Starting on January 20, 2025, Donald Trump is now the 47th President of the United States, this time with JD Vance as his Vice President. Let’s dive into what this new Trump presidency could mean for your finances.
The failed assassination attempt on Trump was a sobering reminder of how fragile life is, underscoring that unity and shared values should matter more than political divisions. I hope both parties come together to heal and strengthen the American spirit.
As investors, maintaining a calm, rational approach is essential. Emotions can easily cloud judgment and lead to suboptimal decisions. Now is the time to think strategically about what policy changes might mean for portfolios and financial plans.
What A Trump Presidency Means For Your Finances
In general, the Republican Party is for smaller government, lower taxes, and less regulation. The result of these policies could be an increased budget deficit and inflationary. However, the general view from an investor’s perspective is that Republican policies are a net positive for your finances.
Here’s what you could see happen now that Trump/Vance team has won. If you look at history, stocks and real estate generally go up whoever is in power.
1) A Potential Melt-Up in the Stock Market
Despite an extraordinary rise in the S&P 500 since October 2022, a Trump presidency may add fuel to the fire. As a result, if there’s a time to be greedier when others are already greedy, it could be now.
Investors will get excited about the continuation of the existing flat 21% federal corporate tax rate or a potential cut in the tax rate. Since January 1, 2018, the nominal federal corporate tax rate in the United States has been a flat 21% following the passage of the Tax Cuts and Jobs Act of 2017. The TJJA might get extended beyond 2025 now.
With a lower concern for higher tax rates, corporations will logically set aside less money for future tax hikes and spend more to grow their businesses, which includes hiring. With potentially lower corporate tax rates, corporations will be able to boost their profits, lowering their valuations, and increasing their dividend payouts.
The thing with investing is that potential positive catalysts don’t have to happen for stocks to go up. It is the hope and possibility of a potential catalyst that will help bid up stock prices.
As a result, despite high valuations in the S&P 500 and other stock indices, you probably want to hold on and continue dollar-cost averaging. Expect more volatility. When the market is expensive, it becomes more susceptible to sharp pullbacks.
If there is a 0.5% – 1% dip, you should probably buy. If there is a 10% or greater correction, you may want to back up the truck. This strategy shouldn’t differ from your general goal of investing for as long as possible in the market.
2) Tech Giants and Companies with Monopoly Power May Benefit More Under Trump
At the margin, President Biden was seen as a tougher fighter against monopolies than Trump. In fact, battling monopolies was central to Biden’s economic strategy. As a result, companies facing antitrust suits like Amazon, Google, Microsoft, and Apple may see some relief under Trump, even though Trump also went after these companies.
Because we have not seen the federal government effectively break up tech companies’ monopoly power yet (just levy one-off fines), you probably want to just keep holding these big tech companies.
We operate in a society where the rich and powerful continue to get richer and more powerful. Hence, you might as well keep owning shares in these dominant companies.
As soon as I saw Google roll out their artificial intelligence snippets in 2024, which plagiarize content creators without giving proper credit, I bought more Google stock. There’s also no way I can overcome OpenAI and Anthropic’s copying of my work, so I became a shareholder in both through Fundrise Venture, an open-ended venture capital product, which anyone can invest in too. Company is are staying private for longer, which means more assets should be allocated towards private investments.
With Trump announcing a $500 billion AI infrastructure initiative in partnership with Softbank, Oracle, and OpenAI—dubbed Stargate—it’s clear the government sees AI as a transformational technology. In 20 years, I don’t want my kids asking why I didn’t invest in or work in AI when the opportunity was so clear!
3) Real Estate May Strengthen Under Trump
Trump has repeatedly admonished the Federal Reserve for its high interest rate policy. Trump is reportedly planning to override the Federal Reserve’s independence when he returns to the White House in 2025. The overriding of the Fed’s independence is unlikely to happen, but it’s nice rhetoric for votes from those hurting from high-interest debt.
On the campaign trail, Trump promised to “drive mortgage rates down to 3% or lower.” That’s probably not going to happen either, especially with his inflationary policies such as mass deportation and tariffs. But at least he’ll be cognizant of high interest rates and try to push them down. Perhaps with enough moral suasion, at least the rise in interest rates will be capped.
While speaking at the Economic Club of New York in early September 2024, Trump said, “Reducing mortgage rates is a big factor. We’re gonna get them back down to we think 3%, maybe even lower than that, saving the average home buyer thousands of dollars per year. They can now go out, young people will be able to buy a home again and be a part of the American Dream.” He talked about suppressing inflation again in his inauguration speech.
Trump also built his fortune in residential commercial real estate. As a result, perhaps he will introduce more real estate friendly policies that will help the commercial real estate market recover. It is only rational to look after your own interests.
At Least Hold On To Your Real Estate
With pent-up demand, a strong economy, and potentially declining mortgage rates, there should be significant demand driving both residential and commercial real estate. As a result, I would not sell your rental properties or primary residence. Instead, I would hold on or buy more before a potential uptick in demand. The performance and evaluation differential between stocks and real estate is too large to sustain in my opinion.
I clearly remember the stressful times of bidding wars between 2000 – 2006, 2012 – 2018, 2020 and 2021, and the spring of 2024. Bidding wars are tough for buyers because there can only be one winner. I expect bidding wars to return in spring 2025 after a stronger-than-expected spring 2024.
If there is indeed a melt-up in the stock market, it will boost consumer wealth and help bring up real estate prices with it. The gap between the S&P 500 index and the S&P 500 real estate sector performance will likely narrow as a result.
I’I’m methodically dollar-cost averaging into private real estate through Fundrise. So far, I’ve invested $954,000 in private real estate since the end of 2016 and over $300,000 in Fundrise. I want to ride the potential commercial real estate recovery over the next several years.
4) Trump may encourage you to work harder for longer due to lower taxes and return to merit
When income taxes are high, the rational economic move is to work less and retire earlier since you get to keep less of your money. Under a Trump presidency, the fear of income taxes increasing should diminish. The top federal income tax rate will likely remain at 37%, rather than rising to 39.6% as President Biden has been advocating since 2020.
Here are the 2025 federal income tax brackets for single, married, and head of household filers.
The ideal federal marginal income tax rate to pay is up to 24%. At this rate, you’re earning enough to live a good life, but you’re not paying so much in taxes that you are disincentivized to work. Jumping from a 24% to a 32% marginal income tax rate is significant, while offering not much more benefit for the additional income earned.
Americans who make six figures or have the potential to make six figures a year or more, thereby have the incentive to grind it out for four years under Trump. In addition, Trump is also focused on a return to merit, which should inspire people to have hope that their hard work will pay off. More workers working harder for longer equals greater output, which should lead to greater profits, greater consumption, and a stronger economy. Intern, this leads to higher real estate and stock prices.
Once again, those who believe higher income and capital gains taxes are coming will be wrong for at least another four years. As a result, the sense of urgency to contribute to a Roth IRA through normal or backdoor channels fades.
5) Speculative investments like startups and crypto may also get a boost under Trump
Consistent with a potential melt-up in the S&P 500, there may be an even greater surge in the most volatile assets such as cryptocurrencies, public and private artificial intelligence companies, and venture capital overall.
After securing the support of Elon Musk, Donald Trump won the endorsement of venture capitalists Marc Andreessen and Ben Horowitz, before they flip flopped again. Andreessen and Horowitz believed Trump is better for startups and that President Biden has been against innovation.
In their post on “little tech,” aka startups, the firm writes, “The anti-startup bias that is increasingly pervasive across the American government is a clear and present threat to the health and vitality of American technology success – and therefore to the American economy, the American military, and the American people.”
Increasing asset allocation shift to venture capital
Hence, you might consider allocating between 10% – 20% of your investable assets to more speculative investments like venture capital in case they may surge to nosebleed levels once again. With up to a 20% allocation, any outsized gains will significantly impact your overall investment returns. At the same time, if such investments correct by 50%, your finances won’t be devastated.
I’m dollar-cost averaging into an open-ended venture capital product that has a majority of its holdings in artificial intelligence. You can’t invest in funds like Andreessen Horowitz, unless you are part of their friends & family network.
I have also committed $600,000 to a couple of other closed-end venture capital funds that will invest in AI. The capital will continue to be called over the next three years. I don’t have the access or ability to pick AI winners, so I invest in various funds to hopefully find these unicorns. Check out Fundrise Venture, which has a minimum investment of only $10.
With Trump‘s launch of $Trump coin days before his inauguration, it seems like Trump is favorable on the cryptocurrency world as well. As a result, there will likely be more demand and interest for cryptocurrencies during his term.
6) Cash will likely be an underperformer
If the frenzy in risk assets continues under Trump and interest rates come down, then cash will be a significant underperformer. As a result, you want to put your cash to work, as holding too much cash could make you poorer over time.
There is supposedly a record ~$6 trillion in cash sitting on the sidelines. Stronger consumer and corporate balance sheets since the pandemic began is one of the main reasons why any downturn shouldn’t be as devastating as the one we experienced in 2008-2009.
If the amount of money market fund assets reverts to the level seen before the pandemic, there could be a $2.5 trillion unleashing of cash into risk assets. Even if the money market fund assets revert to the level right before the Fed started raising rates, we’re talking $1.5 trillion in cash looking to find a new home.
7) Buy American and protect America becomes popular again
Isolationism, protectionism, and nativism may return under Trump.
During his first presidency, Trump was highly protectionist of U.S. companies. Trump imposed several tariffs to try and make U.S. companies more competitive and protect jobs.
After tariffs on Chinese goods jumped from 3 percent to 12 percent, China retaliated by raising tariffs as high as 25 percent on many U.S. goods, including agricultural products and food.
In general, trade wars are not good for economic growth as everything just gets more expensive for everyone. It’s like if one person stands up in the front row, everyone behind must stand up to see.
However, a Trump presidency, along with JD Vance as VP from Ohio, could once again rejuvenate interest in investing in the heartland of America. More people who believe in Trump might be willing to move to Republican states to live and work. Surely, Trump will help those states that helped him return to power.
Given this trend, you may want to focus on investing in heartland real estate and companies. Trump should enact policies who helped his constituents win.
8) Inflation may pick up again under Trump toward the end of his term
Finally, the combination of rising asset prices, higher corporate earnings, rising incomes, increased tariffs, potential tax cuts, lower interest rates, increased government spending, rising incomes, and the mass deportation of illegal immigrants may lead to inflationary pressure. As a result, there will be greater pressure on the Fed to hike rates again after a period of cuts.
In economics, everything is yin and yang. Each economic change reflects a new change down the road. Given Trump’s tariff policies are inflationary, we saw the 10-year bond yield spike by 0.15%+ the day of Trump’s victory on November 6, 2024. This spike temporarily increases mortgage rates. That said, the Fed is still on a path to cut rates multiple times through 2025.
Below is the historical Fed Funds rate chart, which has been on the decline since the 1980s. As the Fed Funds rate rises, it cools the economy and often leads to a recession (gray vertical bar). As the Fed Funds rate declines, it boosts the economy, creating inflationary pressure.
The key is to own assets that ride the inflation wave, and the prime asset for this is real estate. Own your primary residence. Buy rental properties. Invest in private real estate funds long term. And consider owning some gold. If you do, you’ll reduce complaining about inflation in 10 years because you will likely have benefited from inflation.
Everything Could Be Worse Than Expected Too
The reality is that whether a Democrat or a Republican is in the White House matters less for your investments than you might think. Historically, the S&P 500 has performed well under both parties. Many variables influence the S&P 500’s performance, namely earnings growth.
The CEO of one, a solopreneur, makes a huge difference to their company’s performance. On the other hand, if Tim Cook retired from Apple tomorrow, does it really matter? Plenty of lieutenants can fill his departure. Apple’s share price might actually go up, fueled by hopes of a more visionary and innovative CEO taking his place.
Strategically, to make a top 0.1% income, your goal should be to become a CEO of a large company! You don’t have to take any risks like entrepreneurs, yet you get paid obscene amounts of money for a job that plenty of people can do.
The President Only Plays A Small Part In Your Finances
The biggest factor in your ability to grow your wealth is YOU, not the president. You control your saving rate, work ethic, investment decisions, and career choices, not the president. Don’t rely on having the “right” president to help you achieve financial freedom.
Ultimately, every U.S. President is a power-hungry patriot who is trying to do what’s best for the most number of Americans. If the President does a poor job, thanks to our democracy, they will be voted out.
Life is precious, yet fleeting. Try to understand other people’s points of view before attacking. Connect through non-violence. We have more in common than we think.
My plan is to put my head down and do whatever it takes to take care of my family over the next four years. I’m grinding my way back to financial independence, witg a greater belief that I’ll get there by December 31, 2027. Along the way, I will try to help readers achieve financial freedom sooner, no matter their political affiliation.
Since 2009, I’ve found that people who are more financially secure are nicer and happier. As a result, more good comes into the world.
Diversify Into Real Estate In The Heartland
If you’re interested in diversifying into heartland real estate, check out Fundrise. Fundrise manages about $3 billion for over 350,000 investors. The majority of its investments are in the Sunbelt and Heartland, where valuations tend to be lower and yields tend to be higher. A Trump presidency should be a net positive for heartland/Sunbelt states that supported him.
I’ve invested six figures into Fundrise and Fundrise is a long-time sponsor of Financial Samurai.
You can join 60,000 +other people by signing up for my free weekly newsletter here. Financial Samurai began in 2009 and is one of the largest independently-owned personal finance sites today with about 1 million page views a month. Everything is written based off firsthand experience because money is too important to be left up to pontification.
