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How Will the Election Affect My Investments?

How Will the Election Affect My Investments?

February 13, 2024

When friends and clients ask me this, I always say the same thing. It’s not prudent to let your politics drive your investment strategy.

This is an election year, so we will all hear TONS of messages about the candidates and how they will affect the investment markets. Remember a few things:

  • The “financial media” is better thought of as the “financial pornography” business. The constant stream of messages is designed to be exciting and provocative and to keep you engaged long enough to see a couple of commercials. The messages are NOT targeted at your values and financial goals and those messages will most likely NOT help you have more financial success.
  • History says that political leaders do NOT have much impact on the performance of investments.
    • If a Democrat is president, the S&P 500 has averaged 14.9% vs 10.7% return when a Republican is president.
    • If Republicans control both the House and the Senate things tend to go better.
      • If a Democrat is president and Republicans control Congress the average S&P 500 return is 18.2%
      • If a Republican is president and Republicans control Congress the average S&P 500 return is 16.1%

  • History says that presidential election years are pretty good for stocks with an average return 11%.

  • History shows that the U.S. stock market grows pretty consistently over time.
    • Since 1960, the average 10-year rolling return for the S&P 500 is 15.5% each year.
    • Since 1960, the average 5-year rolling return for the S&P 500 is 14.8% each year.

  • History shows that the S&P 500 stocks are one of the most effective ways to grow your money faster than inflation. This allows you to buy more in retirement with the money you save today.

So, generally, as far as election years and your investments are concerned, you are better off ignoring politics. If you have a comprehensive financial plan that is focused on your values and on moving toward your financial goals, you should stick with that plan.

 

If you DON'T have a comprehensive financial plan, maybe you should consider getting started. A great first step is a visit with an experienced, highly-trained, CERTIFIED FINANCIAL PLANNER™ professional and Behavioral Financial Advisor to help better understand your options. I love to meet new people. So, follow this LINK to find a time for us to have a get-acquainted visit.

I am a financial planner who is an advocate for my clients ALL THE TIME – a fiduciary financial planner. I provide guidance based on clients’ best interests, not commissions or sales quotas. I think it’s the best way to serve clients and I am thrilled to work this way all the time.

And yes, I’m still taking on a few great families to be part of my financial planning practice.

Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.