This is a question we are always asked when election time comes around, or, investors with cash to invest say “I’ll just wait to see what happens in the election and for things to settle down before I invest”.

Does waiting make any difference?

Does it matter which party ‘gets in’?

To answer these questions, we recently had a conversation with an expert at Dimensional Fund Advisers who shed some light on this topic.

Whilst the following graphs are US centric, this still applies to more local election time in New Zealand too, in that it’s unpredictable, there is no pattern, and you need to invest for your own personal goals and long term planning aims, and not get caught up in trying to guess what may or may not come about.

It’s US election time coming up, and as the US is a major area of the world portfolios are invested in, these graphs are worth taking note of and ‘just getting invested’, controlling what you can control and not worrying about what you cannot.

Lets look at history and consider the annual returns of the S&P 500 Index (the 500 leading publicly traded companies in the US) and how these have been affected by the whether the Democrats or Republicans sat in the White House

 

And what about the S&P 500 Index returns DURING and AFTER US election years:

As you can see, history tells us it’s futile to try to predict the future and elections have made no real difference to investment returns.  Being invested ‘full stop’, and staying invested, is the best course of action to grow wealth and protect it.  Trying to wait for the right time, will mean the right time never comes, and you could be looking back wishing you had taken advice around what goals you want to achieve, and just ‘got started’, at that is what you can control!

Charlene Overell
G3 Financial Freedom Ltd
05.06.2024

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