Investing & Retirement Under Trump: 5 Key Questions Answered!

As we gear up for President-elect Donald Trump’s second term, many Americans are left to wonder: how will this influence our wallets and financial futures? With a mix of speculation and concern swirling around, understanding how to navigate your investments during this new administration is crucial.

Here are the top five burning questions I’ve received about investing wisely as we enter another chapter in Trump’s presidency:

Will Congress shake up retirement plans?

While retirement planning wasn’t a hot-button issue this election cycle, Trump has previously stated his preference for keeping 401(k) plans intact. The 2024 Republican agenda shows no signs of proposed amendments, suggesting that this won’t be a priority for the GOP-dominated Congress.

That being said, experts caution that tax-advantaged retirement accounts could find themselves in the crosshairs as Congress searches for ways to offset the costs of previous tax cuts. They might contemplate eliminating the 401(k) tax deduction or capping contribution limits, which could throw a wrench in your retirement strategy.

Moreover, the Republican party has expressed skepticism towards ESG funds, which consider environmental, social, and governance factors in their investment decisions. Trump’s administration previously imposed restrictions on these funds, affecting workplace retirement plans, a scenario that could easily repeat if he regains the reins with Congressional backing.

How will market performance affect my retirement savings?

Historically, stock prices tend to surge after a presidential election, and recent forecasts from Goldman Sachs predict a similar trajectory following Trump’s win. We saw a glimmer of this with the S&P 500 hitting record highs on November 6.

Yet, while some sectors may shift due to Trump’s proposed policies, it’s essential to remember that retirement investing is a marathon, not a sprint. Experts consistently advocate for maintaining your investment strategy regardless of short-term market fluctuations. Don’t rush into drastic decisions; typically, markets recover over time. If your retirement is just around the corner, consider collaborating with a financial planner to minimize risks in your portfolio.

What about the future of Social Security?

During the campaign, Trump floated the idea of cuts to Social Security, only to backtrack upon realizing its unpopularity. His proposals to eliminate taxes on benefits could create budgetary issues down the line, as noted by the Committee for a Responsible Budget.

Is now a good time to invest in real estate?

Many real estate professionals are optimistic about Trump’s policies, anticipating that his focus on deregulation could maintain competitive interest rates. “With Trump’s interest in deregulation, we could see easier borrowing conditions for homebuyers and investors,” says Levi Rodgers of VA Loan Network.

While experts foresee potential deregulation in lending, they don’t expect it to mirror the reckless policies leading up to the 2008 housing crash. “We’re not facing any of the systemic risks we experienced in 2008, and Trump’s emphasis on easing geopolitical tensions should foster a robust housing market,” notes Robert Washington, founder of Savvy Buyers Realty.

However, proposed increases in tariffs and actions against undocumented immigrants could complicate matters. Raul Gastesi from Gastesi, Lopez and Mestre warns that higher construction material costs due to tariffs and rising wages could affect real estate prices. “If you’re planning renovations or a home purchase, keep an eye on material costs and consider locking in prices now,” he advises.

Can I withdraw from companies tied to Trump and his allies?

For those who opposed Trump’s reelection, there’s a desire to steer clear of financially supporting his administration. Major figures include Trump, his campaign surrogate Elon Musk, and Jeff Bezos.

All three lead tech companies that perform well in the stock market, meaning investments in major indexes indirectly support them. If you wish to divest, consider shifting your assets away from index funds that include these names and align your portfolio with your values. This approach may involve higher costs and risks, so consult a fiduciary financial planner to safeguard your long-term financial health.