Should you dramatically change your investment strategy because of the upcoming elections? Pure’s Senior Financial Advisor, Robert Canavan, CFP®, AIF® rationalizes that the markets are non-partisan, and it’s wiser to stay focused on a long-term financial plan rather than reacting to short-term political events.
Markets are more likely to be driven by:
- Corporate earnings
- Interest rates
- Inflation
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Transcript
As we approach the November election it would be natural to assume that this period could impact your personal finances and possibly cause markets to slide. However, historical data does not back this up. In fact, markets have continued to rise in most election years.
Now, it’s important to remember that markets are nonpartisan. Positioning your portfolio should generally be directed by your long-term financial plan rather than current events. All that being said, this particular election has many people concerned, so investors should focus on fundamentals and stick with their financial plans.
We know election years are likely to bring more salacious headlines along with the emotional ups and downs and it can be tempting to let this affect your decision-making process. Whether you’re an optimist or pessimist about November, remember over time financial markets have been unbothered by presidential elections. So, trying to adjust your investment strategy to capitalize on election swings really could end up causing you more harm than good. Markets are more likely to be driven by things like corporate earnings, interest rates, inflation and even consumer sentiment.
So rather than trying to predict near term political or market cycles, investors are better served by adopting a financial road map and sticking with it. For instance, let’s continue to review your cash flow, and you’re spending and your income. Make sure your plan still makes sense. Do you need to make changes? Do you even have a plan? Well then now might be a smart time to adopt one. Setting one up helps you focus on the things you can control. This can help ease your anxiety, it can also add a layer of predictability to your future. It’s going to allow you to look at worst case scenarios and assess risk perimeters.
Remember, we have a presidential election every four years and the markets overall are nonpartisan. So take a step back and assess your current needs, and continue to stay the course. A long-term plan should be designed to serve you well and give you confidence in volatile times like we are seeing today.
Now if you are interested in creating a financial plan or if you’d like to review the financial plan you already have to see if you’re on track, take advantage of our free financial assessment today.
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IMPORTANT DISCLOSURES:
• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC, a Registered Investment Advisor.
• Pure Financial Advisors LLC does not offer tax or legal advice. Consult with your tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.
• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.
CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.
AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.
