Navigating Investments In An Election Year

Investing during an election year can feel like a daunting prospect, given the uncertainties and apprehensions that often accompany political transitions. As the 2024 election year unfolds, investors are once again faced with the shifting sentiments that a change in political power can bring forth. With political noise intensifying and inherent uncertainties surfacing, investors have naturally begun to consider the implications that the results could have on their portfolios. However, rather than trying to predict the outcome and getting caught up in speculative scenarios, we encourage investors to focus on what they can control.

In this blog, we’ll explore the main causes for concern, provide historical context on market performance, and suggest three strategies for consideration to navigate the coming year.

2024 Investor Concerns

Leading up to presidential elections, investors tend to adopt a more conservative approach, anticipating potential policy changes. Looking ahead to 2024, there are a few additional looming concerns. A recent Nationwide study found that recession fears, retirement planning, increased taxes and impact on future finances are top fears among investors surveyed.

They found that:

“nearly one in three (32%) investors believe the economy will plunge into a recession within 12 months if the political party with which they least align gains more power in the 2024 federal elections”.

While acknowledging these apprehensions, it’s equally important to remain vigilant and not let the noise dictate investment decisions. As history has shown, markets can display resilience through various political landscapes and typically have minimal impact on portfolios.

Election Year Strategies

A key aspect of effective investing in any environment involves recognizing what investors can control and prioritizing their financial plan over short-term market fluctuations.

Here are three strategies to consider this election season:
 

1. Stick to your core approach: Political changes can introduce uncertainties affecting sectors differently, but it doesn’t necessitate a complete overhaul of your investment approach. Consult with an experienced advisor to fine tune your portfolio with your risk tolerance and financial goals.
2. Think long-term: It’s crucial to maintain a long-term perspective and resist making decisions based on temporary market trends. Historically, markets have shown resilience over the long term, irrespective of political changes. Investors should focus on the fundamental strength of their investments and the overall economy rather than market movements influenced by the election cycle.
3. Diversify: Diversification remains a timeless and effective strategy, particularly during election years when uncertainty may be heightened. Spreading your investments across different asset classes, industries, and geographic regions can help mitigate risk. By not putting all your financial eggs in one basket, you increase the likelihood that gains in one area can offset losses in another. Diversification serves as a powerful risk management tool, providing a buffer against the potential volatility associated with election-related developments.

Takeaway

Approach investment decisions for the upcoming election year with a clear and strategic mindset. By understanding historical market reactions and implementing a strategic, long-term plan, investors can position themselves for success in 2024 and beyond.

If you’d like to learn more about how you can diversify your portfolio through high-quality, commercial real estate investments, feel free to reach out to our team. We are always happy to answer any questions you may have and explore how our investment options can help you achieve your financial goals.