Election Anxiety and Your Finances: Staying Calm and Focused
As the presidential election approaches, many investors are feeling anxious about the potential impact on their finances. According to a recent survey, 57% of investors are worried about the outcome, and nearly 40% plan to make changes to their investments based on who wins. But is this anxiety justified?
A Historical Perspective
Research from Carson Research Group reveals that, historically, the performance of the S&P 500 has not been significantly affected by the party in power. In fact, had you invested $1,000 in the broad U.S. stock market in 1953 and stayed invested throughout, you would now have approximately $1.7 million. If you had only invested during Republican presidencies, you would have around $30,000, and if you had only invested during Democratic presidencies, you would have around $60,000.
The Importance of Staying the Course
Financial advisors agree that the key to navigating short-term market volatility is to ignore the “noise” and stick to your long-term plan. However, with anxiety-inducing headlines constantly at our fingertips, it can be difficult to resist the urge to make impulsive changes to our investments.
Strategies for Staying Calm
So, how can you avoid making emotional decisions about your money? Here are three strategies to try:
1. Seek a Second Opinion
Bounce your investment ideas off a trusted friend or family member to get an objective perspective. Verbalizing your thoughts can help you clarify whether you’re acting impulsively.
2. Take a “Cooling Off” Period
Institute a rule that you won’t make any investment decisions immediately. Take a day or two to sleep on it and get some perspective before making a move.
3. Make Incremental Tweaks
If you do feel compelled to adjust your strategy, consider making small, incremental changes rather than wholesale overhauls. This can help you stay invested while still addressing your concerns.
By staying calm, focused, and informed, you can avoid making costly mistakes and stay on track with your long-term financial goals.
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