Trump 2.0 - What Does It Mean For Your Financial Plan?

We are a diverse and divided nation.  Some are happy, while others are sad, that Donald Trump defeated Kamala Harris. What’s now clear is that Trump will become the 47th President of the United States in 2025.  Will it be GREAT or will it be GAUDY?  That evaluation is best left to political debates and pundits.  

We seek different answers and insights...

What Does a Trump Presidency and Republican Held House and Senate Mean for Your Financial Plan?

Let’s start with history.   We have seen different analyses.  Most say that the stock market doesn’t really care which party is in control.  There is a growth bias inherent to benchmarks like the S&P 500 which is positive most years.  Here is a chart illustrating the growth of $1,000 across both Republican and Democratic administrations.

In another study by the Capital Group, they looked at the S&P 500 and determined that a “unified government” where one party controls the White House, Senate and House.  That scenario provides average annual total returns of 14.4% over the years 1933-2023.  Not too bad!  We have seen other studies that don’t go all the way back to the 1930s that show a slight edge to a “split congress” scenario.  

Regardless of one’s political persuasion, we think the point is clear: politics don’t cloud the stock market, but people’s feelings often do cloud their own outlook on the stock market.  

Our advice?  Don’t let your feelings get in the way of your financial plan.

What Do We Find Most Interesting or Vexing ?

Regarding a Trump presidency and financial matters, a few things bubble up to the top of the list.

• Taxes – will corporate taxes stay the same or possibly even move downward?  It’s entirely possible they will go lower which is a boon to publicly traded companies.  Personal income taxes are also up for grabs.  The Tax Cut & Jobs Act (TCJA) is set to sunset by function of law at the end of 2025.  It seems much more likely that a version of this law will be extended.  There are always winners and losers in these tax conversations.  Generally, those filing as married couples get the greatest benefits, whereas individual filers sometimes get the IRS screws.

• Inflation – could inflation rear its ugly head again?  It’s a real concern.  Tariffs are inflationary and Trump is talking a lot about them.  That said, he could be using them as leverage in trade negotiations.   Our concern is that continued government spending combined with tariffs and a strong economy could in fact be a recipe for more inflation in the years ahead.

• Trump Effect on Personal Financial Plans – this is absolutely the most important question that any individual can ask!  So, what will the Trump effect be for YOUR financial plan?  Assuming you have a financial plan, you can and should be able to run different “stress tests” to mimic things like lower taxes or higher inflation.  From there you can see how it changes your financial plan negatively or positively over years and even decades.  If you don’t have a financial plan…well, you should get one!

As Certified Financial Planners®, Jim Burns and Jeremy Whiddon utilize customized financial plans to drive behavior and decisions.  If you want to dive deeper into this election and see how it may impact your financial plans, we are here as always to help.