If this week's presidential election has you nervously eyeing your finances, you're not alone. Some 57% of investors say they're anxious about the race, according to a recent survey from Betterment — and roughly 40% say they plan to move or pull investments from the market based on which candidate wins.
Historically, taking your ball and going home when your candidate falls short has been a losing strategy.
Consider research published earlier this year from Carson Research Group, which tracked the performance of the S&P 500 under every presidency since 1953.
Had you started investing with $1,000 in the broad U.S. stock market that year, and only kept your money invested during Republican presidencies (and pulling out under Democrats), you'd have just under $30,000 today, the research found. If you followed the same strategy, but only invested with Democrats, you'd have about $60,000.
However, had you stayed invested during that entire time frame, you'd have $1.7 million. The reason: The S&P 500 has gone up in 17 of the last 20 four-year administrations.
"If you got out of the market because you didn't like the person who was in office, you gave up some really great gains," says Ryan Detrick, chief market strategist at the Carson Group.
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In other words, when it comes to your investments, the person who sits in the Oval Office doesn't tend to have that big an impact — even if it feels like it must.
"If you're actually trying to be rational about the markets, it's not worth worrying about," says Dan Egan, vice president of behavioral finance and investing at Betterment. "However, the anxiety and fear that's coming from it — it's still worth thinking about addressing that directly."
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Dealing with financial anxiety and the election
Financial advisors are pretty unison in their advice for handling short-term "noise" around markets: ignore it and avoid making any wholesale changes to your long-term plans.
But that is easier said than done these days, given that the app you use to manage your investments and the one that delivers anxiety-inducing headlines likely reside on the same device.
"If you're on your phone and reading on Twitter about how bad things are, it's very easy to swap over to your brokerage account and be, like, 'I need to change this,'" says Egan.
For some people, the best way to keep from making impulsive investing decisions is to set up some firewalls for the sort of news that makes them anxious, he says. That may mean installing limits to your time on certain apps, setting up two-factor authentication or only consuming news through old-school media sources. "It's very hard to doom-scroll a newspaper," Egan says.
But if it's going to be impossible for you to avoid the angst of a constant news cycle, consider setting up systems to keep you from converting those feelings into impulsive, short-term money moves. Here are three strategies to try.
1. Phone a friend
Bouncing your investment ideas off of a trusted confidant can help clarify whether you're acting impulsively, says Egan. For some people, verbalizing things can be helpful, he says. For others, writing may be a better choice.
"Write out an email to that person justifying what you're doing. In the process of writing out your thoughts, you'll see how much of it is driven by angst and anxiety and how you feel right now."
2. Take a beat
When it comes to your investments, institute a rule that you won't do anything immediately, Egan says. Having a "cooling off" period can help you figure out whether you're making emotional decisions around your money.
"Come back to it in a day or two. Let yourself sleep on it and get some perspective," he says. "And if you're still looking at it and you're like, 'Yes, this still makes absolute sense to me,' you can say, 'This isn't an impulse. This is a consistent thought that I've been having.'"
3. Move money slowly
If you do feel compelled to adjust your strategy, consider making small, incremental tweaks rather than wholesale changes.
"The people who underperform the most in markets are the people who are all in or all out — 100% stocks or 0% stocks," Egan says. "The people who get through it and maybe eke out a little bit of comfort while staying invested — they're like, 'OK, I don't like this. I'm gonna go from 90% stocks to 80% stocks."
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