How the Upcoming Election is Going to Effect Your Money
/Last week, I was full of emotion as I listened to our President and First Lady at the Democratic National Convention. In my political conversations with family and friends, we often talk about whether or not we’ll be any happier with a new President in office. Trust me, you don’t want to read our family emails – they are fierce!
Regardless of what side of the aisle you sit on, I think their speeches were as patriotic as one can get. And, I had to wipe my eyes during President Obama’s call for us to do our part.
Well, my part involves continuing to spread the gospel on all things leading to greater economic prosperity – wealth-building!
So, as we enter less than 100 days to before our elections, I’ve been asked a very salient question – what impact will the election have on my portfolio and the stocks that I own?
My response – let’s see what the data says. From this Kiplinger’s article, here are a few things to keep in mind and some of them might surprise you:
1. “Since 1833, the Dow Jones Industrial Average has returned an average of 10.4% in the year before a presidential election, and nearly 6%, on average, in the election year. By contrast, the first and second years of a president’s term see average gains of 2.5% and 4.2%, respectively.” – The data speaks truth on what we can potentially expect.
2. “When it comes to your portfolio, it doesn’t matter much which party wins the White House” – we shouldn’t focus on who wins.
3. “The stock market has an uncanny ability to predict who will call the White House home for the next four years. If the stock market is up in the three months leading up to the election, put your money on the incumbent party. Losses over those three months tend to usher in a new party.” – Oh wow!
What to Do?
I want to encourage you, before you start trying to figure out how the election is going to help/hurt your portfolio, to ask yourself: have I taken care of the essentials?
Looked at your 401k/403b plan and made any necessary rebalancing decisions
Revisited your 2016 plan and figured out whether you’re on track
Checked in with your partner/significant other on what might have changed in the last 6 months.
In case you missed it:
Fear is the number one thing keeping people from investing in the stock market. The only way to get over that fear is to face it. In the “So You Think You Know the Stock Market" episode of Charisse Says that was featured on the Make It Better website, I break down exactly how the stock market works in a fun digestible way. I hope the knowledge you will gain from the video will help you face your fears and start investing.
Think you don’t have enough money to start investing? Check out the Words & Money podcast hosted by Tess Wicks that I was a guest on. During the podcast I explain that you can start investing even if you have less than $1,000 to spend.
What do you have to say? Leave a comment below.
