3 reassuring reasons short-term worry shouldn’t affect your long-term wealth

November 13, 2022

The UK has had a tumultuous few months. From the run of different prime ministers and chancellors to the death of its longest-serving monarch and subsequent succession of King Charles, uncertainty has been the order of the day.

The wider world has been equally as unpredictable, with war raging in Europe and unrest in China’s dominant political party.

That’s usually bad for the stock market. When uncertainty rears its head, funds dip and investors become nervous. At times like this, it’s tempting to make changes to your investments to protect your wealth from the effects of political upheaval on the market.

Even though the future is uncertain and that might be leaving you feeling concerned, here are three reassuring reasons to stay invested, because the current political landscape shouldn’t have a lasting impact on your wealth.

1. Businesses tend to adapt to market conditions

When investing in the stock market, you are investing in a group of businesses that are run by real people. Regardless of any short-term political upheaval or economic downturns, those people will be doing their utmost to ensure their businesses adapt and keep serving the needs of their customers.

Experience tells us that business owners are especially good at innovating, and that they often thrive even in the most challenging of economic circumstances. When businesses grow, or bounce back from setbacks, your investments will typically do well.

You might find it easier to be objective about your investment portfolio by viewing it as separate from the ruling political party at any given time.

After all, businesses don’t change their long-term goals, or the strategy for achieving them, each time a new prime minister is elected. Your investment strategy shouldn’t change either.

2. Technological advancement is more impactful than political parties

When you look back over the 20th century, it becomes very obvious that one of the driving forces behind progress is technological advancement.

The invention of the jet engine, the television, the computer, and the world wide web are just some of the things that have fundamentally changed and improved our lives. Their impact can usually be felt for far longer than the effects of any particular government.

Technological advancement is part of the work of the businesses that you can invest in on the stock market. While political parties, and their impact on the stock market, will come and go, you can count on the continued success and influence of businesses driving positive change in the world.

3. Investing must be less emotional than politics

Politics can be an emotive topic. In particular, when elections and resignations lead to changes in who is in charge it can stir up a whole host of different emotions. Humans can sometimes feel threatened by change because it makes the future less certain, which leads to feelings of fear and worry.

Even though money can be an equally emotive subject, your financial plan is one place where emotions need to be left at the door.

You’ve probably seen the diagrams about how fluctuations in the markets affect your feelings toward investing and can encourage you to make poor choices about where to invest your money. Taking action based on emotion is nearly always a bad idea because it means you are reacting to short-term events.

Investing is about playing the long game. It’s about setting an intention, investing in an appropriate portfolio that will allow you to reach your desired outcome, and staying put through thick and thin.

So, rather than trying to second guess what might happen next with the markets, the best thing you can do right now is to switch off from the politics. Instead, speak to your financial planner about your own goals and strategy to reassure yourself that you’re on the right track.

Get in touch

If you’d like to make sure your wealth is protected from short-term fluctuations in the markets, we can help you to feel confident about your future.

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.