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Writer's pictureScott Frank

Politics and Personal Finance: Strategies for Stability During a Wild Election Season

Updated: Oct 11


In our latest episode, co-host Meg Bartelt, President of Flow Financial Planning, and I dig into elections and finance: Specifically, how can you keep your financial future on track when the political future seems so uncertain? 


Looking at historical trends from the S&P 500, we can see that long-term market growth is “up and to the right,” regardless of who is in power. Thanks to checks and balances – plus the independent nature of entities such as the Federal Reserve and the Department of Justice – political power changing hands is typically a blip on the economy’s radar. If the historical trend of the markets is “up and to the right,” regardless of which party is in power, why do people get so worked up about money around election season?


If you’re struggling to find your calm in the chaos, you’re not alone. It can feel hard to see beyond recent political events (e.g., assassination attempts and sudden candidate changes). But when it comes to current events, it’s helpful to zoom out. We talk about how a phenomenon known as “recency bias” can often make current events seem more critical than past occurrences.


Remember the serenity prayer? It can come in very useful during times like this:

Grant me the serenity to accept the things I cannot change,

the courage to change the things I can,

and the wisdom to know the difference.


Knowing the difference between what we can and cannot control in our lives is one of the greatest keys to happiness, particularly in the realm of financial planning. So what can you control? 


For retirees, maintaining a balanced asset allocation is crucial, in addition to resisting the urge to try to time the markets based on political events. If you’re in the accumulation phase, saving extra cash during market downturns can provide opportunities. We recommend practical steps to enhance financial security, such as building a cash cushion and updating your estate plan. 


Concentrating on these controllable aspects can help insulate your financial well-being from the political atmosphere. 


If you want to get involved, we recommend volunteering for or contributing to your preferred candidates and parties. If you want your financial plan to stay on track, we recommend focusing on your personal goals – and keeping the politics out of it.


Charts referenced in our discussion:

Bar chart labeled Markets Have Rewarded Long-Term Investors Under a Variety of US Presidents
Bar chart labeled Markets Have Rewarded Long-Term Investors Under a Variety of US Presidents

 


Connect with us!

Scott Frank on LinkedIn 

Meg Bartelt on LinkedIn 

Stone Steps Financial 


Money can be confusing—but it doesn’t have to be. When you’re able to understand the complexities, you can make better decisions to improve your daily life. Are you ready to align your money with your ideal life? Connect with us at Stone Steps Financial.

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