Financial planners have 5 tips for what to do with your money before the inauguration

If you’re worried about short-term volatility, a high-yield savings account is a safe place to keep your money.

Every December, I’m eager to figure out new strategies for my money so I can ensure I’m in a good place at the start of the new year. However, with the presidential inauguration coming up, I found myself wondering how my finances would be affected over the next four years.

That’s impossible to predict, but I at least want a short-term game plan to follow so I can keep my money safe while I wait to see what happens in the long term.

I chatted with two financial advisors who gave me five tips on how to best manage my money over the next few weeks.

1. High-yield savings accounts help your money grow in the short-term

Certified financial planner Forrest Baumhover says high-yield savings accounts are good for getting through volatile periods.

“If you feel that things will be turbulent for the next couple of months, but you’d like to invest your money or put it to use after things have settled, then you might be all right shopping around for a high-yield savings account,” he says.

It’s important to remember that interest rates are variable and can change at any time. Politics can affect high-yield savings account interest rates, too. Policy decisions could affect the federal funds rate set by the Federal Reserve.

2. Consider CDs to lock in good rates

I told certified financial planner Roberto Figueiredo that I had extra cash in the bank that I wanted to keep safe before the inauguration. He says CDs are the safest option for me.

“CDs right now are still paying a decent yield, north of 4%,” he says. “If you have that excess cash and you don’t have any short-term liquidity needs, it’s certainly something worth exploring, locking in those higher rates for six months, a year, or 18 months.”

Unlike high-yield savings accounts or the market, Figueiredo explained that the interest rates on money you have in a CD won’t be affected by politics.

“CDs are FDIC-insured from the financial institution you’re putting your money into,” he says. “Rates are locked in when you take a CD out for the entire term you have it, no matter what.”

3. Add money to your emergency fund if it’s running low

In the past year, I’ve had to dip into my emergency fund to pay bills and cover expenses as my income dipped. Figueiredo says that putting excess cash into my emergency fund is a good way to protect my finances in case anything changes post-inauguration. Most financial planners recommend having at least three to six months of living expenses saved, but Figueiredo recommends as much as nine months.

“With a new administration taking over and expectations that different policies will be put into place, we could be faced with some short-term market volatility,” he says. “It is not a bad idea to review your cash needs for the incoming year and set aside a financial reserve to cover any expenses that may come up. If you anticipate a big expense such as purchasing a new car or undertaking a small home renovation project, it is worth building your rainy-day fund in case balances are running low.”

4. Check your asset allocations

I told Figueiredo that I’m nervous about keeping my money invested in stocks and index funds, since a new president might impact the market.

Figueiredo suggests first looking at my current asset allocations and seeing if it meets my risk tolerance.

“If you’re nervous about how a new president might impact the market on a short-term basis, it may be worth considering reducing your portfolio risk if you’re overweight a certain asset class or you have an oversized position in a certain stock.”

Figueiredo says the strong market performance over the past two years has led some portfolios to grow outside their long-term equities target.

“As we enter 2025, it is worth checking in with your financial advisor to verify that your overall asset allocation is still aligned with your risk tolerance and come up with a rebalancing strategy,” he says.

5. Don’t let political views color your investment decisions

Figueiredo also reminded me that it’s important not to let political views color my investment decisions.

“You don’t want to take excessive risk or reduce your portfolio risk when it could significantly impact your financial goals over the long term,” he says.

Because one of my top financial goals is planning for retirement, Figueiredo reminded me that liquidating my investments in an attempt to keep them safe elsewhere could come with tax implications or slow down my retirement planning.

“Rather than trying to predict the highs and lows, it’s really important to stay invested through a full market cycle and really focus on the time that you stay invested and not trying to time your investments,” he says.