Jan 21, 2021 - Politics & Policy

How the election changed investors

dollars with trump and biden's faces

Photo illustration: Brendan Lynch/Axios. Photos: David Hume Kennerly, Alex Wong/Getty Images

50% of Americans changed their investing strategy after seeing the result of the presidential election, according to a Harris Poll survey for Empower Retirement and Personal Capital shared exclusively with Axios.

Why it matters: The election and the intense news cycles following it were perceived, correctly, as an inflection point of historical proportions. Doing nothing is hard in such situations, even if sticking to your long-term plan is what most financial advisers would recommend.

What they found: A third wave of the coronavirus, combined with stocks at all-time highs and uncertainty about the actions of the incoming administration, combined to persuade 65% of Americans to put more money into cash savings, says Personal Capital president Jay Shah, even as a smaller minority started "chasing heat" and buying high-flying tech stocks.

  • The biggest change after the election was in where new money was put to work. "Pre-election, one out of every five dollars coming to us would go into socially responsible strategies," says Shah. "Post-election, it's one in every three dollars."
  • Such investments could be a bet on President Biden's $3 trillion green-infrastructure plan, or they could just represent more optimism from Democrats, who are more likely to invest in those strategies.

The bottom line: The surging markets notwithstanding, most Americans are still more nervous about the economy than they were a year ago. That can make them twitchy, when it comes to their investments, and prone to take quick action when news happens.

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