#029 – The 5 Biggest Mistakes People Make When Investing During Elections

By: Ryan Greiser, CFP®

Read Time: 3 Minutes

Elections shake markets, but they shouldn't shake your investment strategy.

Every election cycle, the markets experience volatility stirred by political uncertainty. This often leads investors to make snap judgments based on the shifting political landscape.

However, knee-jerk reactions to elections can undermine long-term investment success. This article will guide you through the common pitfalls that investors face during these times and how to avoid them.

By the end of this read, you'll be equipped to navigate election seasons with confidence and maintain your investment focus.

Let's dive in.

Mistake 1: Reacting Emotionally to Political News

Investors often react emotionally to election news.

This can derail long-term investment strategies.

The benefit? You maintain a clear head and make better investment decisions.

Several people I've worked with reacted hastily to election outcomes—switching to cash fearing presidential doom that never came. During Trump's and Biden’s terms, despite dire predictions, the markets grew significantly.

Reacting without a sound strategy often leads to missed opportunities.

Maintaining your strategy through the election noise can significantly benefit your portfolio’s growth.

Next, we’ll look at the dangers of abandoning your investment strategy.

Mistake 2: Abandoning Long-Term Investment Strategies

Switching investment strategies during elections is a common mistake.

It's often based on fear, not facts.

The big benefit here is stability—keeping your eyes on the prize ensures continuous growth.

Historical data shows consistent market recovery and growth across various administrations. Those who stayed the course reaped the benefits.

A steady, well-thought-out investment strategy typically outperforms erratic shifts in approach.

Remember, consistency is key when investmenting.

Up next, we'll tackle the mistake of overconsuming media.

Mistake 3: Overconsumption of Media

Getting swept up in election media hype is easy.

It fuels anxiety and can provoke rash decisions.

The benefit is peace—less noise means more focus on what truly matters.

The rise in media noise as elections near is inevitable. Those who can tune out the excess chatter keep their investment strategy on track.

Media can distort reality, affecting your financial decisions.

Limiting media exposure keeps you rational and grounded.

Let’s move on to the importance of having a clear investment process.

Mistake 4: Not Having a Clear Investment Process

Lacking a clear investment strategy is a risky gamble during elections.

It leaves you vulnerable to market whims.

The benefit of this approach is control—you dictate your financial future, not the circumstances.

Investors who know their strategy inside and out are less likely to falter when uncertainty hits.

A solid, well-understood strategy provides a safety net against hasty decisions.

Understanding your investment process can protect you from market panics.

Next, we discuss the role of discipline in investing.

Mistake 5: Lack of Discipline in Following the Investment Strategy

Failing to adhere to your investment strategy is a critical error.

Discipline is the backbone of successful investing.

The major benefit? Long-term success—discipline beats market timing every time.

Warren Buffett famously said that successful investing requires no extraordinary intelligence but discipline to control urges that get others into trouble.

Discipline ensures you are not swayed by fleeting emotions.

Sticking to your strategy consistently leads to reliable growth and less stress.

Now, let's wrap things up.

Conclusion:

Investing during election seasons does not have to be a perilous endeavor. By avoiding these common mistakes, you empower yourself to make informed, rational decisions that align with your long-term financial goals.

I'll see you next week,