Hooray! Election season is over and the political ads have finally been put to rest. For me, that means no more mud-slinging unless the boys get into the garden. Now that we know who will be serving as our next Commander-in-Chief, it’s time to deal with the post-election predictions for our next president.
I’ve heard from several of you about your investments and market concerns, so I want to address those fears. Let me just say that volatility around the election was expected, but a collapse is not imminent, so hang on.
Having started with that, here are my thoughts on how the election of Donald Trump will affect your investments and bottom line.
Addressing the Issues
As an outsider, Trump will likely face distrust from both parties at the outset of his administration, but it seems that both parties want to give him the benefit of the doubt and see how he will lead. His leadership style appears to be this: he will surround himself with smart people, get the facts needed, make a decision with the information available, and put people in place to execute his plans.
Trump ran on a platform of national security and governmental change, and the promise to improve our economy. So let’s look at how some of his proposed policies may impact your family finances.
Taxes: Trump plans to revise both the individual and corporate tax codes would reduce taxes across-the-board, especially for working and middle-income Americans who will receive a massive tax reduction.
*If you would like to calculate the potential effect on your own taxes, check out the Tax Policy Center's online calculator.
Child Care: Trump wants to rewrite the tax code to allow working parents to deduct childcare expenses for up to four dependents from their income taxes. Parents would also be allowed to enroll in tax-free dependent care savings accounts for their children or elderly relatives.
Jobs: One area that Republicans and Democrats agreed on was the need to improve our national infrastructure. Trump plans to update America’s infrastructure and create thousands of new jobs in construction, steel manufacturing, and other sectors -- which will in turn should generate new tax revenues.
College Costs: Trump wants to work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars. The idea is to allow the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, and make these programs easier to access, pay for, and finish.
Health Care: Trump want to repeal and replace Obamacare with Health Savings Accounts (HSAs). He also want to allow people to purchase insurance across state lines, in all 50 states, creating a dynamic market.
Trump’s plans were always short on details, so let’s explore that thought. When politicians run for office, they make promises and statements to get votes. Remember the one about ‘you can keep your current doctor and your health insurance won’t go up one dime.’ What President-elect Trump has done was to set a vision (make our country great again) and, to re-state his leadership style, will get smart people to work on solutions, and then implement them. He didn’t make unrealistic promises as he didn’t know what the details would be yet, which means he can't be wrong since he didn't promise anything.
The Reality
You may not be excited about our new president, however some of his proposals could be beneficial to your bottom line. Many will approach this new administration with skepticism since there is much we don’t know. While there’s no question that each of the suggested policy changes carry both pros and cons, none of the President-elect’s policies will go into effect without the agreement of Congress.
That means that even with a Republican House and Senate, new rules will take time. My prediction is that change will be slow over the next four years, but Saturday Night Live will have lots of fodder to work with.
The Bottom Line
At a recent economic review I attended, our current US economy was called a ‘healthy tortoise’, meaning that the fundamentals are stable and it is moving forward, but at a slow pace. Similarly, the global economy was referenced as a ‘mule on a lunch break.’ It can pull a lot more growth, but it has stalled for the moment.
What does this mean for the effect on your bottom line, you ask? Well -- not much for now.
While we should continue to look for short-term market skittishness and volatility, your long-term plan should remain the same. Unless there is a change to your goal, family circumstances, or an ACTUAL change in law that directly affects your financial situation, you should stay the course.
If you’re still feeling a little uncertain as we transition into a new administration, don’t worry -- it’s completely normal. Just remember that your mother’s advice still holds true, no matter who the president is:
While it may seem like a bumpy ride initially, history proves that things will work themselves out in the end. If you are still concerned about the outlook for your portfolio, please reach out and I’ll be glad to talk with you.
Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.
I’ve heard from several of you about your investments and market concerns, so I want to address those fears. Let me just say that volatility around the election was expected, but a collapse is not imminent, so hang on.
Having started with that, here are my thoughts on how the election of Donald Trump will affect your investments and bottom line.
Addressing the Issues
As an outsider, Trump will likely face distrust from both parties at the outset of his administration, but it seems that both parties want to give him the benefit of the doubt and see how he will lead. His leadership style appears to be this: he will surround himself with smart people, get the facts needed, make a decision with the information available, and put people in place to execute his plans.
Trump ran on a platform of national security and governmental change, and the promise to improve our economy. So let’s look at how some of his proposed policies may impact your family finances.
Taxes: Trump plans to revise both the individual and corporate tax codes would reduce taxes across-the-board, especially for working and middle-income Americans who will receive a massive tax reduction.
*If you would like to calculate the potential effect on your own taxes, check out the Tax Policy Center's online calculator.
Child Care: Trump wants to rewrite the tax code to allow working parents to deduct childcare expenses for up to four dependents from their income taxes. Parents would also be allowed to enroll in tax-free dependent care savings accounts for their children or elderly relatives.
Jobs: One area that Republicans and Democrats agreed on was the need to improve our national infrastructure. Trump plans to update America’s infrastructure and create thousands of new jobs in construction, steel manufacturing, and other sectors -- which will in turn should generate new tax revenues.
College Costs: Trump wants to work with Congress on reforms to ensure universities are making a good faith effort to reduce the cost of college and student debt in exchange for the federal tax breaks and tax dollars. The idea is to allow the opportunity to attend a two or four-year college, or to pursue a trade or a skill set through vocational and technical education, and make these programs easier to access, pay for, and finish.
Health Care: Trump want to repeal and replace Obamacare with Health Savings Accounts (HSAs). He also want to allow people to purchase insurance across state lines, in all 50 states, creating a dynamic market.
Trump’s plans were always short on details, so let’s explore that thought. When politicians run for office, they make promises and statements to get votes. Remember the one about ‘you can keep your current doctor and your health insurance won’t go up one dime.’ What President-elect Trump has done was to set a vision (make our country great again) and, to re-state his leadership style, will get smart people to work on solutions, and then implement them. He didn’t make unrealistic promises as he didn’t know what the details would be yet, which means he can't be wrong since he didn't promise anything.
The Reality
You may not be excited about our new president, however some of his proposals could be beneficial to your bottom line. Many will approach this new administration with skepticism since there is much we don’t know. While there’s no question that each of the suggested policy changes carry both pros and cons, none of the President-elect’s policies will go into effect without the agreement of Congress.
That means that even with a Republican House and Senate, new rules will take time. My prediction is that change will be slow over the next four years, but Saturday Night Live will have lots of fodder to work with.
The Bottom Line
At a recent economic review I attended, our current US economy was called a ‘healthy tortoise’, meaning that the fundamentals are stable and it is moving forward, but at a slow pace. Similarly, the global economy was referenced as a ‘mule on a lunch break.’ It can pull a lot more growth, but it has stalled for the moment.
What does this mean for the effect on your bottom line, you ask? Well -- not much for now.
While we should continue to look for short-term market skittishness and volatility, your long-term plan should remain the same. Unless there is a change to your goal, family circumstances, or an ACTUAL change in law that directly affects your financial situation, you should stay the course.
If you’re still feeling a little uncertain as we transition into a new administration, don’t worry -- it’s completely normal. Just remember that your mother’s advice still holds true, no matter who the president is:
- Live below your means
- Don’t buy stuff you can’t afford
- Save for a rainy day
- Wear clean underwear in case you are in an accident
While it may seem like a bumpy ride initially, history proves that things will work themselves out in the end. If you are still concerned about the outlook for your portfolio, please reach out and I’ll be glad to talk with you.
Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.