Why ‘ignoring the noise’ is the best strategy for your financial plan in times of political volatility…and three other tips to get your financial plan right today
This is a blog I didn’t expect to write until later this year.
Then, on a distinctly damp Wednesday, Rishi Sunak decided it was the right time to give the UK a choice about who should run the country for the next few years!
Now I’m writing this on Saturday the 25th of May but if I’m being perfectly frank the recommendations I’m going to make on this blog are pretty evergreen however I’ve had a number of conversations this week about stock markets and how they perform when elections are happening…
…and there’s no better year to talk about than 2024. 64 countries will vote in 2024 with half of the worlds population positioned to vote, including the UK.
However what this means for your financial plan, is to do absolutely nothing!
It was summarised best by the brilliant Mr Warren Buffet who said…
“If you mix politics with your investment decisions, you’re making a big mistake”
The reality is that all of the data tells us that markets are pretty resilient and tend to be, over the medium to long term, pretty agnostic to who is in charge.
So, whilst there might be political change in the UK, in the US and in any of the other 62 countries facing elections this year…the advice is always the same.
- Make sure your portfolio is really broadly globally diversified.
- Make sure you understand how much risk and volatility your investments have
- Keep an eye on costs and understand how much you’re paying for your investments.
- Ensure you’re making the most of tax efficient savings wrappers like pensions and ISA’s
And
- If you’re in doubt, or need help, get support from a professional you can trust.
However, the reality is that making arbitrary changes based on what might or might not happen politically is not a robust investment strategy. Both in the US and the UK the evidence points to the fact that over the medium to long term it doesn’t really matter.
If you want to talk this through, want to see the research in this area which means that I’m confident on this particular point or would like help from a professional who can support you to make the right decisions for you, feel free to get in touch.
