The midterms are on November 3, and for the next few weeks your feeds will be full of charts, predictions and confident people telling you what the results will do to your portfolio. Some of that will make you want to do something.
The decision in front of you is narrow: should you change your investments or your contributions before the vote? For someone steadily building wealth through index funds and retirement accounts, the answer is no. “Stay the course” is easy to say, though, so here is what reacting would actually cost, which money decisions are already locked in no matter who wins, and the short list of things worth watching after the results come in.
What history says (and what it doesn’t)
Midterm years have a reputation for choppy markets, and the data backs that up. Going back to 1930, the second year of a presidential term (the midterm year) has averaged an S&P 500 return of about 3.7%. That compares with about 7.0% in year one, 8.1% in the presidential election year and nearly 14% in year three [1].
The year after a midterm has historically looked very different. Since 1950, the S&P 500 has been higher one year after every midterm election, 19 in a row, with an average gain of almost 15% [2]. In the longer record, the only two negative 12-month stretches after a midterm followed the 1930 and 1938 elections [3].
Two cautions. First, 19 elections is too small a sample to bet money on, and past performance does not promise anything about this cycle. Second, the pattern does not say which party “helps” markets. Results under every combination of White House and Congress are mixed enough that sorting your portfolio by party is guessing.
What the history does support is that election-season volatility has usually been temporary. The expensive mistake is how people react to it.
The reaction tax, in dollars
Say you have $50,000 invested. On November 2 you get nervous, sell, and park the money in a high-yield savings account until things “settle down.” Three months later you buy back in.
To come out ahead, you have to be right twice: once when you sell and again when you buy back. Here is what each outcome looks like, using illustrative numbers. These are not forecasts.
If the market rises 6% while you wait:
- Market gain you missed: $50,000 × 6% = $3,000
- Interest earned in savings over three months: the top high-yield savings accounts were paying around 4.25% APY in mid-October [4], which works out to roughly 1% for three months. $50,000 × 1% = $500
- Net cost of sitting out: $3,000 − $500 = $2,500
That $2,500 doesn’t just disappear once. It is money that is no longer compounding for you. If we assume 7% a year purely to illustrate (not a promised return), $2,500 left in the market for 31 years, from age 34 to 65, grows to about:
$2,500 × 1.07³¹ ≈ $2,500 × 8.15 ≈ $20,400
Three months of nerves turns into roughly $20,000 less at retirement.
If the market falls 6% while you wait, and you buy back at exactly the right moment:
- Loss you avoided: $3,000
- Plus interest earned: $500
- Net benefit: $3,500
That is the best case, and it requires you to time the re-entry perfectly. In practice, people who sell on fear tend to wait too long to buy back, because the moment that feels safe usually comes after prices have already recovered.
Taxes make it worse. All of this assumes selling is free, and that is only true inside a 401(k) or IRA. In a taxable brokerage account, selling for more than you paid realizes a capital gain, so you could owe tax just for stepping aside. Shares held more than one year produce long-term gains, which get lower rates. Shares held one year or less produce short-term gains, which are taxed as ordinary income [5]. If you’re newer to investing, most of your taxable shares may still be in that short-term window.
In short, you would be taking a near coin flip with a historical tilt against you, plus taxes and a decades-long compounding penalty if you guess wrong. The math says keep investing.
What’s already locked in for 2027, no matter who wins
A lot of the money rules you care about next year are already set by existing law, and many adjust automatically. An election in November does not change them.
Contribution limits. The IRS adjusts 401(k) and IRA limits for cost of living each year. For 2026, the 401(k) limit is $24,500 and the IRA limit is $7,500 [6]. The IRS announced those numbers on November 13, 2025 [6], so expect the 2027 figures around the same time this year. Plan to raise your contributions when they come out.
The Saver’s Match. This is already law. It was enacted in the SECURE 2.0 Act, replaces the Saver’s Credit for retirement contributions, and begins in 2027. It matches 50% of the first $2,000 you contribute to a workplace plan or IRA, up to $1,000 a year, with the first deposits arriving in 2028 for 2027 contributions [7]. For married couples filing jointly, the match starts phasing down above $41,000 of modified AGI and disappears at $71,000 [8]. If your household is near that range, it belongs in your 2027 planning now.
Income tax brackets. The One Big Beautiful Bill Act, signed in July 2025, made the individual tax rates from the 2017 tax law permanent [9]. Bracket thresholds also adjust for inflation each year; the IRS published the 2026 adjustments in October 2025 [10].
The calendar. Under the 20th Amendment, the new Congress begins its term at noon on January 3 [11]. Any change to tax law would still have to pass both chambers and be signed. Even a decisive result does not change your 2026 tax return or the rules for your next paycheck.
The short list worth watching (but not acting on yet)
A few decisions genuinely depend on policy. For each, the right move today is to keep a note, not change your portfolio.
Roth vs. traditional. The Roth decision is a bet on whether your tax rate is higher now or in retirement. One election cannot tell you what rates will be in 30 years. Keep deciding based on your current bracket and your best estimate of your bracket in retirement. If Congress changes rates later, revisit then.
Health insurance, if you buy your own. If you’re self-employed or buy coverage on the ACA marketplace, your premiums depend partly on federal subsidy rules. The enhanced premium tax credits expired at the end of 2025 [12], and whether anything replaces them is up to future legislation. Open enrollment on HealthCare.gov for 2027 coverage runs November 1 to December 15, 2026, a month shorter than before [13]. Choose based on the actual quotes you get, not on what you think might pass.
Interest rates. Federal spending and deficits feed into interest rates, which affect your savings yield and any future mortgage. You cannot control that, and it doesn’t change where your emergency fund should sit. Keep it in the account where it is now.
What to do this month
- Leave your automatic contributions running. If prices dip around the election, your regular contributions buy more shares at lower prices. That is the system working.
- If volatility makes you uneasy, check your allocation rather than your news feed. If a 20% drop would genuinely make you sell, your stock-and-bond mix may be too aggressive for you. Adjust it deliberately, on a calm day, not because of an election.
- Rebalance only on your normal schedule. If you rebalance once a year, keep that date. Don’t move it because of the election.
- Put the 2027 limit announcement on your calendar. When the IRS publishes the new numbers, raise your contributions to match. That move is certain to help you, regardless of who wins.
The election will produce winners, losers and a lot of commentary. Your plan should keep working through all of it. If you want the 2027 limits, the Saver’s Match details and any real policy changes explained as they happen, the Thousandaire newsletter covers each one with the math, once the rules are actually final.
Sources
- Nasdaq Dorsey Wright, Midterm Election Year Update (August 25, 2026). S&P 500 returns by year of presidential term, 1930 to 2026.
- LPL Financial Research, Weak September Seasonals Precede Strong Midterm Trends. S&P 500 one year after midterm elections since 1950.
- S&P Dow Jones Indices, Stocks Rocked the House Post Midterm Elections (November 10, 2018). Historical post-midterm S&P 500 performance, including 1930 and 1938.
- The College Investor, Best High-Yield Savings Rates for October 14, 2026. Rates change frequently; check current APYs.
- Internal Revenue Service, Topic No. 409, Capital Gains and Losses.
- Internal Revenue Service, IR-2025-111: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500 (November 13, 2025).
- Internal Revenue Service, IR-2026-89: Treasury, IRS announce intent to issue proposed regulations on Saver’s Match (August 7, 2026), and Notice 2026-48.
- U.S. Department of the Treasury / IRS, Report to Congress on Anticipated Saver’s Match Promotion Efforts (September 28, 2026).
- Journal of Accountancy, Tax provisions in the One Big Beautiful Bill Act (July 2025), P.L. 119-21.
- NYSSCPA, IRS Releases 2026 Inflation Adjustments and Tax Brackets (October 10, 2025), covering Revenue Procedure 2025-32.
- National Constitution Center, The 20th Amendment.
- KFF, Affordable Care Act research and analysis. Expiration of the enhanced premium tax credits at the end of 2025.
- AARP, ACA Open Enrollment: Key Dates. Dates may differ for state-run marketplaces.
The Thousandaire Editorial Team creates practical, evidence-based personal finance content for people building real wealth. We break down investing, retirement, taxes, real estate, and other wealth-building decisions with clear explanations, real numbers, and no hype
