Podcast Episode 351: Navigating Investments in Election Years

We’re in the middle of another election year in our country and regardless of your politics, there’s always a little concern over the uncertainty of who will take office and how will markets react. People ask all the time about the impact election years have on investing and whether they should be looking to make changes. We are all driven by emotion as humans so it comes as no surprise that this can be a volatile time, but will it be?

In this episode of the Money Wisdom podcast, Heath Grossman, CFP® puts the emotions aside to take a look at what history shows us about returns when different parties are in office.

When it comes to investing during an election year, many investors find themselves caught up in a web of myths and speculations. The concern that political outcomes will dramatically impact the market is a common fear. However, the reality is often quite different from these anxieties.

Statistics reveal a compelling story: market returns during election years are consistent with those in non-election years. This consistency suggests that fundamental economic indicators—such as corporate earnings and interest rates—play a far more significant role in driving market performance than the political landscape. Grossman’s expertise in the intricate relationship between politics and finance helps investors understand that their financial future is not solely at the mercy of political tides.

Investor behavior is frequently influenced by emotional biases. For instance, some believe that if a political party they oppose gains power, it could trigger a recession or negatively impact their investments. Grossman emphasizes the importance of focusing on market fundamentals over political affiliations. By doing so, investors can maintain a sound investment strategy that aligns with their retirement goals.

The podcast also underscored the need for investors to stick to a well-structured financial plan, irrespective of the political climate. That’s why we encourage building a retirement income plan that considers personal expenses, income sources, and the best methods to generate income from one’s nest egg.

One of the most valuable takeaways from the episode is the call to focus on what can be controlled. Rather than letting the noise of elections and the news cycle heighten anxiety, investors should build and stick to a plan based on personal goals. It’s important to work with a financial advisor to ensure that one’s investment strategy remains on track, despite any political upheaval.

Remember, while politics can create a sense of uncertainty, it should not dictate our investment decisions. By understanding the true drivers of market performance and focusing on sound financial planning, investors can navigate the election year with confidence and clarity.

Here’s some of what we discuss in this episode:

• Put aside bias and emotion and let’s look at the reality of financial returns during election years.

• What should investors focus on in an election year as it relates to investments?

• The noise surrounding elections heightens anxiety so we want to try and block that out.

• We can’t predict what the market will do but we can prepare for every outcome to put you in the best position possible.