Deciphering Fact from Fiction: How to Stay True to Your Financial Goals this Election Year.

During an Election year, our lives become flooded with news, opinions, and predictions, which can cause uncertainty, stress, and poor financial decisions. Historically, in times of change and uncertainty, there are common patterns in investors' mistakes.

Below are three common mistakes made by investors in election years, and ways to avoid these pitfalls.

Overreacting to Election Headlines. 

It’s no secret that media coverage ramps up during election cycles. From sensational headlines to dire predictions, the 24 hour news cycle thrives on provoking reactions. There is nothing wrong with wanting your candidate to win. Investors may run into trouble when they place too much importance on election results and make hasty decisions based on short-term political events or perceived threats to the market. 

The truth is: Markets have weathered numerous elections, each with its own set of challenges and opportunities. Historical data shows that while volatility can spike during election years, long-term investment strategies tend to prevail. It is crucial to stay focused on your financial goals rather than the daily headlines. 

Trying to Time the Market. 

In an election year, it’s tempting to think you can outsmart the market by predicting the winner and adjusting your portfolio accordingly. However, timing the market- especially during such unpredictable times- may lead to missed opportunities and unnecessary losses. Waiting on the sidelines may lead to reentry fear, and keep you sitting idle long after the election is over.  

The truth is:  The market is influenced by a vast array of factors, many of which are unrelated to election outcomes. Reacting to short-term political shifts rather than sticking to a well-constructed investment plan can cause you to buy high and sell low, the opposite of a successful investment strategy. Instead, we should remain committed to your long-term plan, making adjustments only when necessary and based on solid data. 

Letting Emotions Drive Decisions.

Elections often stir strong emotions. Whether it’s fear, excitement, or uncertainty, emotions can cloud judgment and lead to impulsive financial decisions. This is one of the most significant risks during election years- allowing feelings to override rational investment strategies. 

The truth is:  Emotional investing often results in poor decisions. When emotions run high, it’s essential to rely on a disciplined investment process. That’s why we are here: to provide guidance, keep emotions in check, and ensure that your investment strategy remains aligned with your long-term financial objectives. 

Staying the course together. 

Our goal at Ecos Wealth Advisors is to help you navigate these turbulent times with confidence and clarity. While elections are undoubtedly important, they are just one of many factors that may impact the market.  Our focus will remain on your long-term financial goals, your portfolio is well-positioned to weather this storm. 

If you have any concerns or would like to discuss your portfolio in light of the upcoming election, or just for year end planning purposes, please don’t hesitate to reach out.