“Oh my God! The Democrats won!” “Oh my God! The Republicans won!”
“Time to pull all my money out of the market. ““Time to sell all of my real estate.” “I’m going to buy Gold and hide it under my pillow.” “I’m moving to Canada!” “Bitcoin or bust!” Don’t make election money mistakes!
Please stop. I know the election can lead to stress, anxiety, and emotional decisions. You cannot invest or make moves with your money based on emotion. If you are an investor, you are in it for the long haul, not 4 years only.
Typical Average Market Returns
If you really think one of the two candidates is going to somehow destroy the entire country and system as we know it, and that the American economy is going to take a complete nosedive that it will never recover from, perhaps you should review the history of the stock market for one.
From 1871- 2019 the stock market has averaged between a 10%-11% return annually. (Source: Investopedia) So that means over the last ~120 years, the stock market has averaged 10%-11% every year! Now some may be higher, some may be lower, we have had our ups and downs for sure.
Real estate has fared similarly throughout the years as well, obviously this is a little more difficult to calculate, whether you own rentals, condos, your own home, REITs, etc.
Disasters we have survived so far- the short list.
Here is the main point: this is what we have survived thus far in the last 120 years:
- 2 Presidents assassinated: McKinley in 1901 and JFK 1963
- Civil rights expansion- we have witness to great expansion of civil rights- a decent amount of time in the stock market study is when we had segregation. Thankfully this has gotten better and continues to improve.
- Women receiving the right to vote- some thought this was controversial
- The Great Depression
- Herbert Hoover (generally regarded as one of the worst presidents ever)
- World War 1
- The Spanish Flu
- Pearl Harbor
- World War 2
- The Vietnam War
- The Cold War
- Students practicing hiding beneath their desk in case a nuclear bomb was dropped. Duck & Cover!
- The President being impeached
- Gas shortages and poor economies
- Iran Hostage Crisis
- Gulf War
- Black Monday in 1987 where an investor killed themselves from loses, and in another instance a man killed his stock broker
- The dot.com boom and bust causing the markets to drop
- The terrorist attacks of 9/11
- The Iraq War
- The Great Recession and bailouts
- The housing market collapsing shortly after the great recession
- COVID-19 (So far, the market at the time of writing is up 9% YTD)
That’s the short list too. We as a country have survived so much, yet we still average a 10% return on our money in certain investments. Obviously, there is no guarantee in the future. However, after looking at that list, personally, I don’t think the election of 2020 is nowhere near as terrifying as some of the other events that has happened.
Adapt & Survive
While the investing climate may change depending on politics, informed folks will always figure out a way to make money, invest, and become financially free; this will not change. Savvy readers, like the readers of this blog will always adapt and find a way to succeed. Have hope, not fear. Believe in yourself, turn off the news for a bit.
Now, I am not encouraging one to be disengaged in politics and government, quite the opposite. Vote, volunteer, donate, use your voice for whatever you believe in. But at some point, take a break and take care of yourself!
So what should I do?
When you invest for the long term, you must practice discipline. Take this year for example, the sky was falling with COVID-19, and it is still a scary world out there for some due the this virus. We have had civil unrest, a highly contested election, people are calling 2020 the worst year of their lives. What does the market do- well as of this article in November 2020 the SP500 is up 9.48% just shy of the average we mentioned above.
Although this year has been turbulent, your dollars who you put to work in your investments have been working regardless of what is happening. Your dollar soldiers don’t have emotions, they work for you regardless of current events, regardless of politics. And if they stop working forever, then we may have bigger problems to solve.
If you haven’t started investing, now is the best time if you have a long-term horizon. Just exactly what you invest in is up to you. Real estate has also generally fared well even though some of the COVID related rent eviction moratoriums make some landlords nervous.
The economy might sputter, adversity will continue, bad things will happen, stocks will drop, foreclosures will rise, the true investor will act with the big picture in mind. If you ever get nervous look at the list above of all the terrible things that have happened, and we have endured, and we will endure. If you want to take a look at how to play defense to protect yourself financially from down investing years, take a look at my article here. Happy investing!
It’s ok to not be ok.
Side note: If you are suffering from election stress even though it’s over, it is ok. Around 70% of Americans are feeling anxiety about politics and fighting about it on the internet. If it gets to the point where it is affecting your life and the ones of those around you, don’t hesitate to talk to someone about it. Whether it is a close one to you, or potentially a qualified therapist. There is no shame in ensuring that you are mentally healthy.
While I primarily write about finances and things you can do to put your family in a better financial situation, if you are not mentally ok, that becomes priority number one. It’s OK to not be OK in general, but you need to talk to someone about it and not bear that burden.
Take a breath. It will be ok. Stay safe, and let’s figure this out together!