It’s hard to believe that 2024 is more than halfway through. Lo and behold, it’s a presidential election year, too. November 5 is rapidly approaching.
Whenever an election year approaches, our advisors often receive questions about how to invest during times of political uncertainty.
It is common for investors to assume that the stock market, retirement accounts, and other investments may react dramatically based on which candidate wins the election.
Plan ahead
Even though the current political climate can feel emotionally charged, one fundamental principle of financial planning remains true.
No matter which candidate you support, it is important to make decisions with a clear head rather than react emotionally.
We understand that can be difficult, especially during election cycles. That is why our advisors are here to provide guidance and personalized strategies that support your long-term goals.
So, what does a steady financial strategy look like when the future feels uncertain?
It may come as a surprise, but historical data shows that election results tend to have little impact on mid-term and long-term market performance.
Keep fundamentals in mind
As this article from U.S. Bank1 explains, presidential elections often have less impact on the market, 401(k) plans, and broader investment strategies than many people might expect.
While there are policy shifts that can influence short-term performance in certain sectors, history shows that long-term market trends are rarely driven by election outcomes alone. For that reason, it is generally not recommended to make major financial decisions based solely on political cycles.
Instead, it is important to focus on the fundamentals. Diversifying your investment portfolio and maintaining a disciplined approach can help reduce risk and support long-term outcomes.
Furthermore, as we’ve discussed at length in our why it’s smart to start tax planning in July blog2, there may be a more predictable and impactful financial change on the horizon.
The Tax Cuts and Jobs Act of 2017 is set to expire on December 31, 2025. If current law remains unchanged, federal income tax rates will increase for most Americans in 2026.
Depending on your situation, it may be worth exploring whether a Roth IRA conversion3 fits into your broader retirement strategy. In some cases, converting assets now could result in a lower overall tax burden compared to future rates.
Next steps
Ultimately, the adjustments you make in an election year are ideally kept as minimal as possible. The ideal approach for you will depend entirely on the financial instruments you are using, the unique mix of holdings in your stock portfolio and the structure of your retirement plan.
At Financial Services of America, we are happy to help you navigate the changes you should – and shouldn’t – make to your financial plans this election year. While we don’t advise making dramatic changes to your financial plans, we certainly advise having a solid plan in place.
No matter where you are in your financial journey, we are here to help you chart the ideal path forward. Simply contact us today, and let’s start building the ideal financial plan for your very own goals.
Disclaimer
Insurance products are offered through the insurance business Financial Services of America (FSA).
Financial Services of America (FSA) is also a financial services practice that offers securities products and services through AE Financial Services, LLC (AEFS), member FINRA/SIPC.
Financial Services of America (FSA) is also an investment advisory practice that offers investment advisory products and services through FSA Advisors (FSAA), a Registered Investment Advisor. AEFS and FSAA do not offer insurance products.
The insurance products offered by Financial Services of America (FSA) are not subject to regulatory requirements and standards of care applicable to registered representatives and are not subject to investment advisory requirements.
AEFS, FSAA and FSA are not affiliated companies.
Please remember that converting an employer plan account to a Roth IRA is a taxable event. Increased taxable income from the Roth IRA conversion may have several consequences.
Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.
3776535-8/24
1 “How presidential elections affect the stock mark.” U.S. Bank Wealth Management. July 22, 2024. https://www.usbank.com/investing/financial-perspectives/market-news/how-presidential-elections-affect-the-stock-market.html Accessed August 8, 2024.
2 “Why it’s Smart to Start Tax Planning in July” Financial Services of America. July, 2024. https://fsa1.com/why-its-smart-to-start-tax-planning-in-july/
3 “Is a Roth IRA Conversion right for me?” Financial Services of America. November, 2023. https://fsa1.com/is-a-roth-ira-conversion-right-for-me/The Tax Cuts and Jobs Act of 2017 is set to expire on December 31, 2025. If current law remains unchanged, federal income tax rates will increase for most Americans in 2026.