To help you figure out what the election could mean for your cash situation, here’s a look at the top five short-term effects on finances and money decisions, as we gear up for the ‘mother-of-all-elections’!
1) Stock market gains or losses due to market volatility
When election fever hits, stock markets may, in the short-term, be affected due to investor confidence.
In a recent Bloomberg article, it was noted that the level of uncertainty surrounding Malaysia’s vote is showing through a weaker Ringgit leading up to the vote.
In fact, political shocks around the world of late (i.e. Trump’s victory and Brexit) are the reasons why investors are extra cautious.
But what does all this mean for our money in general? For starters, there are potential gains and losses expected – especially in currency investments. The good news is that there is also an opportunity to make advances from pre-election rallies.
2) The plight of the real estate business
Folks in the real estate line – more specifically, the front line i.e. real estate agents – may need to brace themselves for lower property sales and fewer rental opportunities as well.
This may be linked to reluctance from the general public to make any sudden moves.
People may hold off from buying property, renters are likely to stay in their contracts for the time being and owners may be unenthusiastic to sell – unless for desperate/urgent transfers.
Much of these reservations are related to general uncertainties leading up to, and following, the elections.
Consumers are largely concerned with how it might affect them directly and indirectly, if in the unlikely (but not improbable) event, the opposition does win.
Conversely, even if the current government stays in power (as many do expect) – consumers want insight into property prices, banking regulations and fiscal policy, etc. before moving forward.
Thus, for these reasons and more, things like housing and other major life decisions involving big money are likely to be put on the back burner for the next few months.
3) Ventures into small business
Even small business can be risky business in times of uncertainty. Even though the economic climate in Malaysia is relatively stable, the outcome of the election could see many changes to the business environment, no matter the victor.
Those considering trying their luck in small business ventures may be hesitant to start right now; even those pondering leaving their jobs might choose to err on the side caution and stick it out.
Is all this waiting or delaying really necessary? The answer is – it depends. This is because certain areas tend to experience booms during (and after) elections as others experience temporary slumps.
While businesses linked to tourism and real estate might struggle a bit in the short-run, small industries like business management (e.g. accounting and tax prep, for example), short-term rentals as well as food and beverage, are likely to remain stable.
4) The cost of stockpiling
Owing to the fears of post-election chaos and shortages, consumers often hyper prep and heavily stock up on sundries.
While it is necessary to have an emergency food supply, the effect of excessive stockpiling among consumers could see short-term, indiscriminate price increases for grocery items that are not controlled or tariffed.
If you experience a heavy and unfair price hike – especially on necessities like rice, oil or baby milk, be sure to file a complaint with the Consumer Complaint Management Centre.
5) Overall spending
Again, caution is the key word for personal finance as Malaysia goes to the polls and also in the months that follow.
Consumers are likely to save more and spend less – especially on what may be considered frivolous goods. For instance, purchases of electronics (upgrades), jewellery, expensive furniture, and holidays, etc. may be deferred for now.
Similarly, larger spending that involve loans could also be delayed – such as home renovations and new car purchases.
In any case, these financial pauses are expected to only be temporary. Moreover, you don’t have to follow these trends if you are financially secure i.e. with healthy savings and strong income streams.
Instead, continue to plan your expenses and budget well for larger purchases. For instance, if you are financially ready to buy a home, there is no time like the present!
Focus on fixed repayments rather than floating or variable offers as the market may be unpredictable in coming months; make affordability a priority, and do shop around for the lowest rate.
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