Let’s face it: we live in a hyper-political world. Everything and everyone seemingly wants to bring up the latest political news. So it’s easy to think that politics is all-encompassing.
It’s in the news, of course. But it’s also in sporting events, talk shows, and even comedy shows. It’s everywhere.
But even if politics is everywhere, there’s one part of your life where it should be avoided at all costs: Your Money.
Mixing your money and your politics is one of the biggest mistakes that you can make.
Here’s why you shouldn’t mix politics and money
Simply put: the stock market in the U.S. has done well under both Democrats and Republicans. Even though those parties advocate for and implement vastly different policies.
Some people make the mistake of letting which party is in power determine their financial decisions.
When their preferred party is in power, they think things will be wonderful and the economy and the country will flourish.
But when their non-preferred party is in power? They start thinking that the economy will tank and bring the stock market down with it.
However, the stock market has done well under presidents with vastly different political views. Under President Reagan (a Republican), the S and P 500 gained 207%. And under President Obama (a Democrat), the S and P gained 233%.
Unfortunately, too many people are making investment decisions based on what party is in power. And it’s led to the sad situation where “Investors, on average, performed better when their political party was in power – about 2.7% per year”.
Why does that occur? Because when your preferred party is in power, you are more likely to be optimistic about the stock market. And that means you’re more likely to stay invested.
But when the dreaded other party is in power, you are more likely to have less confidence in the stock market, and more likely to miss out on the gains.
So my advice here is simple.
After creating a comprehensive financial plan, that is tailored to your goals and your life, stick to that plan. Regardless of whether Republicans or Democrats have more power in DC.
Now if there are things in your life that change, then you may very well need to change your plan.
But you shouldn’t change your plan just because the party you don’t like is in power.
And if you ever have any concern about what policies a party is implementing and how it will affect your money, call a CERTIFIED FINANCIAL PLANNER™ to get an objective opinion about your concerns.
If you want to talk to someone who can help you make objective decisions about your finances, I’d love to see if I can help. You can email me at firstname.lastname@example.org, call me at 424-258-4460, or contact me here.