2024 election anxiety is weighing heavily on everyday investors

Trying to figure out where the economy is going is like reading tea leaves. The stock market is flying sky high and so are interest rates. Meanwhile, layoffs abound, and the 2024 presidential election looms.

Betterment, a financial advisory company, surveyed 1,200 retail investors in the United States across four generations to understand what they are thinking and doing. Here are their major trends

• Focusing on interest rates: 78% of investors said they are tracking interest rates. Over the past year, 52% have moved their money or opened new accounts in order to get a higher interest rate. In addition, 32% have changed the type of investment they’ve made due to investment rates: 50% have increased savings in high-yield accounts, and 42% have increased cash holdings.
• Election apprehension: Only 26% of respondents said they were optimistic about the election, and people with portfolios over $1 million were twice as likely to be excited about the election (32%) than people with less than $100,000 (16%). There was not a significant difference in how investors would react based on which party won: Half of Democrats said they’d pull back investment funds if Trump won; half of Republicans said they’d do the same if Biden won.
• Confidence remains high: Despite everything, 60% of investors said they feel positive about their financial future and 55% said they have only gotten more positive over the past six months. The top three sources of stress were: inflation (38%), the election (27%), and paying off debt (26%).

“Although investors are anxious about the upcoming elections, this anxiety doesn’t seem to be translating to significant shifts in their investment approach," Dan Egan, Betterment's VP of behavioral finance and investing, noted in the report. "While we can expect the markets to react to the upcoming political cycle, investors aren't planning on letting the coming elections effect their portfolio allocations, long-term investments, and timeline for major financial decisions for the most part."