How Will Election Results Impact Your Investment Strategy?

By Net Worth Advisory Group

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As our current election is underway, many investors are asking, “How will these outcomes affect my investments?” Political changes, from presidential elections to local races, can influence financial markets and economic policies. As we assess the implications of the election, let’s explore the extent of the presidential influence on the economy and how you can navigate these shifts to keep your portfolio performing at its highest.

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Power Has Limits

First, let’s refresh our knowledge about what the President can and cannot do when it comes to the economy. Presidents are usually awarded praise or denounced as failures depending on the state of the economy during their tenure in the White House. But the economy is a complex, many-faceted system, and the President has more influence over some aspects of the economy than others. 

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While the stock market and the economy are not the same thing, markets can reflect certain elements of the state of the economy. In reality, the President doesn’t truly have as much control over the stock market as many think (although the choices they make can certainly have short-term effects on investor confidence and market performance, particularly on certain securities and sectors). 

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For example, history shows us that the stock market performance at the beginning or end of a President’s term in office isn’t necessarily indicative of their choices. It may have more to do with the naturally occurring cyclical nature of market performance, socio-political changes, or a myriad of other factors which can impact the market’s performance. 

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Research tells us that there is no trend driving the market returns of a particular political party, and the President probably shouldn’t receive much credit or blame for stock market performance during their term, as evidenced below in the hypothetical growth of $1,000 invested in the S&P 500 since March 1933 until June 30, 2023.

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Source: Forbes

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As you can see from the chart above, the party in power didn’t have as much impact on the markets as events that occurred like the Great Depression, World War II, the tech boom in the late 1990s followed by the crash in 2001, and the Great Recession in 2008 followed by the recovery. 

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The President does influence proposing fiscal policy (i.e., tax law) and regulatory policy, appointing Federal Reserve governors, and responding to external shocks and crises. But do you see anything in common with these things? That’s right—you don’t have any control over them. But you do have control over some very important pieces of your financial puzzle, pieces that matter more than who wins an election. 

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Control What You Can

All elections are important, but with a solid financial plan in place, elections are a “non-event” when it comes to your finances. Here’s what you can focus on amid everything going on in our world:

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Your goals. You set your goals for a reason. Remind yourself of the “why” behind them and remember what’s most important to you. Don’t let the noise of the election derail what you are working toward, and don’t abandon your plan just because you haven’t lived through times like these before. 

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Your perspective. The markets are always changing. If you check your portfolio performance every time there’s a shift in the markets, you could end up feeling overwhelmed and stressed. If you maintain a long-term perspective and stay disciplined in your approach, you’re likely to feel confident in your plan. 

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Your choices. One of the most important rules in investing is to refrain from making emotional decisions. Multiple studies have analyzed how our emotions affect our investing results, especially when we chase above-average returns. Instead of panicking, follow the guidance of your financial professional. This is just one blip of many that will come on your journey of pursuing your life goals and your advisor has the expertise and experience to walk you through it. 

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How’s Your Financial Strategy?

How are you feeling about your financial situation? Are you feeling anxious about the election impact on your investments, or are you resting easy knowing you have a well-thought-out plan in place? 

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If you don’t yet have a tailored financial strategy or are unsure if your current plan can handle life’s uncertainties, our team at Net Worth Advisory Group is here to assist. Call us at 801-566-6639 or schedule a complimentary, no-obligation consultation to see if we are a good fit to help you pursue your goals.

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To learn more, visit our website.

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About Net Worth Advisory Group

Founded in 2003, Net Worth Advisory Group is an independent, fee-only, CERTIFIED FINANCIAL PLANNER® and investment advisory firm located in Salt Lake City, Utah. We specialize in helping people transition from the workplace into retirement and ensuring that those who are already retired will not outlive their nest egg. Our top priority is to have clients experience a greater sense of ease with diligent, personalized wealth care and the implementation of customized financial plans and ongoing personalized asset management. We equip all clients with a comprehensive financial plan, meeting every six months to update as needed and review investment performance. Our team is passionate about providing comprehensive financial planning with the fee-only model, and we love feeling like we’re making a difference in our clients’ financial lives.

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As a NAPFA-registered fee-only advisory firm, our recommendations are untainted by a hidden agenda to sell financial products paying large commissions. Unlike our competitors at brokerage firms, insurance companies, and banks, we are compensated solely by our clients, so we are financially motivated to provide objective advice that is always in our clients’ best interests. Anyone can call himself or herself a financial planner, but only an advisor with the CERTIFIED FINANCIAL PLANNER®, CFP® designation has met the education, examination, experience, and ethical requirements mandated by the CFP® board. According to the CFP Board, there are 97,000+ CFP® professionals in 2023, representing about 1 in 3 financial advisors in the U.S. Net Worth advisors are also members of NAPFA, which only has about 4,600 advisors, and are either CFP® professionals or CFP® professionals in training.

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Net Worth Advisory Group’s mission is to significantly improve the lives of our clients by delivering exemplary financial planning and wealth management advice that enables them to live the lives they have imagined.

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