Should The Upcoming Election Affect Your Investment Decisions?
Elections tend to bring out strong emotions. A presidential election year can especially cause excitement or despair, depending on your side of the aisle. This highly polarizing election certainly isn’t an exception.
It’s emotions like these that can completely derail an otherwise successful investment plan. During this emotional time period, please remember that emotional investing is often the exact opposite of what will lead you to long-term success.
This is the 45th presidential election, and although it is one rife with uncertainty, having a new leader in the White House is something the economy has experienced before. If we look at the data, rather than following the political and economic pundits in the news, it’s clear that the best course of action is to stay the course.
Consider the historical performance of the S&P 500 Index – a benchmark of US stocks – over the past eight decades. In 17 of 18 presidential elections, a hypothetical $10,000 investment in the index made at the beginning of each election year gained value 10 years later – regardless of who won the election. Most importantly, over a longer-time frame, the stock market has always gone to reach new highs and recover from downturns, despite who is in office.
Long-term investment success has always depended on the strength of the economy rather than on which party occupies the White House during any particular time. And the market has proven resilient time and again. Wise investors who look beyond the media hype, focus on long-term goals and avoid trying to time the market have tended to reap the rewards in the long run. That’s true not just during elections, but any time of the year.
Beliefs about which president is best for the nation may encourage you to vote, but they shouldn’t prevent you from sticking to a successful investment plan.
If you’d like to learn more about our unique approach to long-term investing, don’t hesitate to contact us today.