With the presidential election just weeks away, a financial planner shares his best advice for your money

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• Expect short-term volatility in the stock market surrounding the U.S. presidential election.
• Don’t let that volatility affect your long-term strategy — stay invested no matter who wins.
• Instead, take four steps to solidify your financial position right now.

With a major presidential election looming, it’s impossible not to wonder how the outcome will impact you and your money.

What should you do with your finances ahead of the vote? Do you need to make changes in your investment portfolio before the election? As a financial planner, here’s what I see as things to do (and what to avoid).

Keep politics out of your portfolio

You have good reason for holding the political views that you do. But when it comes to your investments, keep some distance between politics and your portfolio.

If you zoom out for a broader perspective, the US stock market has grown in value over time, regardless of which party is in the White House or which party controls Congress. Although it’s tempting to draw definitive connections like “the market does better when X is in power” or “stocks go up when Y happens,” it’s incredibly difficult to single out a specific cause for market movements or events.

I would not be surprised if we see increased volatility in the stock market around the election. In fact, I’d expect it. But if you’re a long-term investor, part of your job is to tune that out. It’s noise, not signal. 

This is not to say that elections don’t matter or there’s no difference between the two candidates involved. It does mean that you should (a) expect big swings in either direction in the short term and (b) keep calm and stay invested.

Beyond Your Hammock’s fractional CIO, Mario Nardone of East Bay Investment Solutions, shared the below chart with us and our clients earlier this year. It shows what happens if you jump in and out of the market based on whether your preferred party is in the White House … and how those returns get crushed by the investor who simply stayed invested the entire time:

On average, market returns have been positive in an election year and the subsequent year, regardless of who got elected. It’s more important to focus on the long term for your investments rather than try to guess what’s going to happen in the immediate future.

4 actions you can take right now, before the election

As human beings, most of us have a bias toward action. When we feel strongly about an issue or event, it feels much better to do something rather than sit by and do nothing.

But your money, especially your investment portfolio, likely needs you to “do nothing” ahead of the election.

This is especially true if you’re a long-term investor with many years (or decades) between now and when you hope to start drawing from your savings and investments to support your lifestyle. Still, there are some proactive steps you can take to put yourself in a better financial position now.

1. Confirm you have access to cash reserves

Always maintain an emergency fund or some amount of cash on hand that is easy to access as soon as possible. A high-yield savings account is a great option for this; CDs and vehicles like iBonds are not.

2. Reduce any major spending areas

If there are obvious places in your budget to cut back, try to remove those costs now and direct that money to savings instead. Having a little extra cash flow power can give you peace of mind.

3. If you have excess cash, make it work

If you have a full emergency fund, cash to use on your short-term goals, and still have extra money in the bank, you’re missing opportunities to earn more. Move excess cash to something like a CD if you want to lock in current rates (Business Insider tracks the best CD rates) or your investment account if you’re prioritizing long-term growth. Also make sure you’re tracking to max out qualified retirement accounts and vehicles like HSAs before December 31.

4. Consider ways to reduce your tax bill

One of my favorite strategies for our clients is to donate appreciated shares of stock to charitable organizations and replenish the value of the donated stock with new cash into your account. You need to do this before year-end to benefit on last year’s tax filing. You may also want to consider tax-loss harvesting to help offset capital gains.

The policies we pursue and set at all levels of government matter, and we should care about them. I strongly believe in proactively working to change what we feel is wrong and supporting what we believe is right. Making impulsive or emotional money moves ahead of an election, however, does not help anyone — and can harm you personally most of all.