How to Invest During An Election Year

Summary

In this informative video, financial coach Terry addresses the economic uncertainties during a US presidential election year, highlighting that historical data shows minimal impact on stock market returns. The S&P 500's performance in election years is comparable to non-election years, with positive returns seen more frequently. The video reassures viewers that there's no need to alter investment strategies due to elections, emphasizing the importance of a diversified portfolio and maintaining a long-term perspective.

Takeaways

• 📉 Economic uncertainty is high in the US, with concerns about interest rates and potential recession.
• 🤷‍♂️ The impact of a presidential election year on the economy is a common source of confusion and concern for many people.
• 💡 Studies indicate that nearly a third of Americans worry their financial future could be negatively affected by an election outcome.
• 🏛️ Despite concerns, historical data shows that elections have minimal impact on stock market returns.
• 📊 The S&P 500's average return in election years is similar to non-election years, at around 11.3%.
• 🎉 Election years have shown a higher frequency of positive returns compared to non-election years (80% vs 70%).
• 🔍 There is insufficient evidence to link the elected party with stock market performance, as many factors contribute to market fluctuations.
• 🕰️ Presidents often face weaker markets in the early years of their term, with improvements typically seen in the last two years.
• 💰 Forbes analysis suggests that investing remains an effective way to grow wealth, with the S&P 500 outperforming cash by 8.1% on average.
• 📈 The best approach to investing is to maintain a diversified portfolio and not to panic or deviate from strategy due to an election year.
• 🎓 Education is key; free master classes and informative videos are available to help individuals learn about successful investing and money management.

Q & A

What is the current economic situation in the US mentioned in the transcript?

The transcript mentions that there is a lot of economic uncertainty in the US, with concerns about interest rates and the possibility of entering a recession.

How does the presidential election year add to the economic concerns of people?

During a presidential election year, people tend to be more confused and concerned about the economy, as they worry about how the election results might affect their financial future.

What percentage of Americans fear their financial future could be negatively affected by an election outcome?

Studies show that almost a third of Americans believe that their financial future might be negatively affected if the party they least align with is elected.

What does the transcript say about the impact of elections on the stock market?

The transcript states that studies show an election has a minimal impact on the stock market returns, with the S&P 500's average return during election years being about the same as non-election years.

How does the stock market performance differ between election and non-election years according to the transcript?

The S&P 500 generates positive returns more frequently in election years (80%) than in non-election years (70%). However, there isn't enough evidence to suggest a correlation between the elected party and the stock market performance.

What factors determine stock market performance according to the transcript?

The transcript mentions that numerous factors determine stock market performance, including economic indicators, national and international crises, monetary policy, and corporate earnings.

What is typically observed about the stock market performance in the first two years of a president's term?

The first two years of a president's term typically coincide with weaker markets, while the last two years are more positive.

What does the transcript suggest about the effectiveness of investing during an election year?

The transcript suggests that investing remains the most effective way to grow your money during an election year, as the principles of good investing still apply.

What does Forbes analysis show about the S&P 500 compared to other asset classes?

Forbes analysis shows that the S&P 500 generates higher returns than cash, outperforming cash by 8.1% on average compared to other asset classes, with the best return followed by corporate bonds and then gold.

What advice does the transcript give for individuals regarding their investment strategy during an election year?

The transcript advises that there should be no reason to deviate from or adjust your investing strategy just because it's an election year, and emphasizes the importance of not panicking and maintaining a well-diversified investment portfolio.

What resource does the transcript recommend for learning about successful investing?

The transcript recommends checking out several videos and a free master class for more insights on how to invest successfully and manage your money.