Trump Won. What Is Going To Happen To My Money?
First off, I’m sorry. I’m sorry we’re all collectively in this moment together. I’m sorry that we’re back in the chaos that many of us did not consent to. I’m sorry if you support Trump and maybe think you’re going to all of a sudden start earning more money each year.
But speaking of money, what is going to happen to all of our accounts? What is realistically expected to happen, now that Trump is in office again?
As a money coach who has been fortunate and privileged enough to have learned financial literacy my entire life, here’s what I know.
On Taxes
Trump wants to do away with federal income taxes on tips, Social Security benefits, and overtime pay. This might temporarily give financial relief to a small number of Americans, but it will also negatively impact revenue for programs many people rely on like Social Security.
He plans to extend the individual and estate tax cuts from 2017 Tax Cuts and Jobs Act, which are due to expire at the end of 2025.
Analysts have already given warning of his tax plan increasing America’s deficit by $4.1 trillion over 10 years. His large tax cuts will only go toward large corporations and the ultra wealthy (meaning likely not anyone reading this), piling on extra strain to the lower and middle classes.
On The Stock Market
Some people were thrilled to see their investment accounts increase literally overnight when Trump was elected. Corporations and the S&P 500 are expected to profit due to his tax cuts, but keep in mind THIS IS NOT “trickle down economics”, this is simply how the Stock Market is intended to work.
His trade and tariff policies are likely going to painfully strain international companies and areas like the auto industry, clean energy, and semiconductors.
There are already concerns about the growing defecit due to Trump’s plans, meaning that bond yields are expected to rise further. This will ultimately hurt bond prices.
Growing & emerging international markets will hurt due to higher US interest rates and a higher risk of trade conflicts.
On Interest Rates
Because of Trump’s overall Agenda — specifically because of tariffs negatively impacting the American consumer, inflation is expected to rise even more. Higher inflation historically makes the Federal Reserve keep interest rates high, so we expect to see continued high rates.
This directly negatively impacts borrowing costs for consumers, specifically those seeking to take out a mortgage, car loan, or open a new credit card.
Since Trump’s agenda does not progressively address the home shortage, we can expect mortgage rates to increase to more than 7%.
For those investing and saving in high yield accounts, we could potentially expect to benefit from higher yields.
On Housing
This last one truly guts me to type out, because it is going to ABSOLUTELY DEVASTATE families and nature alike…
Trump intends to increase the housing supply via giving permission to build on federally protected lands and by reducing environmental regulations.
I don’t know how he plans to get homes built, since his plan to deport millions of immigrants. This will directly negatively impact the construction industry since it currently relies HEAVILY on immigrant labor.
Trump does not even yet have concepts of a plan for housing policies, meaning affordability for buying a home will still be a big challenge with continuing supply shortages and high mortgage rates.
What Can I Do?
In the mean time, we CAN work to save and invest in the best ways we know how to for ourselves and our families.
To benefit from this, start investing in the S&P 500 if you already haven’t.
Fidelity’s FNILX (Fidelity Zero Large Cap Index) index fund is inexpensive, and is one of the best ways to track the S&P 500!
