SL: What election results may mean for my wealth?
Election results are in and Donald Trump is the President-elect of the United States. While it’s never easy to predict how campaign promises will come into effect once the president is inaugurated, here’s what we think.
Trump presidency: likely effect on the markets
In general, Trump policy is likely to be friendly towards consumer spending and long-term economic growth which in turn is likely to provide support to the markets.
- In all likelihood, Trump will extend the 2017 Tax Cut and Job Act, instead of allowing it to expire. Although this would bolster GDP growth, it would worsen the already ballooning fiscal deficit and increase Federal debt.
- Trump tends to favor looser regulation. He will likely curtail the Inflation Reduction Act, reduce spending on renewables and cut green energy tax credits.
- Trump’s “America First” stance on foreign policy is likely to be supportive of domestic economic growth in industries such as energy, infrastructure, and construction. He will likely impose tariffs that will drive up the cost of doing business for foreign companies in America. This may damper economic growth and heighten tensions with international trading partners.
- A Trump regime is likely to keep taxes low and even reduce taxes on US corporations. The standard deduction is likely to be maintained or even increase.
How is this going to be impact me?
While a Trump presidency is probably going to mean lower taxes and more money in your wallet, the impact on the stock market is inconsequential. Research shows that although elections do mean volatile markets, geopolitical events do not have a long term impact your portfolio.
As always, the best defense from any geopolitical changes is a carefully calibrated risk tolerance that aligns with your portfolio, and a well thought out financial plan.
If you have any questions on the Trump presidency or your year end financial affairs, please reach out to discuss.
-Judd