This week, I’m talking about investing in an election year to help you keep the proper perspective with your money and your retirement during a very contentious and anxious time. 

As I record these episodes in advance, I don’t yet know what the results of last night’s election are. But here’s what I do know. There’s a very high chance that the stock market will be volatile in the days and weeks ahead as we digest the results and what that means for Americans and American businesses. 

Today, I want to talk about the impact of the election on markets. The reality is that if you go back almost 100 years, the stock market doesn’t really care all that much what happens in the election. 

If the incumbent is re-elected, the stock market for the following year was higher by about 6.5% and if a new President is in the White House, returns were only slightly lower at 5%. 

So the point here is that although an election year means potential changes to policy, laws, taxes, regulation, etc., the stock market’s reaction tends to be pretty muted, no matter what happens. And that’s because changes to policy and laws tend to be slow and many campaign promises never materialize. 

Predicting political outcomes in our democracy is about as accurate as predicting when my 3 year old will finally be fully potty trained. In the meantime, just like with our politicians, I’ll have to put up with a lot of crap in the meantime. 

And if you think about it, it makes sense that doom and gloom predictions about the impact of politics on the economy and stock markets are overblown, because no matter what happens, the pace of change is usually slow and no matter what happens, the stock market likes the fact that we have some clarity over the political landscape over the next 2-4 years. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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