Federal budget proposals and their effect on investment strategies

Every year there is a lot of fanfare when a U.S. president submits their budget proposal for the upcoming fiscal year. The media jumps into action, predicting what this proposal will or won’t do for the economy and telling you how to invest your money based on what changes the budget may bring.

This can cause people to engage in emotion-based investing decisions – like selling stocks and getting out of the market. There can be misappropriation about the federal budget proposal and its effect on investment strategies.

Remember that a presidential budget proposal is just that, a proposal. It’s not law. Congress is the only branch of government authorized by the Constitution to make laws for spending and taxes. As the saying goes, “The president proposes, Congress disposes.”

That’s why having a long-term investment plan, one that lasts longer than a four- or six-year political term – and sticking with it – is so important. So the next time that you’re concerned with the news out of Washington, call your financial advisor.