Home > Personal Finance > How to Prepare Your Money for a Trump Presidency

Comments 0 Comments

After a volatile election, President-elect Donald Trump will be inaugurated as the 45th president of the United States on Jan. 20. Consumers are divided over what this means for their finances — some are eager to bet big on American stocks, while others are considering hiding their cash under a mattress. To help you prepare for the changes ahead, we spoke with a handful of financial experts who shared their thoughts on investing with caution.

‘Dysfunctional Politics Aren’t New’ 

“We tend to invest based on emotion, and some people are really high on Trump, and some people are scared to death of Trump,” said Allan Roth, founder of Wealth Logic, a financial planning firm in Colorado Springs, Colorado. “When Obama was elected, a lot of people were like, ‘We’re going to print money, U.S. stocks are horrible, put everything in gold, avoid the dollar, avoid the stock market’ — and the absolute opposite happened. I’m a believer in capitalism, and capitalism trumps dysfunctional politics. And dysfunctional politics aren’t new.”

Roth won’t be the only financial expert keeping a grounded outlook. Jude Boudreaux, a financial planner based in New Orleans, said the main question around investing should be your goals and time horizon, not what we expect to happen in the next four years. “The biggest message I have is not to overreact,” he said. “The next 12 months, from a market standpoint, are not going to be the difference between you being able to retire successfully or not.”

“My advice to consumers is boring,” said Michael Falk, CFA and partner with Focus Consulting in Long Grove, Illinois. “Spend less than you earn, keep your focus on your goals, which are likely more than four years away, and never stop learning.” (You can see how your financial decisions are affecting your credit by viewing your free credit report snapshot, with updates every two weeks, on Credit.com.)

Hedge Against Inflation 

Many investors are rightly concerned about inflation, said Robert Dowling, a financial planner with Modera Wealth Management in Westwood, New Jersey. Employment is up, and Fed Chair Janet Yellen recently said it “makes sense” for the U.S. central bank to gradually raise interest rates. For these reasons, he said investors may want to give themselves exposure to Treasury Inflation-Protection Securities, or TIPS, which provide a hedge against inflation, as well as commodities. “I would never suggest selling everything and buying these two different asset classes,” he said, but if investors have exposure to these, it could benefit their portfolio when inflation takes hold.

Think Globally

Another option for concerned investors is adding more global exposure, Dowling said. Again, you’ll want to broadly diversify, not concentrating too much on one country or type of investment, and avoid currency risks by choosing a quality mutual fund with help from an expert. “There is a portion of exposure we always like to have to emerging markets — small economies and small countries offer lots of growth (and volatility),” Boudreaux said. Investing no more than 5% “has always helped us.”

When betting on emerging and developed markets — which are all available in inexpensive index funds — “don’t pick stocks just to pick them,” advised William Bernstein, author of The Investor’s Manifesto. “The transaction costs will eat you alive.” Keep your risk tolerance in mind and try not to overestimate it. “If you think you can [tolerate more risk], maybe you want to tamp it down,” he said. “Once every 10 years you get a real financial crisis. You want to have an allocation you can live with when that does happen — and that’s not an if, that’s a when.”

Set Aside Cash

“Because I think the potential impacts are so opaque,” Falk said, referring to the Trump presidency, “I lean toward avoiding leverage and major directional bets, and maintaining some dry powder (cash) or quick access to capital.”

Dowling agreed, suggesting consumers shore up at least two years’ worth of living expenses, which can be stashed in a CD or money market account. For retirees, having the cash to draw from while they work to replenish their lagging portfolio — a popular strategy known as cash-flow management — can be invaluable. For young professionals, it can help to have those savings on hand in case of emergency. “Pay yourself first, fund your Roth IRA and build good spending habits,” Boudreaux advised. “The spending habits you develop in your 20s and 30s will have a much greater impact on your financial future than what the market does in the next two to four years.”

Image: BasSlabbers

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team