Don't Let the Election Derail Your Investment Strategy
Ignore the headlines. With a solid financial plan and a well-diversified portfolio, you can confidently ride out any market volatility caused by the election.


As the U.S. presidential election approaches, it’s natural for investors to feel a surge of anxiety about its potential impact on their portfolios. With heightened media attention and the constant drumbeat of predictions, it’s easy to believe that the outcome of the election will dictate market movements. However, history tells a different story.
In reality, while elections bring volatility, they rarely determine long-term market performance. So how should you, as an investor, navigate the political landscape and protect your portfolio from the noise? Here’s what you need to know.
Uncertainty: The market’s greatest challenge
Elections are synonymous with uncertainty, and markets notoriously dislike uncertainty. This year’s race is shaping up to be one of the closest in decades, which could contribute to market volatility in the short term. However, investors should avoid knee-jerk reactions based on political headlines.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Historically, markets have shown remarkable resilience during election years. In fact, data shows that since 1970, the S&P 500 has delivered an average return of 11.6% during election years — outperforming the average annual return of 9% to 11%. This illustrates a critical point: The best course of action in the face of uncertainty is often to stay invested. Trying to time the market during volatile periods rarely pays off. Missing just a few of the best-performing days can significantly reduce long-term gains.
Does the party in power matter?
A common misconception is that the stock market performs better under one political party than the other. However, when we analyze decades of market data, we find no clear correlation between party control and stock market performance. Whether a Democrat or a Republican is in office, the stock market has historically generated positive returns over time.
A cold, calculating market
It’s important to remember that the stock market is not driven by ideology or political promises. At its core, the market is a mechanism for valuing companies based on their future earnings potential. It’s a cold, calculating entity that cares about corporate profits — not policy debates.
When a new president is elected, markets quickly adjust to any anticipated policy changes, factoring in their potential impact on company earnings. Whether the issue is taxes, tariffs or regulations, the market’s primary concern is how those policies affect corporate profitability.
In some cases, policies that seem harmful to certain sectors may already be priced into stock valuations before they are even implemented. Meanwhile, companies have proven time and time again that they can adapt to changing regulations, innovate and find ways to thrive regardless of the political environment.
Focus on the fundamentals
While elections may dominate headlines, they are just one of many factors influencing the market. Global economic trends, interest rate changes, corporate earnings and consumer behavior all play a far more significant role in determining long-term market performance.
Conclusion: Don’t let the election derail your strategy
The U.S. election may add an extra layer of uncertainty to the market, but it’s important not to let it derail your long-term investment strategy. History has shown that markets reward patient investors who stay the course, regardless of political outcomes.
Rather than reacting to political headlines, focus on the fundamentals: a diversified portfolio, a clear financial plan and the discipline to remain invested through volatile periods. By doing so, you’ll be better positioned to achieve your financial goals — no matter who sits in the White House.
Related Content
- Election 2024: Politics and Your Portfolio
- What Investors Should Keep in Mind This Election Season
- Could the Election Impact Interest Rates?
- Should You Still Have Bonds in Your Portfolio?
- In ESG Investing, Money Changes Everything
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Stacy is a nationally recognized financial expert and the President and CEO of Francis Financial Inc., which she founded over 20 years ago. She is a Certified Financial Planner® (CFP®), Certified Divorce Financial Analyst® (CDFA®), as well as a Certified Estate and Trust Specialist (CES™), who provides advice to women going through transitions, such as divorce, widowhood and sudden wealth. She is also the founder of Savvy Ladies™, a nonprofit that has provided free personal finance education and resources to over 25,000 women.
-
Don't Let a "Clunker" Fund Drag Down Your 401(k)
401(k) lineups are loaded with overpriced, underperforming fund options. Here's how you can dump the clunkers.
-
Do You Need Flood Insurance? I'm an Insurance Expert, and Here's Where You Can Get It
Standard homeowners insurance does not cover flood damage, so you might need separate flood insurance, which you can get either through FEMA or private companies. Here are the details.
-
Do You Need Flood Insurance? I'm an Insurance Expert, and Here's Where You Can Get It
Standard homeowners insurance does not cover flood damage, so you might need separate flood insurance, which you can get either through FEMA or private companies. Here are the details.
-
I'm an Investment Professional: These Are the Three Money Tips I'm Giving My College Grad
College grads can help set themselves up for financial independence by focusing on emergency savings, opting into a 401(k) at work (if it's offered) and disciplined, long-term investing.
-
Stock Market Today: S&P 500, Nasdaq Hit New Highs on Retail Sales Revival
Strong consumer spending and solid earnings for AI chipmaker Taiwan Semiconductor Manufacturing boosted the broad market.
-
If You'd Put $1,000 Into Berkshire Hathaway Stock 20 Years Ago, Here's What You'd Have Today
Berkshire Hathaway is a long-time market beater, but the easy money in BRK.B has already been made.
-
New SALT Cap Deduction: Unlock Massive Tax Savings with Non-Grantor Trusts
The One Big Beautiful Bill Act's increase of the state and local tax (SALT) deduction cap creates an opportunity to use multiple non-grantor trusts to maximize deductions and enhance estate planning.
-
Know Your ABDs? A Beginner's Guide to Medicare Basics
Medicare is an alphabet soup — and the rules can be just as confusing as the terminology. Conquer the system with this beginner's guide to Parts A, B and D.
-
I'm an Investment Adviser: Why Playing Defense Can Win the Investing Game
Chasing large returns through gold and other alternative investments might be thrilling, but playing defensive 'small ball' with your investments can be a winning formula.
-
Stock Market Today: Powell Rumors Spark Volatile Day for Stocks
Stocks sold off sharply intraday after multiple reports suggested President Trump is considering firing Fed Chair Jerome Powell.