One of the most helpful skills you can develop as an investor is the ability to tune out the noise of headlines, and instead seek out the facts behind the noise.
When you have developed this skill, you’ll be able to find the cause of the headlines – the factual information that can help you to make rational investment decisions. Remember, the noise, or headlines, may be sensationalised in order to capture your attention. They could distract you from your long-term goals, and cause you to focus on short-term concerns.
This can be a constant challenge, even in an ordinary year, but in 2024 it could be even more tricky because of the sheer number of general elections set to take place around the world. General elections are usually accompanied by endless media coverage, not all of it objective or factual.
Read on to learn more about how you can navigate this challenging year and continue to make sensible investing decisions by focusing on the need-to-know information.
Elections can create division, amplified by media headlines
During an election cycle, politicians tend to make bold claims, not just about their own abilities to improve the way a country is run but also about the failings of their opponents. As the media fills newsfeeds with coverage, the facts can easily become lost among wild claims and speculation.
Incumbent leaders will take credit for what’s gone well under their leadership, such as economic growth, promising further positive improvements if they are re-elected. Meanwhile, the opposition will usually attribute negative developments to the existing political leaders, such as high inflation or unemployment. They will likely argue that their party would rectify these issues if elected.
It's rarely sensible to make changes to your portfolio based on the events and statements made during a general election. Politicians may exaggerate their claims, oversimplifying the cause of the problems the country faces as well as the solutions required to fix them.
Global markets are affected by a variety of factors, so a general election is unlikely to have a long-term effect on your investments.
3 steps to tuning out the noise of the elections
Fortunately, there are some simple steps you can take to mitigate the impact of the media coverage on your investing decisions this year.
1. Acknowledge that the election could affect you emotionally
Begin by acknowledging that the coverage could have an emotional effect on you – this is what it is designed to do. Many headlines, particularly those containing conflicting information or emotionally charged rhetoric, could stir up feelings of fear and anger – two powerful emotions when it comes to investing.
Read more: Revealed: the true cost of letting emotions guide your financial decision-making
2. Minimise your exposure to media coverage of the election
Once you understand and acknowledge how the coverage could affect you, it may help to minimise the amount of time you spend consuming coverage of the elections. You might decide to limit the amount of time you spend reading or listening to the news, or perhaps be selective about the sources you use.
It’s important to remain informed, but being selective and intentional about the updates you read could help protect you from being influenced emotionally.
3. Trust your financial plan to help your finances weather the storm
Finally, remember that your portfolio has been crafted with your personal circumstances, goals, and attitude to risk in mind. It’s carefully balanced to mitigate risk, so that short-term volatility is unlikely to derail your progress.
Any changes you make to the portfolio must be made with these factors in mind, rather than fear about short-term issues that the election could stir up. By keeping this in mind, you can put any fears you have into perspective and ensure you only make changes to your portfolio for the right reasons.
Your financial planner can help you to make sensible investing decisions in 2024
With so many elections going on around the world, you’re likely to be bombarded with coverage throughout the year. It can be difficult not to be pulled into the hype, and when this happens, fear could lead you to make impulsive decisions about your investments.
As well as the steps you read about above, your financial planner can help you to navigate the information that will be shared in the media.
Their experience and knowledge of financial markets can shed light on what is really going on, so that you can feel confident in the decisions you make about your money. Consequently, you can prevent the sensationalist headlines from influencing you in the wrong direction.
To learn more about how we can help you with this, please get in touch.
Either contact your financial planner directly, email us at hello@ascentawealth.com or fill in our online contact form to organise a meeting and we’ll get in touch.
