Election Time
/The presidential election has been a source of concern for many investors, and our clients are no exception. Over the past several months, I have heard many express concerns over both candidates and the impact each party will have on the markets. No matter the party affiliation, each side is worried about the other side getting elected and sending the markets into a nosedive.
There is no doubt presidential elections bring uncertainty and volatility, which can lead to some investors getting nervous and moving into cash. And we all know, trying to time the market—even though you are simply trying to avoid pain—rarely pays off, so moving into cash is not the answer. I’m sure you know what I’m going to say: sticking with your long-term investment plan and ignoring the short-term noise is the best course of action.
Don’t get me wrong, I fully expect to see increased volatility as we near Election Day and even in the months following, so we need to mentally prepare ourselves and set our expectations. However, according to one Vanguard study with research dating back to 1860, a 60% stock / 40% bond portfolio shows an average 8.4% annual compound return for Democratic presidents and an 8.2% return for Republican presidents. This shows no statistical difference in portfolio returns between the parties over the long term.
Be prepared for volatility in the months ahead, but keep your eyes, and your investments, focused on the future.
- Juli Erhart-Graves, CFP®, Worley Erhart-Graves Financial Advisors
