Tomorrow is the big day! A day that marks the end of the presidential candidates' media noise and the start of complaining about another president. There seems to be a lot of anxiety over what will happen to the stock market once the election is over. Here are three very good reasons on why you shouldn't lose sleep over the election.
Elections Don't Directly Affect The Market
You may be afraid of what will happen to your retirement account when Trump or Hillary becomes president. I want to reassure you that they aren’t going to affect your retirement plan or investments as much as you think. Yes, the market does experience volatility during a presidential transition but it’s not all at once. The market will react to the election and then it will correct itself and after a couple of months as the new president takes office things will slowly begin to change as policies take effect. Even then however policies will take effect over time.
Remember when the Brexit news blasted our television screens? Everyone was scared the economy would completely crash overnight. However, in hindsight, the market reacted and then corrected itself because nothing really changed except the United Kingdom was no longer in the EU. We can compare the Brexit vote with the presidential election. The new president will be elected but the sun will still rise Wednesday morning and you will still walk into work just like any other day. The headlines will just be different.
Inevitable Corrections Happen But Focus On Your Long-Term Plan
Your retirement plan should be created so that it is built to withstand these corrections. A good financial advisor knows that political changes happen and that market corrections happen one in every five years. By having your retirement portfolio diversified correctly you can trust that you will still have your money when you decide it’s time to retire as it will be able to ride through the ups and downs of the world we live in.
Behavior Driven Decisions, Remember Great Companies Will Still Be Great Companies After the Election
Our economic system was built on the idea that our country’s value is going to be built through individual hard work to create great companies. It was not built to rely on who is president currently. There is beauty that allows us to live the philosophy that optimism is the only realism. Ultimately do you believe in people like Jeff Bezos and Mark Zuckerberg and companies like Apple and Google to continue to come along and grow? I do. Just because there is a new president doesn’t mean that Jeff Bezos is going to stop trying to find new ways to expand Amazon or that Google will stop trying to develop the next best technology. We are owners of these companies, not the government.
Ultimately our behaviors of buying and selling should not be affected by the upcoming election. Our behaviors should actually be to invest in what this country already does best, innovate. Warren Buffet said at his last stockholders meeting that this election will not change his investing philosophy at all and it shouldn’t alter yours either. As you prepare to cast your vote tomorrow, try not to lose sleep over whether your investments are going to be ok or not after this election.
A good financial advisor knows that though political changes happen on a regular basis they also know that major market corrections historically occur on average one in every five years.
If you are like most Americans and struggle to manage your actions and behaviors by reacting to news events like the coming presidential election, then maybe you should consider working with an advice based fee-only financial advisor to help you.
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Steven LaFleur attended college at the University of Nebraska-Lincoln where he majored in finance. After college, he worked in his family’s business. After three years Steven decided it was time to pursue his passion; helping and educating younger generations on money, planning, and finances. Steven is now a financial advisor at True Measure Wealth Management in Omaha, NE. Steven and his wife Kelly have two daughters who keep them busy at all times of the day. Steven enjoys skiing in the mountains and also biking and golfing during the non-snowy months. As a junior advisor, he’s passionate about helping the younger generations plan for their future. For more of Steven’s insights subscribe below.