With 2016 just around the corner, Americans are starting to think more about the presidential election and the impact it will have on the country as well as on their own finances, according to a recent RBC Wealth Management poll.
The survey found one in three (32 percent) Americans think the economy will improve after the 2016 elections and only 17 percent think the economy would worsen.
“The stock market typically rises during election years, regardless of which party wins,” says John Taft, CEO of RBC Wealth Management-U.S. “Of course, there are always exceptions to any rule. The biggest service we can offer investors during any period of change is to help them decipher real risk from simple negative sentiment and make good decisions about how they invest for the long term – regardless of who takes office in 2017.”
However, there are differences between how millennials (ages 18 to 34) and baby boomers (ages 55 and older) view the upcoming election, with younger Americans displaying far more optimism than any other group. While 37 percent of millennials think the outcome of the presidential election will boost the economy, only 30 percent of Americans ages 35 to 54 (Gen Xers) and 29 percent of those ages 55 and older agree.
“While Millennials do tend to be a more optimistic bunch than their parents and grandparents, the difference in outlook may be tied to a growing percentage of baby boomers retiring and leaving the workforce,” says Janelle Nelson, vice president and portfolio analyst at RBC Wealth Management-U.S. “No longer earning a paycheck, boomers are more dependent on the economy and market for growth in their investment portfolios than the millennials and Gen Xers who are either in or just entering their peak earning years. And as we know, economic growth has been slow over the last several years.”
Many Americans are also optimistic that their personal financial situation, namely on the value of their investments, will improve after the election.
Younger Americans are also far more hopeful that their personal financial situation will improve after the election, with 40 percent of millennials and 37 percent of Gen Xers indicating that they think the value of their investments will improve after the election compared with only 23 percent of baby boomers.
The more optimistic sentiment among younger Americans is also true when it comes to their ability to save for the future after the election, with 33 percent of millennials believing it will improve compared to 23 percent of Gen Xers, and only 13 percent of baby boomers expressing the same degree of optimism.
“The market rises 75 percent of the time, yet every day, every year, every cycle, we are given many reasons to fear growth will not materialize or what we have saved is at risk,” Nelson says. “In the absence of another market correction, investors should remain steady and know that a long-term, diversified approach is their best bet whether they are investing during an election year or not.”
These are some of the findings of an Ipsos poll conducted on behalf of RBC from October 6 to October 9, 2015.
Source: RBC Wealth Management – U.S.