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The impact of politics on investing

As we prepare for elections all over the world, the temptation might be to try and “predict and position” the portfolio accordingly. However, regardless of who wins, decades of returns show that stock markets have trended upwards.

The below chart shows the growth of £1 invested in the UK market over almost 70 years and 17 different prime ministers. We can see that over the long term, the market has provided substantial returns, regardless of who’s in charge.

That’s because the companies of the world will continue to focus on serving their customers, growing their businesses and making a profit.

I wouldn’t be surprised if we see some volatility around the election, but so do many other factors—the actions of foreign leaders, interest rate movements, changing oil prices and technological advances, to name a few. That’s why you can see rises and falls in both Labour and Conservative governments.

The bigger picture is that stocks have rewarded disciplined investors over time—regardless of who has won high-profile elections.

As ever, if you want to discuss anything about the upcoming election or your investment portfolio in general, please do get in contact.