your letter up with a call to the compliance officer and use the words “I’m mad as hell, absolutely livid, and I am lawyering up”. Third, call the Financial Ombudsman Service on 1800 367 287 and complain. I can’t guarantee any of this will work, but it’s worth … a punt.

 

ARE WE A BANKRUPTCY CASE?

TERRY ASKS: I am humbled by the present state of the WA economy — my job is paying me 50 per cent less than what I was earning four years ago. I now earn $115,000 and my wife earns $70,000, we have a teenager in private school and we have dwindled away $120,000 in savings just to survive. Our house is worth $900,000 (owing $720,000), and we have car loans of $35,000 and a credit card debt of $50,000. We have now hit rock bottom and do not know what to do. Are we a bankruptcy case?

 

BAREFOOT REPLIES: You are certainly spending like it. Despite what you’re telling yourself, you don’t have an income problem, Terry — you have a spending problem. You “dwindled away” $120,000 (and $50,000 in credit cards) “just to survive”? Fair suck of the sav, Terry! Even on your present household income you’re pulling in $11,000 a month after tax, your mortgage is about $4000 a month. Even with a kid in private school, $300 haircuts, and fuel for the jetski, you should be able to make ends meet. You’re spending way more than you earn, and you’re basically broke. That can only keep going on for so long. Wake up and shake the sauce bottle, buddy. You are still spending like a high-earning FIFO when you’re all but ... FIFO-ed. Financially, you can turn this around within a few years without going bankrupt — but only if you and your wife are prepared to change your behaviour.

 

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The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice