Author: Written with input from the FaithWise Advisors planning team.
The midterm elections are weeks away, and the headlines are getting louder. Every evening brings a new forecast about taxes, interest rates, and what the next Congress might mean for the economy. A friend at church mentions he moved part of his portfolio to cash “until things settle down.” You start to wonder whether you should do the same.
That question is natural. During election seasons, constant media coverage can make the economy feel more uncertain than it may be. For families who see their wealth as a trust to be managed faithfully, that noise can raise real questions about whether their portfolio is still aligned with their goals and their legacy.
The most effective response to election-year volatility is usually not a reaction, but a plan. Holistic financial planning looks at short-term market swings in the context of your whole financial life: your cash needs, tax strategy, giving, and long-term family goals. When those pieces are already in place, headlines become far less likely to drive your decisions.
What History Suggests About Markets and Elections
It is reasonable to wonder how an election might affect your investments. Markets do sometimes become more volatile in the months before an election as investors react to competing policy ideas and forecasts. Over longer periods, though, investment results have historically depended far more on economic growth, corporate earnings, and innovation than on which party controls Washington.
A key consideration during volatile periods is avoiding reactive decisions. Moving to cash or making large portfolio changes based on headlines can increase the risk of missing a recovery that follows. No one can reliably predict short-term market moves around an election, and past patterns do not guarantee future results.
A holistic financial plan builds the possibility of volatility from the start. Instead of trying to time the market, it relies on a thoughtful asset allocation, regular rebalancing, and tax-aware decisions designed to hold up through short-term noise.
Grounding Your Strategy in Stewardship
For Christian families and business owners, financial planning is about more than growing assets or tracking returns. Wealth is a trust to be managed for family provision, community flourishing, and Kingdom impact. When markets swing, those convictions can serve as a steady anchor.
Separating Short-Term Needs From Long-Term Goals
Consider a hypothetical business owner preparing to sell her company during an election year. Surrounded by conflicting commentary, she feels pressure to delay the sale or move everything into defensive investments out of concern about possible tax changes.
A holistic planning conversation shifts the focus from speculation to purpose. By mapping out her real cash needs, her long-term family goals, and her giving vision, an advisor can help set aside the money she will need soon while keeping long-term assets invested for the future. Decisions start to flow from her plan rather than from the news.
Using Volatility for Tax-Smart Moves
Market swings can also offer practical opportunities for families who are paying attention.
Tax-Loss Harvesting and Rebalancing
When markets dip, selling investments that are worth less than you paid can produce capital losses. Those losses can offset capital gains elsewhere in your portfolio, and up to $3,000 of losses beyond your gains can offset ordinary income each year, according to the Internal Revenue Service (IRS) rules on capital gains and losses. Proceeds can be reinvested in similar, but not substantially identical, investments to help maintain your target allocation.
Giving Appreciated Assets
Volatility can also present a meaningful opportunity to review your giving. Donating appreciated securities, rather than cash, may help you avoid capital gains tax on the growth while still claiming a charitable deduction, subject to the limits described in IRS Publication 526. A donor-advised fund through FaithWise Charitable lets you make that gift now and recommend grants to the ministries you care about over time. Donor-advised funds (DAFs) through FaithWise Charitable start at $5,000, putting this kind of planned giving within reach for many families.
Teaching the Next Generation Through Uncertain Seasons
Uncertain markets give you a chance to show your children and grandchildren what steady stewardship looks like. When they see you stick with a long-term plan instead of reacting to headlines, they learn something no lecture can teach.
Talking openly about how your family handles market swings, why you give the way you do, and what your long-term vision is helps prepare the next generation to manage future wealth with humility, competence, and confidence.
A Stewardship Checklist for Election Season
- Review your cash reserve: Aim to keep expected cash needs for the next 12 to 24 months in stable, liquid investments, so you are less likely to need to sell long-term holdings in a downturn.
- Look for tax-loss harvesting opportunities: Review taxable accounts for losses that could offset gains.
- Measure against your plan, not the headlines: Compare your portfolio to your written long-term plan rather than to political commentary or forecasts.
- Coordinate giving with taxes: Consider giving appreciated assets or funding a donor-advised fund as part of your year-end tax planning.
Confidence That Comes From Trusted Guidance
Dr. Paul Pierson, Dean Emeritus of Fuller’s School of World Mission, wrote that he “looked for someone to handle my investments who has expertise far beyond my capacity.” He shared that FaithWise Advisors helped him support several grandchildren with college expenses, direct his giving to a number of Christian causes, and keep “sufficient funds and income for unanticipated expenses for this phase of life.” Read Dr. Pierson’s story.
FaithWise Advisors did not compensate Dr. Pierson for his testimonial, and his experience may not be representative of other clients.
How FaithWise Advisors Helps Families Stay Anchored
- FaithWise Stewardship™: A wisdom-rooted, faith-fueled approach to every financial decision that treats investing and giving as one discipline, so every decision connects back to your values.
- Coordinated teams: FaithWise Investing and FaithWise Charitable work together, so tax, investment, and giving decisions are approached as one integrated strategy.
- Fiduciary guidance: FaithWise Investing’s advisors serve as fiduciaries, committed to independent, objective investment recommendations.
- Planning for every season: Cash reserves, rebalancing, and tax strategy are structured ahead of time, not decided in response to headlines.
Talk With a FaithWise Advisor Before Year-End
If election headlines have you second-guessing your portfolio, a calm conversation can help. FaithWise Advisors can review how your investments, cash reserves, and giving are positioned for the season ahead.
Schedule a conversation with a FaithWise Advisor or call (626) 765-8450.
Key Takeaways
- Long-term investment results have historically been driven more by economic growth and corporate earnings than by which party wins an election.
- A holistic plan strives to keep one to two years of expected cash needs in stable investments, so you are not forced to sell long-term holdings during a downturn.
- Market pullbacks can create constructive opportunities for tax-loss harvesting, rebalancing, and giving appreciated assets.
- Staying steady during uncertain seasons models faithful stewardship for children and grandchildren.
Frequently Asked Questions
Should I move my investments to cash before an election?
For most long-term investors, moving to cash based on election predictions carries timing risks. A more prudent strategy aims to ensure your near-term cash needs are properly positioned while keeping your long-term investments aligned with your goals and risk tolerance.
What is holistic financial planning?
Holistic financial planning looks at your entire financial picture together, including investments, cash needs, taxes, estate plans, and charitable giving, rather than treating each one separately.
How does tax-loss harvesting work?
Tax-loss harvesting means selling investments that have lost value to realize a capital loss. That loss can offset capital gains, and up to $3,000 per year of net losses can offset ordinary income, with any remaining losses carried forward to future years.
Is it a good idea to give appreciated stock instead of cash?
For many donors, giving appreciated stock held longer than a year can be a more tax-efficient way to give, because it may help avoid capital gains tax on the growth while still providing a charitable deduction. Your tax advisor can confirm how it applies to you.
How can I talk with my children about market ups and downs?
Start by sharing your family’s long-term goals and giving priorities, then explain how your plan is designed to handle volatility. Including adult children in planning conversations helps them view stewardship as a long-term commitment rather than a reaction to the news.