Investing During an Election Year: What We Can Learn

Election years make many people anxious, investors included. Some of them panic and cash out early or think that they can predict more than is realistic based on the outcome of an election. But these lines of thinking typically lack sound support and do not take historical patterns into account.

Over the years, we have learned a lot about investing during an election year and what kinds of mistakes people are likely to make. We’ve put together our top tips for investing in an election year and how you can use them to weather the bumpy market.

1. Invest for Long-Term Success

Our first piece of advice involves keeping your long-term plan front and center. Election years often make people nervous and send them into a panic to sell their shares. Although market trends may become more volatile in an election year, we repeatedly see that sticking to your long-term investment strategy is typically your best option. Ensure you maintain a diversified portfolio for better results, even if the market dips after the election.

2. Do Not Make Unsound Decisions

Some people try to time their investments around politics and wait to invest until after the election gets called. But this is typically not a good move, and we can’t expect stock values to drop after the election. You can often buy stocks during dips earlier in the year instead of banking on a post-election change. 

Another common move is to cash out in the months leading up to the election, but this doesn’t usually work well either. While the market often takes a drop at this point, it tends to make a quick recovery.

3. Ignore Stock Market Volatility Surrounding Elections

Don’t get spooked by the market volatility around the election, and remember that this is almost always short-term. Just as you don’t want to cash out before the election, avoid cashing out during the bumpy period just after the election. November and December tend to be volatile months for the stock market, but they do not have much impact on long-term results.

4. Keep Your Strategy Consistent

It might be easy to think that whoever becomes president will have a major influence on the stock market, but this is not the case. The president typically won’t have much of an influence on your stock portfolio, regardless of which party wins. Do not let the results or short-term changes impact your long-term strategy.

Make Smart Election-Year Investments With HSC Wealth Advisors

Hopefully, our guide to investing in an election year has shed some light on these common mistakes that occur in unpredictable election years. Financial services from HSC Wealth Advisors can help you make the most of your investments, in election years and beyond.

We are a team of fee-only financial planners, meaning we can put your interests above anyone else’s. Take the guesswork out of navigating investment advice during an election year by working with the certified professionals at HSC Wealth Advisors.

Reach out today to talk with one of our CERTIFIED FINANCIAL PLANNERS™ and learn more.