Every election cycle, we all freak out. What will it mean for our country? What will it mean for the economy and our money?
But should we freak out?
What actually happens after presidential elections?
The problem with presidential elections is we can see the uncertainty coming.
Humans crave stability and control. When we see the uncertainty of an election barrelling towards us, we want to take action.
Unfortunately, that usually means doing ill-advised things with our money.
We go into “wait and see” mode, by either
There are only two certainties in investing:
Rather than focus on what the market will do tomorrow, let’s focus on what it will do over the next 10 years. Or 20 years. Or however long you have before you retire.
By focusing on the long-term, it’s hard not to view the market like a savings account that pays 10% interest.
If a savings account paid 10%, wouldn’t we want to deposit our money as soon as possible? Every day that goes by is one more day it’s NOT earning 10% interest.
The golden rule of investing is “stay invested”. So the following should have no impact on our decision to not cash out and not wait.
But hopefully it relieves some anxiety about what the election means for your money.
Since 1984 the markets have had a pretty good year following a presidential election regardless if it’s Democrat or Republican or the incumbent or new someone new.
The only exception was 2000 which was in the middle of the dot com bubble bursting.
Election or no election, we should never violate the golden rule: “Stay Invested”.
But if it makes you feel better, the 12 months following an election are usually pretty darn good.