How the Biden Administration may affect your Portfolio

Invest Better

11 January 2021

How the Biden Administration may affect your Portfolio

Election fever is over and politics can now go back to being boring but since you are here I suppose you are more interested in how the new administration’s policies may affect your investment portfolio.

So what are the Biden stocks to buy and where should you be looking to invest? What will the Biden administration mean for the US and global economy? There are a number of proposals however we have highlighted a few.

Once we see these proposals put into action, we can expect to see more investments in Impactful or Social Investing funds and you can read our article on what that is here.

The Environment

The Biden administration has set out a plan to overhaul the US energy industry by investing heavily in clean energy infrastructure alongside building new energy efficient homes. Between $2 and $3 trillion dollars will be put towards green industries and technologies.

He has also signed an executive order for the US to rejoin the Paris Climate Accord COP26 since he has committed to make the US Carbon-neutral by 2050.

Decarbonise the Power Sector by 2035

The aim here is to establish a US wide clean energy standard, reform and extend tax incentives for clean energy and energy efficiency.

Should this plan come into effect, we could see more investments in alternate energy and renewable energy companies. Companies in this sector that produce, transport and distribute renewable energy will benefit from the tax breaks and other incentives.

Companies that still operate in the traditional forms of energy like fossil fuels may see lesser demand and less growth.

Move further towards Zero-Emission Vehicles

This is a trend we have seen get stronger over the past two years especially when we look at companies such as Tesla, NIO and traditional car manufacturers who are now making hybrid versions of their petrol and diesel vehicles.

With the new administration’s plans in place, we expect to see more investment in Electric Vehicle infrastructure such as charging stations, increased investment in research and development for battery technology and aspects of the public transport systems becoming more green. The proposal also includes incentives for manufacturers who redesign their factories to produce Electric Vehicles and the eco-system around it.

As these plans unfold, we may see more people adopt electric vehicles due to improved battery technology, cost reduction due to incentives and rail companies that are focused on being greener.

Combustion engine manufacturers and their part suppliers will see a drop in demand and have a weaker business outlook.

Real Estate and Housing

The proposal is to update up to four million buildings over a four year period, making them net-zero by 2030. This encompasses the lighting, electric appliances, and advanced HVAC systems.

Part of this proposal includes improve energy efficiency by cutting carbon emission in current buildings by 50% by 2035. It includes climate proofing two millions homes over four years through cash rebates and providing financing for people who upgrade their homes.

Companies that provide insulation, heating ventilation and air condition companies including electrical companies involved in this sector should see greater demand.

Green Tech

There will be an increase in investments for research and development companies. The proposal is to invest $400 billion over a four year period in companies, projects and initiatives in order to meet to carbon goals set.

This will beneficial for companies with existing clean energy technologies which is positive news for any portfolio with these types of companies or stocks.

Taxes

The Biden administration proposed to increase corporation tax from 21% to 28% and should the proposal go through, it will have a direct impact on the market.

Estimates by Goldman Sachs suggest the increase in corporate taxes and high earners in the state could lead to a 9% decline in the value of the S&P 500 Index if the price to earnings ratio remain the same.

On Shoring

Trump had an agenda with regards to onshoring and it is set to expand under the Biden administration. The Biden administration has highlighted this as an important aspect of improving the US economy by encouraging more companies to produce locally.

Biden’s proposal outlined here highlight some detail; a manufacturing and innovation strategy as it was termed that will see incentives and tax benefits for companies which should encourage more US companies to invest in the US.

As this proposal in put in place and gains momentum, companies that have a large exposure in their supply chain internationally may be negatively impacted.

Final Note

It is important to realise there are a number of hurdles that need to be overcome and that includes various aspect of going through congress, signing executive orders and other interesting aspect of the US government system.

Should these proposals be taken onboard and implemented, one can expect to see a significant investment in clean energy including research and development, making existing homes more energy efficient and increased employment in these sectors.

Electric Vehicle manufacturers should see tax incentives as charging stations and other relevant infrastructure such as public transport (rail) plan to adopt carbon friendly measures.

Investors in clean energy funds or ESG funds that focus on environmental, social and governance should see more capital coming in as the government increases investment in companies in that sector.

There are other proposals by the Biden Administration that have not been covered and if you are interested in reading further, they can be found here.

Why You Need to Set Goals

Living the Life

4 January 2021

What is a Goal

A goal is an aim or a purpose you wish to accomplish in a particular setting be it life, career, relationship or financial. Goals are important and if it is not something you already knew, you are about to discover one of the most simple but important aspect of being successful.

In his book Goals!, Brian Tracy outlines 12 steps you can take to accomplish any goal. I read this book and I found the lessons useful and applied them. You can read the reviews on this link.

In this article we are looking at the main reasons why you need to set goals.

Time is Finite

We know there are 24 hours in a day yet some people seem to get more out of the day than others. Why? Using a single day as an example is not the best way to explain this so it makes sense to look at how people spend their time over a period of time.

We spend a large portion of our time at work during the working week going to the office, being at the office and travelling home from the office. This alone adds a new twist to the phrase ‘home office’ since our offices are much more like homes considering how much time we spend there.

In order to make the most of the working day or weekend, we need to set goals so we determine what needs to be done and how much time needs to be dedicated to that task. We need to set goals because time is finite and we need to determine beforehand what needs to be done in the time we have.

Resources are Finite

Every tangible resource is finite and the world is not waiting on us. If we consider a task worthwhile, we need to plan how much time and resources will be required.

These resources could be within our power or it could be something we depend on other people in order to complete our task. In any case, we do not have infinite resources and goal setting will help focus on the resources we need so we can apply them effectively.

You are not Immortal – Not yet at least

We are not immortal and without goals, we have a tendency to spread ourselves too thin. Wanting to do everything for anyone that asks and disregarding what is important.

Setting goals allows you to make an account of your time, your skills and your strengths at least. You know what you are able to do and what you are unable or not so good at, so you outsource or delegate or postpone as the situation may demand.

Without setting goals we become unsure of we are looking to accomplish and can spend time looking in the wrong places, or interacting with the wrong people who will not add value to the task at hand. We also have an increased risk chance of burning out.

The aim is to accomplish balance – work and rest and play depending on who you are and what you get up to. Our resting time or playing time is just as important as our working time since we gather inspiration for what we are working on or just simply resting from work which is equally as important.

Priorities – Not everything is important at all times

This is one of those things that we hear about but do not apply correctly. By setting goals, you are making yourself think about what is important and in what order while taking any dependencies into account.

Without setting goals it becomes difficult to determine what task is important, what task needs to be done first, how much time a task should take and at which point we escalate or delegate.

Establishing priorities gives you an opportunity to decide if it is relevant, important and how much effort or resources are required to complete the task. These points are important because they improve your chances of success.

If first you do not succeed, try again holds true only if you know where you went wrong in the first place otherwise you are most likely repeating the same thing in different ways whilst expecting a different outcome and we know what the definition of insanity is right?

Confidence and Willpower

If you have never experiences the feeling of accomplishing a goal, you need to definitely set one. It is one of the best feelings and our brains actually reward us with those feel good chemicals.

Beyond that, we get a boost of confidence to take on even more challenges. We stay motivated and it lifts your mood, improves your mindset and ultimately is another win in your belt or trophy in your cabinet.

Final Note

A goal is an aim or a purpose you wish to accomplish in a future date. In our busy lives it is important to take time and set goals after giving them much thought because it allows us to be accountable to ourselves on how we have spent our time and resources.

Not everything is important and not everyone is important. Setting a goal will allow you to determine this without neglecting important details or relevant people along the way.

Setting goals even small ones and achieving them will boost our confidence, improve our willpower and help us approach much bigger goals with a sense of calm and determination.

Goals allow us to achieve balance in our activities so whilst we are not hammering away at goal related tasks, we make time to rest, play, go for a walk, speak with a friend and take time to reflect so that when we have accomplished the goal, we can share that success with people.