Ever wonder if Daylight Savings Time can mess with your investments? Well, your nagging feeling may be correct.
If you dread Daylight Savings Time and the biannual confusion it unleashes, you’re not alone. Many of us stumble around under the cover of darkness this time of year, griping about our sleep cycles. But DST is not just a passing annoyance, it can hit you where it really counts – your wallet.
In the United States alone, daylight saving time implies a one-day loss of $31 billion on the stock exchanges.
Recent studies have found Daylight Saving Time can be quite disruptive to the economy. The sleep-deprived days that follow ‘spring forward’ weekends have sometimes been marked by higher-than-average drops in the S&P 500 since 2007. Historically, November commerce takes a hit (up to 4.9%) for a full month after ‘falling back’ an hour.
Don’t believe me. Just look at the results of the trading days after we changed our clocks and fell back an hour beginning Sunday, November 5:
According to this Morningstar.com chart, the S&P 500 Index has been off 0.57% since Monday, November 6. So far, no reason to panic but bear in mind that there are likely to be a few more red days ahead of us.
Workplace injuries, strokes, and car accidents also see an uptick in the wake of clock changes. True enough for me. I had a little fender bender on Thursday just five days after the clock changes as my Honda Odyssey made contact with a Jeep Wrangler that had stopped suddenly in front of me. Oops!
Why is Daylight Saving Time still a thing?
That’s a tough nut to crack. Contrary to popular belief, DST was not born out of a need to extend farmers’ work hours with natural light. It dates back to World War I and an effort to conserve fuel. In today’s high-tech world, lighting is no longer our biggest energy drain – so why keep this relic around? Around this time of year, this question is often posed on lots of Facebook feeds, too.
Enter the Chamber of Commerce. Along with industry groups, the Chamber is often credited for keeping DST around, claiming that an extra hour of daylight translates into spontaneous shopping trips for consumers on their way home from work.
With hits to investments, commerce, productivity and health, it’s no surprise that a 2013 study tagged DST-related disruptions at about $434 million. That’s a hefty price tag for a few more shopping hours – which, by the way, don’t typically offset November’s drop in spending.
How can you soften the blow?
With no clear end to Daylight Saving Time in sight, here are some savvy steps you can take:
1.) Beat the heat.
This is a great time to make some adjustments and automate your thermostat. According to the Department of Energy, temperature is the primary driver of energy bills – about 48% of all energy use in the average home.
Small adjustments can make a big impact. These stats are hard to resist: turning your thermostat back 7 to 10 degrees for 8 hours each day can save 10% per year in heating costs. Keeping your heat at 68 degrees while awake and lower while you sleep also has a big impact. Be sure to check with your utility provider – many offer rebate incentives on programmable thermostats.
2.) Lighten up.
Here it comes: light bulb advice again. We all know we’re supposed to use the LED ones, despite their stale, headache-inducing white glow. At this point, there’s no denying that switching to energy-efficient bulbs is the fastest way to cut costs. Lighting your home with the same amount of light for less just makes sense. So why put it off? Ditch your outdated bulbs. And maybe splurge on a lampshade that amps up the ambiance.
3.) Don’t Panic About Investments.
With stock exchanges full of groggy traders, now’s not the time to be making wholesale changes to your investment allocations. In fact, as stocks have historically shown, markets tend to lose some altitude making this an ideal time to dollar-cost average and rebalance.
Do I gain an hour of sleep or lose one? That’s the depth of thought most of us give to Daylight Saving Time. But don’t be fooled by that enticing extra hour of sleep this season. Staying alert in the days following a time change can protect you – and your wallet.
If you’d like an objective second opinion about your finances, please reach out to Steve Stanganelli, CFP®, CRPC®, AEP® at Clear View Wealth Advisors, LLC. Email him at Steve@ClearViewWealthAdvisors.com.