One thing is for sure: uncertainty leading up to the presidential elections can affect the stock market and cause the economy to fluctuate.
What does this mean for your retirement? Is there anything you should be doing now to avoid a potential dip in your retirement nest egg? Is there a correlation between who sits in the White House and how the markets perform?
Fear of the unknown can bring about investor anxiety. Yet regardless of whether a Republican or Democrat wins the White House, experts say it’s what happens in all three levels of our government that can best determine how the markets fare. It is said that the stock market generally performs better under a divided government. If either party wins total control of the White House, Senate and House of Representatives, it can potentially have a negative effect on the markets.
Here are a few tips to move forward into the unknown with a bit more confidence:
Review the Level of Risk in Your Portfolio. Are you comfortable with the amount of risk you are currently exposed to? Do you have the time to ride out whatever may come, and stick it out to see what happens?
Any changes you make now due to an impending election would be fear-based, and investment decisions are best made without emotion. The outcome of the election is unknown, which is unsettling to many investors. However, as with any market concerns, staying the course and continuing to execute your financial strategy should help to mitigate any potential negative impact.
Have a Well-Planned Investment Strategy in Place. Having a well-constructed financial strategy in place can give you the confidence for the future – whatever it holds. If your financial plan is laid out to accomplish your long-term goals, you’re probably best-off sticking to the financial strategy you’ve committed to. Any changes you make now would be fear-based, and investment decisions are best made without emotion.
Don’t Gaze into a Crystal Ball. What happens in the economy and the stock market may surprise us after the 2020 election. While historical trends generally favor the reelection of sitting presidents, it’s when times are hard, which they could be with the recession that stemmed from COVID-19, that we are more likely to see change.
Whatever the outcome, keeping your politics separate from your financial decisions is a habit that is likely to benefit you in the long run.
Overall, history has shown much less correlation between presidents and market performance than most people believe. Have a conversation with us about any of your concerns. We’d be happy to provide a second opinion on your investment strategy and financial plan.
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