Don’t let election jitters derail your retirement plans
As the 2024 U.S. presidential and congressional elections rapidly approach, investors are waiting with bated breath to see if their preferred candidates will take or retain power – and bracing for adverse outcomes if they fail to win.
According to a new survey by Nationwide, around one-third (34%) of investors believe the economy will plunge into a recession within 12 months if the political party they least align with gains more power in the 2024 elections. Additionally, half believe the cost of living will rise, more than a third (34%) believe their taxes will increase and one-third (33%) believe new economic policies will pass and negatively impact their financial future.
As election fears take hold, some investors are taking action by turning to their portfolios and retirement plans, with one in four (26%) planning to invest more conservatively and nearly one in five (18%) planning to diversify retirement solutions within their portfolios.
But is it wise to make changes to your investment portfolio based on political inclinations?
“Election seasons can be draining on all of us as we’re hit with relentless campaign ads and messaging, leading us to believe we need to prepare our investment portfolios for the worst,” said Kevin Jestice, senior vice president of the Nationwide Investment Management Group. “However, it’s important to remember that election results in either party’s favor have historically had little impact on future investment returns.”
According to a Nationwide white paper, market history shows that stock returns have been fairly similar under both Democratic and Republican presidents. Even one-party legislative control has had no discernible effect on market returns.
Instead of making emotional decisions based on short-term political shifts, Jestice suggests working with an advisor to stay focused on long-term strategies. In fact, Nationwide’s survey found that 63% of Democrats, 59% of Republicans and 58% of Independents agree that working with an advisor during an election year helps them feel more secure, regardless of who is elected.
Some advisors are also helping calm nerves by implementing more comprehensive solutions into retirement portfolios, counseling investors on taking capital gains early in case tax laws change and taking Social Security benefits later, according to Nationwide’s survey. Advisors are also increasingly leveraging solutions like annuities to help protect against market risk, so make sure you talk to yours about which solution might be right for you, Jestice said.
“It can be a good thing to be informed about politics and hold strong beliefs, however it’s important to recognize the influence strong political views can have on our decision-making – including how we invest money for the future,” Jestice said. “The best thing investors can do right now is tune out political noise and tune in to their long-term financial goals by working with a trusted advisor.”
Need to connect with a financial professional? Nationwide has a team of specialists ready to listen and learn about your unique insurance and financial needs.
This material is not a recommendation to buy or sell a financial product or to adopt an investment strategy. Investors should discuss their specific situation with their financial professional.
Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.
Nationwide Funds distributed by Nationwide Fund Distributors LLC, member FINRA, Columbus, Ohio.
Nationwide Investment Services Corporation, member FINRA, Columbus, Ohio
NFM-24362AO
10/2024