Tips for Investing in an Election Year

The Crucial Role of Financial Representatives in Retirement

Posted by Ethan Ball

Serving Cedar Rapids, Iowa, and Surrounding Areas.

Tips for Investing in an Election Year

As November 5 approaches, you might find yourself drowning in a sea of campaign commercials, non-stop news coverage, and heated social media debates. But for investors, it’s not just the political climate that can be stressful—election years are historically challenging too.

According to U.S. News & World Report, the S&P 500 has averaged about a 7% gain during presidential election years since 1952. That’s quite a drop compared to the 17% average gain the year before an election year! Add in the fact that we’re facing the highest federal funds interest rates in over two decades and a 55.8% chance of recession in the next year (thanks to the New York Fed’s recession probability model), and you’ve got a recipe for uncertainty.

So, how do you navigate this volatility without losing your cool? Here are five tips to help you invest confidently during an election year:

1. Don’t Make Financial Decisions When You’re Emotionally Charged

First off, let’s talk about something called election stress disorder. Yep, it’s a real thing! It can lead to irritability, anxiety, and a heightened sense of unease. If you’re feeling overwhelmed, take a step back. Ask for help! Emotional decision-making can lead to impulsive choices that might hurt your financial future. Give yourself some space to breathe and think things through.

2. Stay Invested

I get it—market fluctuations during political upheaval can be nerve-wracking. But remember: reacting to short-term declines by changing your long-term investment strategy could do more harm than good. The stock market has a history of bouncing back, so trust your investment plan and stay the course. It’s designed to weather these ups and downs!

3. Look at Sectors That Historically Perform Well

If you’re feeling a bit more adventurous and want to capitalize on historical trends, consider exploring sectors that have done well in past election years. According to U.S. News & World Report, financial services and energy have been top performers since 1973. You might think about increasing your allocation to ETFs in these sectors. Just remember—don’t put all your eggs in one basket!

4. Remember Past Performance Doesn’t Guarantee Future Returns

While it’s tempting to lean on historical data when making decisions, keep in mind that past performance doesn’t guarantee future results. Markets can be unpredictable, so it’s best to use this information as one piece of your overall investment puzzle rather than the whole picture.

5. Work With a Financial Professional

Investing during an election year can feel overwhelming, but you don’t have to navigate it alone. Partnering with a financial professional can help ease your worries. These experts are objective, knowledgeable, and can provide valuable insights tailored to your situation. They have the training, experience, and licensing to back up their recommendations, helping you make informed decisions with confidence.

So if you’re preparing for retirement in Cedar Rapids or worried about the market, consider working with a trusted financial professional at Iowa Retirement Benefits & Solutions who can help you navigate these challenges and keep your investment strategy on track.

Investment advisory services are offered through Fusion Capital Management, an SEC registered investment advisor. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.

Author

  • Ethan Ball

    Owner of Iowa Retirement Benefits and Solutions. Born and raised in Aledo, Illinois. A graduate of Coe College in Cedar Rapids Iowa. Ethan and Brittney reside in Mount Vernon, Iowa with their one-year-old son Easton and Golden Doodle Noelle. Ethan has been working with individuals to plan for retirement for 9 years. In his spare time, Ethan enjoys following Coe College wrestling, hunting, and fishing.

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