I have a couple of CDs maturing in a few days, around $300,000 in total, and I am considering investing it in S&P 500 index funds. I am a healthy 66-year-old retiree, I am physically and mentally healthy, and I have most of my expenses covered. I could let this money grow for the next 10 years until I am 76, if I continue to be healthy. Fingers crossed.

Should I wait to invest in the stock market until after the election or do it now?

Investing Retiree

Related: Is it unethical to anonymously donate to a political party? 'I fear that our democracy could be undermined.'

Dear Investing,

Politicians come and go, but the stock market abides.

Manage your finances like nobody's watching, play mahjong like you're a Nobel Prize winner, and invest like you have no interest in who occupies the White House. When you start second-guessing yourself and wondering whether a Harris or Trump presidency will be a boost or a bust for stocks, you are attempting to time the market. That, except in rare circumstances, is a fool's game.

Don't take my word for it (or anyone else's for that matter - it's your money after all). "With the Federal Reserve likely to cut interest rates further amid a resilient economy, we continue to forecast S&P 500 earnings to grow 11% this year and 8% in 2025," Solita Marcelli, UBS (UBS) Americas chief investment officer, writes in a recent note.

Proceed apace, and let the chips fall where they may on Nov. 5. "Reducing equity exposure in the wake of a 'disappointing' election outcome is likely to be counterproductive over the longer term, in our view - data going back to 1928 show that U.S. equities tend to rise into U.S. presidential elections and thereafter," Marcelli adds.

I do, however, have some other advice, based on your age and income. I recently told a 69-year-old woman who had $3.9 million in assets and $6,000 a month in income that if she had a high tolerance for risk, I would not deter her from holding most of her assets in equities because she was living comfortably on her existing income and was a long-term investor.

You are taking $300,000 now and planning to invest it in the stock market at the age of 66 - and not having more information on your income and expenses or how much this $300,000 makes up of your overall assets gives me pause. Don't bet the house on the market at 66, if you need that money for your retirement. It should be a long-term investment.

Manage your finances like nobody's watching, play mahjong like you're a Nobel Prize winner, and invest like you have no interest in who occupies the White House.

If you use the rule of thumb that you should subtract your age from 100, which gives you 34%, that (roughly) is how much money you should probably (there are no conditional statements as there are no guarantees) have that percentage invested in equities. Even if you expect to live into your 90s, think twice before investing more than 50%.

The S&P 500 SPX tends to do well in the weeks leading up to a U.S. presidential election, rising by an average of 1.2% in the two weeks prior going back as far as 1952. However, the presidential elections in the U.S. are nothing if not full of surprises and, despite this record, the S&P fell by 2.2% in two weeks before the 2020 presidential election.

"Uncertainty around elections - and the potential policy decisions of new governments - can lead to fluctuations in the stock market," economist Clive Walker writes in the Economics Observatory blog. "Over the longer term, the party in power seems to make [a] limited difference to the performance of shares in publicly listed companies."

All of the above leads to volatility. "Successfully predicting election outcomes is difficult," he adds. "Over the last decade, pollsters, political analysts and reporters have made some notable forecasting errors. One clear example is the 2016 US presidential election, when estimates put the likelihood of Hilary Clinton winning at between 71% and 99%."

Rather than focus on the election, concern yourself more with your own diversification strategy, or lack thereof, and the broader economic environment.

But the outcome of close races, like the one we see between Donald Trump and Kamala Harris that will be played out in a handful of swing states, is also anybody's guess. Markets don't like uncertainty, but it's inevitable with a race such as this. "Financial markets reflect this challenge," Walker says. "In the absence of a clear consensus about the outcome, we see larger daily price changes that tend to offset each other."

Vanguard recently analyzed the performance of both U.S. and global stock markets between August 1971 and September 2024, a timespan during which there were 14 presidential elections, including the forthcoming election on Nov. 5. Lukas Brandl-Cheng, investment strategy analyst at Vanguard, Europe, concluded that the impact of U.S. presidential elections on stock markets has historically been "minimal."

He advises against short-term jitters. "The events that impacted stock markets the most were of a much bigger scale," he added. "These included the bursting of the dot-com bubble - when technology stocks fell after a rapid rise in valuations in the late 1990s - and the global financial crisis in 2007-2009. Stock markets eventually recovered from these major, global events and went on to reach new highs."

Anu Gaggar, vice president of capital markets strategy at Fidelity, says U.S. markets typically rise in an election year. "Politically driven economic cycles are more relevant to emerging-market economies or economies with weaker institutions," she concludes. "They're not as relevant for developed markets like the U.S." What's more, she cautions about betting on sectors: "There are very few consistent patterns of relative sector returns in election years."

Concern yourself more with your own diversification strategy, or lack thereof, and the broader economic environment. Stock markets are "non-partisan," as Gaggar points out. That's partly true, in that they are made up of investors of varying political stripes whose job it is to follow the money, whether that's based on technical analysis, fundamental analysis or plain old-fashioned fear and/or greed.

Neither of those emotions are good starting points, especially with $300,000 at your disposal.

Related: 'I'm convinced the U.S. will be drawn into World War III': How do I prepare my finances?

You can email The Moneyist with any financial and ethical questions at [email protected], and follow Quentin Fottrell on X, the platform formerly known as Twitter.

The Moneyist regrets he cannot reply to questions individually.

More columns from Quentin Fottrell:

'I'm struggling with grief and loss': I inherited seven figures after my parents died young. Why do I feel guilty?

I'm 54 and have terminal cancer. I have a wife, 47, and 8-year-old child. How do I split my $1.2 million retirement and life insurance between them?

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-Quentin Fottrell

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