Three steps to consider taking with your investments in an election year

1 Understand how the election affects the market

The first step is to understand the election’s likely impact—or lack thereof—on your investments. Historically speaking, elections have made essentially no difference when it comes to long-term investment returns. 

With all the chatter about the election, it may be hard to tune out the noise when you think about your investments. But your retirement savings are invested for the long term, and changes in the market from an election have historically been short term. Over time, the market tends to grow, independent of the political party in the White House. 

Financial markets have generally shown resilience during four-year presidential election cycles. Changes in which political party controls the White House and Congress appear to have little discernable difference on long-term stock market performance. While election seasons can stir up strong emotions in investors and drive market volatility, trying to time the markets or make investment decisions based on perceived election trends could be unwise versus simply investing for the long term.

2 Create a retirement plan

It’s never too early or late to start planning for your retirement. When many of us think about planning for retirement, we think about saving money. But there’s so much more to a retirement plan than just the financial aspects. You can start creating your plan by taking time to think about the nonfinancial aspects of retirement:

• What do you want to do when you retire? 
• How will you spend your time?
• How can you stay connected with family and friends? 
• What will you do to stay healthy? 
• Have you set goals for retirement? 

During an election year, many of us feel anxious and worried about the future. That’s why this is a great time to address your concerns by planning ahead. Your company or retirement plan provider may offer retirement planning tools and resources to help you get started answering those questions and planning for retirement.

3 Stay the course

The way you invest your retirement savings should have a long-term focus. Markets are affected by many factors, including economic indicators, monetary policy, and corporate earnings—which can all change market values in the short term and then tend to recover over time. Statistically speaking, presidential elections and their outcomes haven’t affected the markets in a meaningful way. So, tune out the election noise and consider keeping a long-term focus with your investments. 

In an election year—just like every year—take some time to review your retirement investment strategy. If your retirement plans and goals haven’t changed, and you’re invested for the long term, don’t let the election noise steer you off course.

Keep your retirement plan on track

Saving for retirement isn’t easy and doing so in a noisy election year can be even harder. But if you step back and consider taking these three steps, you can make your job a little easier. Start by understanding that elections historically haven’t had a long-term impact on the market. Then take some time to start picturing retirement and setting your long-term savings goals. Next, try to tune out the election noise and stay focused on your long-term investment strategy.