PFA Updates

Sep 19, 2024

As we approach the 2024 presidential election, some may wonder about its potential impact on their finances. While elections are undoubtedly important, we’ve done some homework and come to the following conclusion: you may care passionately about who wins, but your investment portfolio probably doesn’t.

Key Insights:

• Markets over the long term: As the accompanying chart shows, the stock market has fluctuated under the leadership of both parties. However, the long-term trend suggests that the stock market's performance may have more to do with the overall strength and resiliency of the U.S. economy than the person who sits in the Oval Office.1
• Economic factors: Data suggests economic trends tend to have a more consistent relationship with market performance than who wins in November. Improving economic conditions (which can include falling inflation) tends to create a more favorable business environment.2
• Prepare for short-term volatility: While elections can trigger some market volatility, it’s critical to keep short-term events in perspective and not allow them to distract you from your long-term financial strategy.
• Tax policy differences: Keep in mind that what can have more of an impact on your finances is tax policy. But remember, the president can lay out a tax policy, but it is up to Congress to pass any tax legislation into law.3,4
• Tax changes take time: The tax policies outlined by the Republicans and Democrats are based on assumptions and will be subject to revisions during the legislative process. We encourage you to consult your tax, legal, and accounting professionals before modifying your tax strategy. We always welcome collaborating with your tax professional to help align your long-term strategies.

If you have any questions about your financial plan or investment portfolio in light of the upcoming election, please don't hesitate to reach out. We're here to help you navigate any uncertainties as you pursue your financial future.

1. Baird.com, March 14, 2024. The stock market is represented by the S&P 500 Composite Index, which is an unmanaged index that is considered representative of the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost. https://www.bairdwealth.com/insights/market-insights/baird-market-strategy/2024/03/all-that-matters-elections-and-your-money/

2. U.S. Bank, June 21, 2024 https://www.usbank.com/investing/financial-perspectives/market-news/how-presidential-elections-affect-the-stock-market.html

3.Tax Foundation, June 2024  https://taxfoundation.org/research/federal-tax/2024-tax-plans/#Topics

4.CNBC.com, June 13, 2024 https://www.cnbc.com/2024/06/13/biden-tax-policy-expiring-trump-tax-cuts.htm