There’s a chance that the aftermath of the election could throw the stock market into chaos. As USA Today reports, the market often fluctuates during uncertain times. You could be tempted to make a move during that potential downswing. You could be tempted to pull out of the market altogether. Here’s why you should stay put.
Cashing out of the stock market during downswings is almost always a bad idea. You’d first have to try and time the market, essentially guessing when you’d stand to make the most return on your stocks. Can you predict the future? Exactly. What if you sell your stocks and the market doesn’t plummet even further? What if you sell and the market surges?
Instead of acting rashly and pulling out of the market, try this strategy: Nothing. Even if the market does take a hit after the election, it will eventually rebound. You want to be there for that recovery. Research has shown that no matter how bad things get for the market in the short term, you’ll reap benefits over the long term if you remain invested.
If you’re worried about the market and think you’ll need access to cash soon, focus on padding your emergency fund. This way, if the market does take a turn for the worse, you won’t be tempted to cash out. You’ll know you have a healthy savings account to tap into first. If you’re close to retirement, you might consider rebalancing your portfolio into more conservative choices. Either way, the best reaction to any market uncertainty is to sit tight!