The US presidential election is capturing widespread attention, dominating news headlines and social media posts, as it fast approaches this November. Not to mention delivering some twists and turns months before Election Day.
The potential consequences for fiscal policy, regulatory adjustments, and economic stability under the new presidency have caused unease and apprehension among some investors – across both political parties – as they navigate how these changes could impact their investment portfolios and financial goals.
But what impact does an election year really have on investors?
Election years often introduce short-term volatility in financial markets due to increased uncertainty and speculation about potential policy changes and leadership shifts. However, this volatility is typically temporary, with markets generally settling once the election outcome is known and the immediate uncertainty dissipates.
Over the long term, this becomes less pronounced rewarding disciplined investors. As the chart below from Dimensional Fund Advisors demonstrates, historically, long-term investment returns have not been significantly influenced by which political party was in power.
Click on image to enlarge
As we approach the election, we can expect increased ups and downs in the markets. However, it is crucial to manage your emotions and stay focused on your long-term investment plan in order to reach your goals.
TAKE ACTION NOW!
- Stay calm and don’t base your investment decisions on headlines.
- Check to be sure you have enough in your emergency fund in cash or cash-equivalents to keep safe.
- Align your investment allocation with your time horizon and goals.