Ask Doc I don't normally pay much attention to elections.
Our political system has left us with a bunch of self-interested leaders devoid of any ideas about how to govern and interested mostly in enriching themselves at the public's expense.
To be frank, facts and politics don't mix.
It's why I dislike government and institutions. They never admit when they're wrong.
But no matter your feelings on this election, it shouldn't be a reason for making a knee-jerk reaction with your investments.
Our readers come from all over the world, every walk of life, and various political viewpoints. But one thing unites us: We're all trying to improve our lot in life by taking an active interest in our wealth and health. Each one of us is just trying to improve ourselves one day at a time.
That's why I leave my personal politics out of all my newsletters – and out of most conversations, for that matter.
But I decided to look at one nonpartisan question in the wake of this week's results: How does this week's midterm election affect me?
Although it's a small sample size, since 1945, markets have done better under Democratic presidents. However, we also see greater returns when Republicans control both chambers of Congress than when Democrats hold majorities in the House and the Senate.
It's hard to say why the market reacts that way or even if it reflects anything the politicians do (or don't do). Some of the biggest Democratic-president/Republican-Congress years came during the Bill Clinton '90s... when the dot-com bubble was swelling valuations across the market... eventually ending badly for lots of investors.
On the other hand, Harry Truman faced a Republican Congress in 1947... and the market fell by 0.3%.
It'll take some weeks until we get all the final results as states continue to count mail-in ballots and Georgia faces a possible Senate runoff. And it will take even longer to see what the new makeup of Congress will mean for the economy and the markets before the next presidential election.
It doesn't do any good to stress about that now. We'll find out about the election results and outcomes in due time.
However, according to Wall Street legend Marc Chaikin, there is something you should be worrying about today...
According to Marc, a certain event next week will offer "by far the best way to protect and grow your money in what will surely be a very difficult transition for most people."
On November 15, he's holding a special free event to give you the full story, along with where you'll want to move your money for the chance to double, triple, or even quadruple your cash as the whole thing unfolds.
Now, here are some of the things on your minds this week... Keep sending your comments, questions, and topic suggestions to [email protected]. We read every e-mail.
Q: With rates going up, does your advice on what to do with cash change? – R.M.
A: Longtime readers know I recommend keeping an emergency fund – at least three months of expenses – of ready cash. That advice hasn't changed... You need to be ready for a financial emergency, no matter what is happening with interest rates or inflation.
An emergency fund needs to be liquid since you don't know when you'll need it. And you don't want to pay taxes or fees to get to it. This limits your options of where you can park your cash. A high-yield savings account is often your best bet for a higher interest rate without the limitations of a certificate of deposit or a money-market account.
By the way, lots of folks think that the U.S. Federal Reserve controls all types of interest rates. The only interest rate the Federal Reserve controls is the "federal-funds rate." This is the rate at which banks and credit unions lend to each other on an overnight basis.
Right now, the Fed is raising interest rates to combat high inflation. The idea is that higher borrowing costs will drive down prices and slow the economy.
In theory, if you can earn more overnight, you should also earn more for 90 days, one year, or 10 years. So most folks take the simplistic view that the Fed raising rates means that all other rates – like those on savings accounts, loans, or Treasury bonds – will automatically increase, too. But the Fed rate only marginally alters other interest rates. Supply and demand is what really drives interest rates you see in your brokerage or bank accounts.
That said, we are seeing rates on savings accounts rise. Last year, you'd have had trouble making more than 0.5% on a savings account. Now, we're seeing plenty of high-yield savings accounts offering 2% or more. So your emergency fund will bring in a higher interest rate. If you want to find the best rate for any account, visit NerdWallet or Bankrate.
Q: Can I use any of those memory apps to lower my dementia risk? – D.R.
A: You've likely seen those ads for smartphone apps that claim to boost your memory by playing games. However, no hard evidence suggests this is true. The problem is, these games don't actually challenge your mind enough, and the tasks usually don't translate into practical uses.
Consider the popular app Lumosity... In its early days, Lumosity claimed its games could reverse Alzheimer's disease and improve memory and focus. Early on, it made millions ($23.7 million in 2012 alone). It all sounded impressive, but when more than 70 scientists tested its theories, they didn't find evidence to support these claims. The company had to pay a $2 million fine in 2016 over unsubstantiated claims in Lumosity ads. Then it made its promises vaguer – and went right back to selling its app.
Don't waste your time and money on a bogus game. Instead, there's an easy, proven way to improve your memory... Getting physical exercise increases oxygen flow to the brain and allows hormones to be released that help brain cells grow. So if you're looking for a great way to keep your mind sharp, put down your phone and get moving. You can also try the "neurobics" exercises I share right here.
What We're Reading...
- Did you miss it? We're repeating a 2019 crisis.
- Something different: The latest in Big Tech layoffs... Meta slashes 13% of its workers.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
November 11, 2022