By Kaylie Wise
As election season approaches, it’s natural to wonder what the coming months could mean for your investments.
News coverage will likely increase, forecasts will fill the headlines, and there will be no shortage of opinions about how markets might react. During times like these, many investors find themselves asking a familiar question:
“Should I be making changes to my portfolio?”
Recently, I had the opportunity to hear from Kellin Clark, Vice President of Government and Regulatory Affairs at Capital Group, and one message stood out.
Election seasons create a lot of noise, but headlines alone are not a reason to change a long-term financial plan.
It’s important to stay informed. Proposed policies and legislative ideas may eventually become law and could affect financial decisions. However, before making significant changes, it can be helpful to understand what has actually been enacted and whether it meaningfully impacts your personal financial situation.
That perspective matters because election years have a way of making every headline feel urgent. Yet markets have always had to navigate uncertainty, whether it comes from elections, inflation, interest rates, economic data, global events, or unexpected developments.
While elections can influence short-term market sentiment, they are only one factor among many that shape long-term investment outcomes.
Uncertainty can feel uncomfortable. Markets may move as investors react to new information and changing expectations. Certain industries may receive more attention than others, and market swings can create the impression that immediate action is necessary.
But short-term market movements rarely tell us what will happen over the next year, much less the next decade. Markets constantly process new information, and events that seem critical in the moment often become much smaller parts of a longer investment story.
Consider Sarah.
For years, she has been doing all the right things. She contributes regularly to her retirement account, follows a disciplined savings plan, and stays focused on her long-term goals. She rarely checks her account balance because she feels confident in the plan she has built.
Then election season arrives.
One evening, after reading several concerning headlines, Sarah starts wondering whether she should move everything to cash until things feel more certain.
At first, that sounds like a cautious decision. The challenge is that successful market timing requires two correct decisions: knowing when to get out and knowing when to get back in.
If the market begins recovering before Sarah feels comfortable reinvesting, she could miss part of that growth. Historically, some of the market’s strongest days have occurred during periods when uncertainty was still high.
Sarah’s reaction is understandable. When uncertainty increases, taking action can feel more comfortable than staying patient.
Yet history tells an interesting story. Research covering approximately 90 years and 23 election cycles shows that markets have continued to provide long-term opportunities through a wide variety of political, economic, and market environments.
That does not mean markets always rise or that difficult periods never occur. It simply suggests that a single election result has not historically been a reliable reason to abandon a well-designed long-term investment strategy.
One of the most common mistakes investors make during uncertain periods is moving long-term investments into cash while waiting for a clearer signal to return to the market. Research has found that investors have historically directed more than twice as much money into money market funds during election years as they did during the year following an election.
Holding cash can absolutely play an important role in a financial plan. Emergency savings and money needed in the near future are often appropriate uses for cash reserves.
The risk comes when long-term investment dollars are moved to the sidelines while waiting for conditions to feel completely comfortable again.
The reality is that markets often begin recovering before uncertainty disappears. By the time many investors feel confident enough to reinvest, part of the recovery may have already occurred.
This is where diversification can help.
A diversified portfolio spreads investments across different companies, industries, regions, and asset classes so that your financial future is not dependent on any single outcome or prediction. Diversification cannot prevent losses, but it can help reduce the pressure to guess what will happen next.
Instead of allowing headlines to rewrite the plan, investors can use election season as a reminder to focus on the fundamentals. Review your goals. Revisit your timeline. Confirm that your investment mix aligns with your comfort with risk and long-term objectives.
As Election Day approaches, there will be no shortage of predictions about what comes next.
Some will prove accurate. Many will not.
What investors can control is not the outcome of an election, but how they respond to uncertainty.
Rather than trying to predict the next market move, focus on the things you can control: saving consistently, staying diversified, maintaining an investment strategy aligned with your goals, and keeping a long-term perspective.
Elections will come and go. Headlines will change. Markets will continue to respond to new information.
The investors who tend to stay on track are often those who remain focused on their plan rather than the noise around them.
Instead of asking, “What will happen after the election?” a more helpful question may be: “Is my financial plan prepared for a range of possible outcomes?”
Kaylie Wise is a Financial Advisor at Bluespring Wealth’s Cincinnati office, where she helps keep the financial planning process organized and moving forward while making clients feel welcomed and supported. She earned a degree in finance and a CFP Board Registered Certificate in Personal Financial Planning from Western Kentucky University and is currently working toward her CFP® certification. Outside the office, Kaylie enjoys hosting dinner parties, traveling, practicing yoga and Pilates, and spending time with her cat, Finnick.
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