Do tariffs and trade wars affect your investments?
Joshua P. Mersberger, CFP®, CRPC
Oct. 24th, 2019
How will this affect your investments?
We have been getting many questions lately from clients regarding the ongoing trade war and tariffs with China and how it will affect their portfolio. This topic has dominated news headlines and the financial markets for the last several months.
Our simple answer is that we do not expect this to a significant long term impact on the market as this is not a fundamental driver of our economy. Yes it will cause short term pain to the economy and will continue to cause markets to fluctuate up and down based upon the perceived chances of a trade deal.
If a trade deal is not reached, trade will simply move to countries that are not affected by the tariffs and life will go in. Certain products will be more expensive in both the US and China but this will not materially change the global economy. However, fundamentals drive markets in the long run and this trade spat will not materially affect fundamentals in the long run. World events will always cause markets to fluctuate in the short term but over the long run markets always revert to their long term averages.
This is why at Mersberger Financial Group we work with our clients to develop a disciplined Financial Plan that helps clients avoid making rash decisions when market volatility is upon us. If you invest based upon the headlines that dominate the news each day and week, you would think that the world is constantly ending and that the safest investment is cash under your mattress since the world is ending. Mersberger Financial Group works with our clients to attempt to overcome the negative news headlines and focus on the fundamentals that drive the markets and returns over the long run and tune out the noise.
Hope you find this educational and helps you to organize your financial life.
Have questions on this topic? Contact us.
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