Election Night and the Dividend Investing Portfolio

Tonight is the night of the 2012 election.  It is important push politics aside and focus on things we can control, like our portfolios.  Dividend Mantra just posted Ignore the Noise  for those who may have difficulty in doing this.

Regardless of who wins, there are 3 forces that will minimize the growth of the dividend investing portfolio until early 2013.  They are as follows:

1)Free capital will be used to develop my newest property.  I must put family first and we need a decent roof over our heads, as this will not be a rental investment.

2)My goal of paying off my student loan (only debt that is non-real-estate) by March of 2013 is going to be very difficult and I would really like to make that happen.

3)The fiscal cliff.  There may be troubling times ahead for our economy if politicians let us fall over the fiscal cliff.   If new legislation does not take place, taxpayers will see an increase of 2-5k increase in taxes next year.  The country will also face 600 billion dollar combination of tax increases and harsh spending cuts.

The future is bright for the dividend investing portfolio.  The fiscal cliff is the only reason mentioned that will have an effect on Mr. Market.  And out of it I think there will be excellent stock valuations for future purchases.  The purchases, will be more frequent and larger in size, due to the fact that I will have plenty of free capital once my home is complete and my student loan is paid off.




Disclaimer: I am not a financial planner, advisor, or accountant. The financial actions mentioned were only suited for my own risk tolerance, strategy, and ideas. Copying another's financial moves can lead to large losses. Each person needs to do their due diligence in researching and planning their own actions in the financial markets.  

Dividend Investing and Politics - How will it affect you?

It was recently announced that Mitt Romney's Vice President pick is Paul Ryan.  For those who don't know, Paul Ryan places a HUGE emphasis on fixing our country's fiscal crisis.  If elected, 2 major changes to our tax code could take place and have great impacts on our investing strategies.


1)Ryan "promotes saving by eliminating taxes on interest, capital gains, and dividends; also eliminates the death tax." He believes that double-taxation on the American people is unfair.  Period.

2)Ryan "wishes to replace the corporate income tax – currently the second highest in the industrialized world – with a border-adjustable business consumption tax of 8.5 percent. This new rate is roughly half that of the rest of the industrialized world."

What impact would this have on the way we invest?  Let me dwell on the first point.  No taxes on dividends?  Awesome- more money we can keep and continually re-invest for greater compounding returns.  Not capital gains taxes?  Great when stocks go up we can sell and keep all profits and invest into stocks with lower p/e ratios or discounted stocks etc.  We would also be able to sell our rental properties and use all of the profits to invest in cheaper rentals as well, without worrying about our profits being taken by the government.

Now with the second point... Current corporate tax rates sit around 39.2%, putting the United States rate just below Japans 39.7%.  Now imagine how much more profitable companies can be if they had their tax rates slashed by over 30%...  This provides a lot more room for growth of our dividends and capital, which again, wouldn't be taxed.   =)


If Romney and Ryan make it to the white house, how do you think your investment strategy will change?  If Obama and Biden are re-elected, will your strategy change as well?