Every four years, a topic that’s often a concern for clients comes up in our review meetings. If you’re thinking it’s related to the election cycle, you’re right. Presidential elections bring up many emotions in people. Hope, frustration, anger, suspicion, and apathy to name a few. It’s a topic that will continue to come up right through Tuesday, Nov. 5.

It doesn’t help that we’re constantly bombarded by ads, texts, and news coverage. But should an election impact your finances? Should changes be made to your investment strategy in an election year? Let’s take a look at the history of the stock markets in election years for clarity.

Since 1948, the S&P 500 index has averaged just over a 10% return each election year. The index is a market-cap weighted index tracking the stock performance of the 500 largest U.S publicly trades companies.

The average intra-year downturn in an election year has been 14%, which is in line with historical norms for all years. Volatility is nothing new when it comes to the world of investing. We’d all love for our accounts to grow on a steady upward trajectory every year, but that’s not the world we live in.

People have always found reasons to sit on the sidelines and wait out market volatility. But that’s not always prudent. Look what happened back in 2008, the year I graduated from college.

Lehman Brothers famously collapsed just two months before the election. And the world economy was in a tailspin. Yet investing in the S&P 500 index at the start of 2008 would have returned investors an average of nearly 8% per year over the next 10 years.

It’s difficult to remove emotions from your investment decisions. I recently came across a chart that illustrates how difficult it can be. Taking every election year since 1992 into account, on average, the average net flow to money market funds outpaced the average net flow into investment funds nearly 4-to-1. So many are seeking safety amidst the uncertainty when they should be seeking opportunity.

So what will this election year bring? There have been 24 elections since the S&P 500 index was created. Twenty of those 24 election years had positive returns, with an average annual return just over 11%. Of course, every year is different, and past performance is not an indicator of future results. The important thing is to control what you can control. One of the most difficult parts of being an investor is resisting the urge that tells us, “This time is different.”

The bottom line is I think it’s wise to stay the course. Stick to your plan. If you haven’t taken the time to discuss your financial future, 2024 is as good a year as any to get the ball rolling.

There will always be reasons, or perceived reasons, to wait for the uncertainty to pass. The world has shown us that the next wrench thrown into our financial wellbeing will be something none of us could have imagined.

I certainly didn’t expect a global pandemic going into 2020. But here we are, and the markets have been resilient. So if the upcoming election fills you with dread, you’re not alone. Elections bring up strong emotions in people. Just don’t let them impact your investing strategy.

Email your questions to kenmorris@lifetimeplanning.com. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Society for Lifetime Planning is not affiliated with Kestra IS or Kestra AS. https://kestrafinancial.com/disclosures