Looking for free diapers and low-cost baby products?
Diapers are expensive and a pain in the budget. Babies need roughly 8000 diapers before they’re potty trained, costing parents $2000 or more.
So we’ve put together some simple and legitimate options to help you save money. When you combine these methods together, you can literally save hundreds of dollars.
Try these easy tactics to get free diapers. It only takes a few minutes to fill out a form or sign up for a program, and the savings you’ll enjoy is truly worth it.
Table of Contents
Let’s start with the low-hanging fruit – free stuff from Target.
Target Baby Registry – Set up a baby registry at Target and you’ll get free diapers and wipes from The Honest Company and plenty more.
You’ll also receive a cool gift bag stuffed with free samples and a $50 coupon book with savings at major outlets like Starbucks and Liz Lange.
Here’s just some of what you get:
- Munchkin Latch 4 oz. baby bottle
- Baby Aquaphor diaper rash cream
- MAM newborn pacifier
- Johnson & Johnson Head-to-Toe lotion
- A 10-piece sample pack of baby wipes from The Honest Company.
- Pampers samples of diapers and wipes.
- Lanisinoh disposable nursing pads and breastmilk storage bags
- Johnsons’s “Baby’s Firsts” guide to first-year milestones
- Babyganics Moisturizing Daily Lotion sample tube
- Mustela Hydra Bebe body lotion sample
- Zarbee’s Naturals baby immune support vitamins
- 10% off any nursing bra and/or camisole.
Two: Sign Up for Amazon Family
Amazon Family (formerly Amazon Mom) comes with a free 30-day trial, or you can access it for free if you’re already a Prime member. Just create a child profile to begin and save up to 20% on diaper and baby food subscriptions. You’ll also get additional discounts on other family products.
Amazon Family is part of Prime so all shipping is free.
Refer your friends and get an additional $10 in Amazon credit to use for free diapers.
Three: Get Free Amazon Cards for Diapers
Wouldn’t it be great to get free Amazon cards and then use them for diapers and other baby products?
Good news – Swagbucks and InboxDollars give you that opportunity. Here’s how it works.
Swagbucks gives you rewards points for various online actions, such as using their search engine, taking surveys, watching videos and playing games. Then just redeem your rewards for Amazon gift cards (or cards from other stores) or as cash through PayPal.
Signing up is free and you’ll even get a $5 sign up bonus.
TIP: Download the app and perform many of the tasks on the go. You can easily earn $25 each month in Amazon cards with minimal effort.
InboxDollars is another loyalty company offering rewards for shopping online, taking surveys and watching videos. Redeem your points for an Amazon card to use on anything you want.
Four: Get Free Diapers by Signing Up with Diaper Companies
Diaper companies know that most parents find one diaper brand they like and use them exclusively as long as their child needs diapers.
Naturally, these companies want you to be loyal to their brand, and not to their competitors. So they’ll happily give you free diaper samples to earn your loyalty.
Huggies Rewards program offers free diapers and wipes when you redeem Huggies points. You can get 500 free points just for signing up here.
When you make a purchase of Huggies diapers or baby products, upload your receipt to their site to get more points added to your account.
Huggies recently lowered the number of points needed to acquire coupons for free diapers and baby products so saving money is easier than ever.
In addition to Huggies, check out the rewards programs at the other major brands:
More Free Samples
Honest Company – Jessica Alba’s environmentally safe company will send you 7 premium diapers and 10 baby wipes. The diapers contain no chemical bleaches.
Dollar Diaper Club – Get a free trial and they’ll send you 6 organic diapers and 10 wipes.
Everyday Happy – Receive a free trial box of premium diapers and a package of bamboo wipes.
Simply Right – Sign up on their website and this Sam’s Club brand will send you free diapers and wipes.
Five: Smart Couponing for Free Diapers
Check your local paper and online for diaper coupons and look for diaper sales at your local stores. By timing your coupons with diaper sales, you can really save on diapers, or even get them for free.
Here are a few places online where you can clip baby diaper coupons.
Six: Use Referral Programs for Diaper Money
A couple of companies offer lucrative referral programs that could add up to a lot of free diapers and wipes.
Diapers.com gives you $5 in diaper credit for each person you refer to their site. Sign up for their referral program here.
If you have an active Facebook or Instagram account, ePantry has a referral program. Post to your accounts and earn $8 for every mom you sign up.
Occasionally ePantry runs promotions offering up to $20 per referral.
Seven: Charities and Government Programs Helping with Diapers and More.
The National Diaper Bank Network helps low-income families with free diapers. The non-profit network has chapters nationwide so those in need can pick up diapers locally.
This is a great complement to food stamps and WIC, which do not provide diapers.
NeedHelpPayingBills.com aims to assist the needy with a variety of needs. Here is their free baby diapers resource list of organizations everywhere that are ready to help.
Eight: – Save by using cloth diapers
Washable cloth diapers are an environmentally friendly option for your child.
They can also help you save money, especially if you have, or plan on having, more than one child in diapers.
Nine: Call Pediatrician or Hospital for Freebies
Hospitals often give you stuff you need for your newborn, such as a free diaper bag or car seat. Check with your hospital before your due date to see what is available to you.
Your OB/Gyn doctor and pediatrician are also great resources to consider for free baby diapers, bottles, and formula samples. They can steer you in the right direction and they usually have baby samples right there in their office.
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your financial details.
Financial planning and analysis (FP&A) is the process businesses use to prepare budgets, generate forecasts, analyze profitability and otherwise inform senior management decisions of how to implement the company’s strategy most effectively and efficiently. The FP&A functions can be accomplished by an individual or a team working alongside other finance professionals such as the controller and treasurer and reporting to the chief financial officer (CFO). While FP&A is often performed by people with an accounting background, it differs from accounting by focusing primarily on forward-looking information as opposed to historical data.
Typical members of an FP&A team include financial analysts and one or more FP&A managers charged with coordinating the work of the analysts. In larger organizations, a director or vice president of FP&A oversees the overall process and strategic direction and communicates with the CFO, CEO and members of the board of directors.
To fulfill its function of providing information and insight connecting corporate strategy and execution, FP&A performs a wide range of activities. These can be divided into a few broad categories including planning and budgeting, forecasting and management reporting.
The central output of the FP&A process consists of long- and short-term plans. The job requires using financial and operational data gathered from throughout the company. A key part of the FP&A process is collecting and combining a wide variety of figures from operations, sales, marketing and accounting departments to produce a unified view of the entire business that can guide strategy decisions by senior executives and board members.
Producing budgets is a big part of the FP&A planning function. Budgets describe expectations for the timing and amounts of arriving income, cash generation, disbursements to pay bills and debt reductions. Budgets may be monthly, quarterly and annually. Often FP&A creates a rolling budget for the following 12-month period that will be reviewed, adjusted and extended at the end of each quarter. FP&A also creates income statements and cash flow statements.
One of the performance reporting functions of FP&A is identifying variances when actual numbers reported by business units don’t match up to the budgeted amounts. In addition to identifying and quantifying variances, FP&A can offer recommendations for strategies that could be used to bring actual results in line with expectations.
Reports and forecasts from FP&A may be presented to the board of directors, to the CEO or other senior executives or to outside stakeholders such as lenders and investors. At a strategic level, decision makers use these analyses to choose how best to allocate the company’s resources.
Public companies reply on FP&A to provide shareholders and analysts with guidance on revenue and profits for upcoming quarters and fiscal years. The accuracy of the guidance supplied to the markets can have a sizable effect on stock prices.
Along with the ongoing responsibility to produce budgets, plans and forecasts, FP&A may also be called upon to support specific management decisions. For instance, it might analyze a merger or acquisition proposal to enable management to decide whether to pursue it or not. Other special projects delegated to FP&A could include analyzing internal incompatibilities and bottlenecks and making recommendations about how to improve the company’s processes.
Initiatives to find ways to trim costs and make a business more efficient are also likely to involve input from FP&A specialists. Because it is in constant communication with all areas of the company in order to gather data for its budgets and plans, FP&A is well suited to optimization efforts.
FP&A’s responsibilities could extend to nearly any department in the company, from operations to marketing to finance. For instance, FP&A may conduct internal audits, research markets or evaluate individual customer profitability. FP&A could also be called upon to provide risk management insights or assess the financial impact of tax policy decisions.
Financial planning and analysis involves gathering financial and other data from throughout a business’s various departments and using that to generate projections, forecasts and reports to help executives make optimum business decisions. Annual and quarterly budgets and forecasts, profit-and-loss statements, cash flow projections and similar decision-making tools are all produced by FP&A.
Tips for Small Business Owners
- Financial planning and analysis is a job best handled by an experienced financial advisor. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with financial advisors in your area in five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
- The 80/20 Rule can help businesses gain insight into issues and opportunities so they can respond more effectively and efficiently. By identifying elements contributing most to a given outcome, businesses can better target resources to remove obstacles and exploit openings.
Photo credit: ©iStock.com/kali9, ©iStock.com/Maica, ©iStock.com/Korrawin
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Many potential homebuyers and investors overlook bank-owned properties, but for buyers who take the time to understand the REO process, these homes can be a significant opportunity.
Some homebuyers are intimidated by foreclosed and bank-owned homes because they often require more renovations — and a different type of negotiation — than other options on the market. However, some REO properties come at a significant discount, and, if you’re willing to work through some of the nuances of the post-foreclosure market, you can set yourself up for a great deal.
What is a Real Estate Owned (REO) Property?
REO, which stands for “Real Estate Owned,” is a term applied to foreclosed properties whose ownership has transferred to the bank or lender.
In order to become an REO property, it must go through these general steps:
- Loan Default. The homeowner/borrower defaults on (fails to make) their mortgage payments for a certain length of time, with the qualifying amount usually specified in the mortgage terms.
- Foreclosure. The lender initiates legal proceedings against the borrower to foreclose on the property.
- Auction. The property is then offered to the public at a foreclosure auction and typically sold to the highest bidder. If the property sells to a third party at the auction, the bank or lender recoups some of the cost of the outstanding loan balance, interest and fees from the sale of the property.
- REO Status. If the home fails to sell at auction to a third party, possession typically passes to the lender and it becomes a Real Estate Owned (REO) property. The lender prepares to sell it, which may involve evicting occupants and removing outstanding liens attached to the property.
REO properties are attractive to homebuyers or real estate investors for several reasons. In many cases, lenders are motivated sellers who do not want to sit on their REO inventory, and (depending on the bank’s history with the property) these homes may be priced at a discount. However, other factors — like the home being sold “as is” — may affect the ultimate price, so it’s important to work through the process methodically to make sure you account for every variable.
10 Steps to Buying REO Properties
The process for buying an REO home is similar to the standard home buying process, but there are a few key exceptions to keep in mind. Whether you’re buying the home to live in or as an investment, these 10 steps should help set you up for success with bank-owned properties.
Step 1: Browse Available REO Properties
Before you get too far into the process, take a look at the properties available in your target market or price range. There are several ways for prospective homebuyers to browse available REO properties:
- Bank and lender listings: Lender-specific listings, such as PennyMac REO listings, show all available bank-owned properties from a certain lender.
- Multiple Listing Service: Lenders and Realtors® often use the Multiple Listing Service to list REO properties, making it easy to find options from multiple lenders in one place.
- Real estate agent: A real estate agent will be able to find REO offerings from multiple lenders in your desired area.
- Online services: Other online services, such as Zillow, offer tools to look up foreclosures by certain characteristics or in certain areas. Some of these tools are free to use, while others may charge a fee.
Step 2: Find a Lender and Discuss REO Financing
Once you’ve found a property you are interested in, talk to a lender about your financing options. This is particularly important because of the timing of the REO homebuying process; lenders are motivated to sell and want to get these homes off of their books, so the more prepared you are with financing, the better.
One thing that can speed up the REO homebuying process is getting pre-approved by the lender that owns the home. With this pre-approval, the lender that owns the REO property will know that you are financially qualified to purchase the property, making them more likely to accept your offer.
Step 3: Find a Real Estate Buyer’s Agent Who Knows REO Homes
A buyer’s agent is a great partner to have while you navigate the home buying process. Your buyer’s agent helps make sure you are finding the best properties at the best possible prices, and they will use their experience to guide you through every stage of the process. Your agent should also be able to tell you if you need to hire anyone else, such as an attorney or an inspection service, depending on your state and situation.
If you are specifically interested in REO properties, try to find a buyer’s agent who works with REO properties frequently. This way, your real estate agent knows the ins and outs of negotiating with a lender, how to calculate the cost of necessary repairs, how to work within the lender’s timeline and how to prepare you for what comes next.
Step 4: Refine Your List of Lender-Owned Properties
Once you are working with a buyer’s agent, you can start narrowing down your list of REO properties. Some major characteristics that should be taken into account include the following:
- Listing price
- Significant repairs needed (and the overall impact on price)
- Location (and proximity to a school, workplace, or other desired area)
- Number of bedrooms and bathrooms
- Quality of neighborhood and surrounding areas
- Community resources in the area, such as parks, gyms, places of worship, etc.
- Lender-specific contingencies or requirements
Once you have taken your “must have” features into account, if you are left with multiple properties, refine your list based on “nice to have“ features like a large yard, a finished basement or an in-ground pool. Share your favorite homes with your agent, who can set up tours for properties at the top of your list.
Step 5: Get an Appraisal on Your Ideal Property
Some REO homes go for a great price, but buying a bank-owned home is not an automatic bargain. An REO property may be discounted based on an undesirable location or severe damage, or it can be overpriced based on comparable sales in the area or the lender’s desire to recoup the money spent. Either way, it’s a good idea to consider getting an appraisal so you know how the true value compares to the asking price.
An appraisal will help you get an objective estimated value, which you can compare to the bank’s asking price to see if the price is fair. During the appraisal, a licensed appraiser will take inventory of major systems (i.e., HVAC, plumbing), the structural integrity of the home, and check the prices of comparable homes in the area.
Note: An appraisal, which tries to estimate true home value, is different from a home inspection, which tries to take inventory of current and potential issues. An appraisal will help you decide whether or not the asking price is fair; an inspection will help you understand the repairs and renovations needed, which is critical for a bank-owned home.
Step 6: Make an Offer
Once you’ve found a property that is right for you, it’s time to make an offer.
Your agent will help you decide what kind of offer is likely to be accepted, put together the offer and submit it to the lender. Depending on the lender, you may need to submit special contract forms or paperwork. It is also common to attach an earnest money deposit check to your offer. This check (commonly 1-2% of the purchase price) is usually held in an escrow account until the purchase is finalized.
Make sure to consider the inspection process as you are making your offer. You may choose to make the offer contingent on inspection so you are protected if the inspection uncovers significant (and potentially dangerous) issues. If necessary repairs are well-documented, you can use that documentation to make your case for a low offer. Talk to your agent to understand your options when it comes to inspection contingencies.
Step 7: Have the Property Inspected
An inspection should be part of buying any home, but it is crucial for bank-owned homes. Real estate owned properties are typically sold “as is,” meaning the homebuyer is on the hook for any repairs — including major structural issues — that need to be fixed. An REO home may have been vacant for weeks or months, it may be neglected due to the homeowner’s financial trouble, or the previous owners may have removed items or damaged the property before vacating. Additionally, it’s possible that the property has gone through non-permitted renovations.
With that in mind, you need to be 100% sure you know what needs to be fixed before finalizing the loan. Having a home inspection done is the best way to take a thorough inventory of what repairs need to be made. The cost of these repairs should be added to the asking price so you have a better idea of what the home will cost you (and whether it’s still a good deal after repair costs are factored in).
In some cases, the lender may conduct an inspection when the home becomes bank-owned. If so, make sure you get a copy of the inspection report and review it thoroughly to decide if it is comprehensive enough to help make your decision.
Step 8: Negotiate Details
For better or worse, negotiating with a lender for a bank-owned home is different from negotiating with a homeowner.
On one hand, dealing with a bank instead of a homeowner means you don’t have to worry about emotional attachments to the home influencing the decision. You are also usually dealing with a very motivated lender who wants to get rid of the property (especially if it’s been on the market more than 30 days).
On the other hand, banks typically take longer to respond to an offer (or a question) than a homeowner because the offer must be reviewed by several individuals or companies. When the lender does respond, they will expect you to respond quickly to keep the process moving.
Working with a lender also means jumping through more corporate hoops. Banks are also more likely to present a counter offer because they must demonstrate they tried to get the best possible price for the property. In addition, the lender may ask you to sign a purchase addendum (which you should thoroughly review with your real estate agent or lawyer) and your final offer may be contingent on corporate approval.
Step 9: Finalize Your Loan
Now that you have submitted an offer, several things will be going on at once: the home inspection, negotiations with the bank, and the finalizing of your loan. During this time, you will be filling out paperwork and sharing information with your lender to ensure your loan is the right fit for the offer you have submitted.
Now is also the time to verify the status of the title. The bank typically clears the title before selling a bank-owned home but you can never assume this is the case. Contact the lender to see if the title has been cleared. If not, the lender may have a title company standing by to perform these services. If you are expected to do so yourself, hire a title company to run a full, insured title search before closing the deal.
Step 10: Closing
Once all of the paperwork is in place, you’ve wired in your down payment and your loan funds are in place, it’s time to close.
Closing on an REO property is similar to any other closing, with a few notable exceptions. If you’re unable to close by a predetermined closing date, the lender may charge a penalty for each day beyond the deadline. (You can try to avoid these delays by getting pre-approved for a loan and getting assurance that your financing will come through by a given date.)
At the closing, you and the lender representative will sign the documents necessary to transfer the house into your name and to finish your mortgage. After you’ve signed everything and the money goes to the right place, you’ll get the keys and a new title: homeowner.
Is an REO Home the Right Fit For You?
A bank-owned home can be a great opportunity for homebuyers or investors to find a good deal — but only if you’re willing to be patient and thorough. Dealing with a lender rather than an individual seller may mean slower response times and a more difficult negotiation, but it can lead to a potentially lower price from a motivated seller that has already handled outstanding taxes.
Browse PennyMac REO listings to see available bank-owned properties from PennyMac, or call a PennyMac Loan Officer to discuss your options today.
It’s amazing how things change when you have kids. Before kids, weekend getaways and trips were fairly easy. When we needed to take a break, I remember we could look at the calendar and twenty minutes later, have a few dates to run by work for time off. Even the destinations would already be top of mind and after looking for deals on travel sites and asking around, we’d settle with whatever had the best price. Pretty easy.
Fast forward a few years and now we’re parents of an eight-year-old and a four-year-old.
Those first few years with our little ones were honestly rough. We’re trying to coordinate between two jobs and one school schedule. It was tough finding the perfect time to take a week or so off. Once we had our dates, we’d then have to make sure that we could find a deal. Thankfully, we’ve gotten a little bit wiser. We found our footing and came up with our little system for timing our vacations and snagging some good savings. We’ve also found some spots that allow us to unwind without breaking the budget.
Affordable Family Vacations to Take This Fall
While school is back in season, that doesn’t mean you have to write off the rest of the year. You still have time to take one last getaway to recharge your battery, have some fun, and connect as a family.
To make things easy for you, I want to share a few of our favorite spots that both we and the kids enjoyed. The cherry on top? They’re also affordable spots!
Daytona Beach, Florida
If you’re looking to escape and have some beach time, then Florida is the way to go. However, staying in Orlando is not on the list if you’re looking for a chance to relax and actually save money. Instead, soak up some beach time before the weather gets too cold and hang out for a bit in Daytona Beach.
When we did our trip last October in Florida, it couldn’t have been more perfect. The weather was still warm, the large crowds of tourists were gone (along with the overpriced hotels), and there were plenty of things to do around.
Racing fans can enjoy the Daytona International Speedway or if you’re in the mood for stars, you can head over to MOA’s planetarium. And if your kids really want to visit the Magic Kingdom or Universal Studios, you can make it a more affordable day trip rather than blow your budget by spending your whole time there. We once went to Universal right after Thanksgiving and were able to skip waiting in line because it was so quiet.
Charleston, South Carolina
We took trips to Charleston for the last few Decembers and I have to say, we’ve enjoyed every one. While the temperatures have cooled down a bit, making beach time minimal, we still managed to be out and about. Throw on a jacket, wear your fall layers, and you’re all set to hit the town and enjoy some history and food.
You have to visit The Tavern at Rainbow Row. Besides being the oldest liquor store in the country, the vibe there is incredible. It’s small, but the selection is wide. Want to have an incredible lunch that’s still cheap? Try out The Blind Tiger. The truffle duck, bourbon bread pudding, buffalo cheese curds are delicious.
Asheville, North Carolina
One of our favorite low-key trips we’ve taken was a camping adventure with some friends just outside of Asheville. Being able to see the mountains shift into autumn colors was incredible. If you’re a photographer or love being outdoors, you have to take a trip here. It’s so peaceful and the views are amazing. For the parents, Asheville is the hot spot for fantastic food and a wide array of awesome breweries.
After spending your days enjoying the parks and maybe getting some tubing in, treat yourself and the kids to Double D’s Coffee and Dessert. It’s a cool double-decker bus in the city that’s also nearby Wicked Weed brewery.
Tuxedo, New York
If you absolutely love New York City but also relish some peace and relaxation that a more rural spot gives, then you should check out some of the small towns upstate.
I may be a little biased since I lived here for a few years, but fall is pretty much the best time to visit. You can truly have the best of both worlds with renting a spot in a town just outside the city. The Metro-North Railroad means you can take a train to New York City, allowing you to enjoy a scenic ride and skip put on the nightmare of driving in Manhattan.
Have your day trips to shop, visit the museums, and explore some of the best restaurants. You can then head back to your affordable getaway spot and enjoy some of the local events including celebrating autumn with exquisite apple cider.
Saving Up for Family Trips
While you hunt for the deals, you can start now saving up for your trip. You can create a vacation fund as separate savings to keep you motivated.
Using a tool like Mint makes it easy to track your progress and help you find ways to trim your budget a smidge so you have more money for fun during your trip. Knowing our money leaks allowed us to try some fun monthly challenges to sock away an extra couple hundred dollars. Keep your vacations debt-free also means there’s less stress as you don’t have to worry about a bill afterward. Double win in my book!
If you’re looking for tips, please check out my post on how to shift gears and become a savvy saver. It’s much easier than you think and you’ll be surprised at what you can accomplish in one month.
Your Take on Family Getaways
Wherever you go, I hope you have a wonderful time together. Now that you know my favorites, I’d love to hear about your spots. What have been some of your best vacations together?
Here on the Best Interest, I provide a lot of “you should be investing!” advice. I talk about the power of long-term investments. And stock market strategies. And even about my specific investment choices. But today is different. Today’s post is about the upcoming market crash. Well…it’s coming eventually.
Perhaps you’ve come to believe that I’m an unwavering bull. A pure optimist. That I think investments can do nothing but increase in value. But that’s not true. I know the crash will come. It always does.
And that might seem scary. If the crash is coming, then why not do something about it? So that’s what today’s post is about. Even though we’re aware that a market crash is coming (eventually), we can take a step back and think about it rationally.
Being a Bull Before the Market Crash
Here’s a prediction.
I predict that I will eventually make a blog post where I say something like,
“I bought some shares of an index fund this month—just like every other month. And I think it’s one of the smartest things you can do as an investor.”
And after that future blog post, the market will proceed to fall 30% over the next few months.
Some people will then look at the Best Interest and think, “Pfff! This guy Jesse doesn’t have a clue what he’s talking about! He invested a few thousand bucks right before the market crashed!! What a dummy!”
I’m calling it now. It’ll happen. And I understand why it will appear like I’d be a dummy.
So let’s dig in. Am I a dummy?
Historical Data: The Market Crash Always Comes
The market crash always comes eventually.
Bear markets—where the stock market value drops by 20% or more from its previous high—have occurred 12 times since 1929.
|Years of Bear Markets||Percent Drawdown from Previous High|
|1929 – late 30s (Great Depression)||-86%|
|1956 – 57||-22%|
|1961 – 62 (Flash Crash of ’62)||-28%|
|1968 – 70||-36%|
|1973 – 78 (Bretton Woods + Oil Crisis)||-48%|
|1980 – 82||-27%|
|1987 – 88 (Black Monday)||-34%|
|2001 – 05 (Dot Com Bubble)||-49%|
|2008 – 09 (Financial Crisis)||-56%|
The market ebbs and flows, oscillating between “unsustainable optimism and unjustified pessimism.” If we believe the assumption that stock prices are current unsustainably optimistic, then it’s believable that a serious bear market could happen in the next few years.
But lesser corrections—typically defined as at least a 10% drawdown—occur even more frequently. Since 1950, there have been 37 corrections of 10% or more. That’s more frequent than one every two years.
It doesn’t take Nostradamus to predict a future market downswing. I’m not calling a 1-in-1000 event. Market corrections happen all the time.
“But if he gets elected…!!!”
You can find arguments from both sides of the political aisle that certain parties lead to better stock market performance. But let’s investigate the data itself.
First, let’s look at the president only. But heed warning: this is a slightly dangerous game. Does the president alone have enough influence to affect the stock market? Will the answers we find here be conclusive of causation? Or will they only present correlation?
From 1926 to 2020, we have 95 years of S&P 500 data. During that time, we’ve had 48 years of Democratic leadership and 47 years of Republican leadership. Republican years saw an average S&P 500 return of 9.0%, while Democratic years saw an average return of 14.9%.
That’s a pretty big difference! But is it causal i.e. one thing causes the other to occur? Can a system as complicated as the stock market be tied down to a single influencing variable like the president’s political party? Probably not.
After all, that’s only 23 presidential terms and 15 individual presidents. Eight Republicans and seven Democrats. Not exactly a huge sample set.
Keep this in mind for the next time a President tweet-brags about the stock market’s success.
President + Congress
But there is another working theory worth inspecting. The theory is that our government is more efficient when the Congress (both Houses) is controlled by the President’s party. If the President and Congress work together effectively, then we all benefit. It’s a “teamwork makes the dream work” situation.
In the 95-year period since 1926, we’ve had 48 years of President/Congress unification (14 years Republican and 34 years Democrat) and 47 years of division (33 with a Republican president and 14 with a Democrat). The market performance during these periods is very interesting.
|President / Congress||S&P 500 Average Annual Return|
|Dem / Dem (34 years)||14.5%|
|Repub / Repub (14 years)||13.9%|
|Dem / Repub or Split (14 years)||15.9%|
|Repub / Dem or Split (33 years)||7.0%|
|Total Unified (48 years)||14.3%|
|Total Divided (47 years)||9.7%|
Is this causal? Does a unified Federal government ensure that the economy and stock market perform better? I doubt it’s conclusive. But it is interesting nonetheless.
The market trends upwards no matter who is in office, but it appears that political cooperation might help grease the wheels.
The Silver Lining of Market Crashes
Back when we consulted Mr. Market, one big takeaway was:
The only two prices that ever matter are the price when you buy and the price when you sell.
Ask yourself: what are your investing plans are for the next few years? Are you going to be a buyer—someone who is investing for the future? Or are you going to be a seller—someone who has invested for the past few decades and now wants to live off those investments?
If you’re a buyer, then a market crash has a pretty significant silver lining. Cheaper prices! If the market declines, then you get to invest at lower prices. It’s the easiest way to increase your long-term investing potential. Buy low, sell high. Dollar-cost average investors relish these chances to decrease their cost basis.
If you’re a seller, let’s look at how your past 30 years have been. The S&P 500 value was around ~350 in 1990. And now it’s at ~3500, or about 10x higher. If the market drops 20% next week to 2800, then your returns are only ~8x compared to 1990. But an 8x return ain’t bad!
“If the market crash is coming…why not sell now and wait to re-invest after the prices drop?”
Before I answer the question above, let’s consult Peter Lynch—who is considered one of the most successful investors of all-time.
Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves.
What exactly is Lynch saying? How do people lose money by “preparing” for corrections?
People lose money “preparing” for corrections because they sell too soon and then don’t know when to buy back in. It’s that simple. Both actions—selling too soon and not buying back in soon enough—can cause investors to miss out of years of growth and years of dividends.
That’s why Peter Lynch’s quote rings so true. Timing the market is hard.
So we don’t sell in preparation for a crash. But what about saving up cash and waiting to buy? Why not hold cash, wait for the 10% drop (that we know happens every 2 years, or so) and buy in then?
Well, I looked at that too. Back in March ’20, my “Viral Stock Market Strategies” article (get it? viral?!) looked at an assortment of supposed strategies that involved holding onto cash while waiting for the market to drop. I back-tested these strategies against the historical S&P 500 data, and simple dollar-cost averaging beats all the “wait for a drop” strategies.
You think there’s a market crash coming? I know, me too (eventually). There’s certainly a chance that holding onto cash and waiting for the crash is correct right now. But if you try that tactic over time, it’s a losing strategy.
Don’t sell. And don’t wait to buy. Carry on with your normal investing cadence.
Don’t do something. Just sit there.
“But what if it’s the crash?!”
What if what’s coming is the big market crash? The mother-of-all-crashes! What if society falls apart? Or if a meteor hits Earth and life changes as we know it? What if we all start scavenging for beans and scrap metal and fuel for our souped-up dirt bikes?
Scary questions, but they have a pretty simple answer. If an existential threat ruins your investments, then the stock market will be the least of your worries. That’s it. If “the big one” hits, then the stock market will be one of many societal structures that no longer matter.
If it’s not “the big one,” then the market will recover. It always does.
Why? Why does the market always bounce back? In part, it’s because humans are resilient. We learn and grow and work towards progress. While this year’s COVID market recovery can be attributed to many different factors—like the Federal Reserve lowering interest rates—it can also be attributed to human resiliency.
If “the big one” is coming, then shouldn’t you just “YOLO” and spend your money now? Yeah, you should. I suppose we all need to do some probability analysis.
- What are the odds that “the big one” is about to come and you look stupid that your investments become worthless?
- What are the odds that “the big one” never comes and you wish that you had invested in your younger years to enable retirement?
I’ll take my chances and save for retirement.
So, am I a dummy? I hope I’ve convinced you otherwise.
Even though we know that the stock market will eventually succumb to 10%, 20%, or even larger drawdowns, there’s no basis that you’ll benefit by trying to wait or time that market crash. It might work, but it usually doesn’t. That’s what the historical data tell us.
Waiting for the election doesn’t matter either. Democrats, Republicans…the market does its own thing. There might be some causality, but it’s tough to tell.
There are silver linings in corrections and crashes. If you’re investing for the long-term, then corrections enable cheaper prices and greater returns.
And if this market crash is “the big one,” then none of this really matters. It’s hard to blog if the electrical grid fails.
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