Kate Hughes: Keep calm and carry on until after the election dust has settled

The nation has roughly divided into two groups in the past few months. Not Tory and Labour but “taken action” and “done nothing”.

With the hype swirling around them, the first group of people have seen the election as a potential threat to their wealth. They have hesitated over property sales and purchases, and taken their money out of equities … and possibly stockpiled fresh water and tinned food.

The second lot have taken a step back, decided that there will be a blip as others adjust their position and then carried on as before, probably disappearing to the pub.

The truth is that too often we make massive financial decisions – particularly investment ones – on the basis of short-term issues, fears or opportunities. And most of the time it backfires.

After all, as Laith Khalaf of the adviser Hargreaves Lansdown puts it, the election isn’t going to alter the long-term flight path. “We could see some turbulence in the stock market in the next few weeks, particularly in the aftermath of the election if there is a hung parliament. However the political machinations in Westminster have little bearing on the earnings potential of UK companies, which ultimately drives stock prices in the long term.

“So while sentiment may swing, investors should stick to their guns and not let the election clamour distort their savings plans.”

Still, that hasn’t stopped private investors withdrawing more than £1bn from UK equity funds in the past month – although of course this isn’t just about fear; among some people, there’s an element of opportunism too. And clearly these investors know something I don’t – precisely how to time the market to make sure they remain in the black. I suspect every fund manager on the planet would like to know about it if they did, but it’s pretty unlikely. In which case they could lose out far more by trying to beat volatility and failing.

It may, though, be less easy to keep calm and carry on if you look at property market data – I’m afraid that if you’re looking to move but haven’t managed to sell your house in the past year, this summer probably won’t be hot for you whoever wins.

“Historic data reveals that there is often a spurt in house sales in the 12 months before an election, followed by a slowdown in the three months leading up to polling day itself,” says Nick Barnes, director and head of research at the estate agent Chestertons. “Seasonally adjusted data ... shows that residential sales have instead trended downwards over the past year. Although affordability issues and property shortages have undoubtedly contributed to the trend, the data nonetheless suggests that people are more concerned about the outcome of this year’s poll than in previous election years.”

And yet the point remains that there’s not much advantage to be gained from trying to force the issue. Every expert clamouring from their soapbox last week acknowledged the same point: until we know who’s in and who’s out, it’s very hard to start planning to mitigate the effects – which are themselves bound up with all sorts of other, broader factors that we can’t plan for, including the ebb and flow of the global economy.

There is hope that we might get a bit of warning about those changes. While the last government threw everything at the financial services industry in a bid for quick, headline-grabbing effects, the next tenants of those hallowed benches might consult the industry before doing anything drastic. And those consultations can take months – plenty of time to get our affairs in order.

There is, however, one exception. It’s clear that the days of higher-rate tax relief on pension contributions are numbered whoever gets in this week. If you have any spare cash that could be stuffed into your retirement savings, and you are a higher or additional-rate taxpayer, you might want to get on to that quite quickly to take advantage of this generous government contribution before it’s lost for ever.

Otherwise, take a deep breath and we’ll see you on the other side.