How to Invest with Confidence in an Election Year

How to Invest with Confidence in an Election Year

Presidential elections can feel like a reality TV show gone wrong. Between mudslinging campaigns, fiery debates, and the 24/7 news cycle, it's easy to get stressed about your investments. But let's take a deep breath and explore the truth about elections and the stock market. Spoiler alert: it's not as scary as it seems!

In this article, we highlight top questions about investing in an election year, drawing insights from over 90 years of investment data across 23 election cycles.

Is one political party better than the other for investors?

• Since 1933, U.S. stocks have trended up regardless of whether a Democrat or Republican won the White House.
• Successful investors stay the course and rely on time in the market rather than timing the market.

What usually happens in the stock market during an election year?

• Primary season tends to be volatile, but markets have bounced back strongly thereafter.
• Taking a long-term approach can help investors withstand volatility and feel confident that markets have tended to move higher over time, even in election years.

What is the most common mistake investors make during an election year?

• Investors often get nervous and move to cash in election years, but that’s rarely a winning strategy.
• Market timing is rarely a winning long-term investment strategy and can pose a major problem for portfolio returns.

Staying invested has historically provided the best long-term portfolio returns.

The Bottom Line: Stay Calm and Invest On

Trying to time the market based on elections is a risky gamble. Remember, the stock market is a long-term investment. Don't let election-year jitters derail your investment journey. Buckle up, stay focused, and let your investments do the heavy lifting!   

To see more information and details, here is the Capital Group Guide to Investing in an Election Year.