What will Labor do to my wealth?

Hi Scott,Given the way the Liberals have self-destructed this week, it’s looking increasingly likely they’re not going to be in office next year. Yet the thought of Bill Shorten making it into office terrifies me. I am 54, earn $110,000 a year, and have an investment property. Should I be worried? How do I prepare?

Rod

Hi Rod,I wouldn’t advise basing your long-term investment decisions on short-term politics. (After all, the way Canberra craters, next year we could have Kyle Sandilands and his deputy Jackie O having a tilt at the leadership.)A good case in point is Donald Trump, who the experts suggested would be a disaster for the US economy, and who has (thus far) proved everyone wrong.Having said that, Labor’s proposed policies ‒ restricting negative gearing to new properties, and halving the capital gains tax discount ‒ will almost certainly serve up a short-term hit to our already fragile housing market.A study from RiskWise Property Research and Wargent Advisory suggests Labor’s proposed policies would cause a 9 per cent fall in house prices in NSW and Victoria, 7 per cent in WA and the NT, and 6 per cent in South Australia and the ACT. That’s a guess, of course, but an educated one.Investment legend Warren Buffett has said that he’s never based an investment decision on the current state of the economy, or on the politics of the day. That’s because he knows that, over the long term, the future is incredibly bright.

Scott