I’m an Economist: 5 Financial Moves You Should Make Before 2025 If Trump Wins the Election
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Economists and financial experts are watching this year’s close presidential race between former President Donald Trump and Vice President Kamala Harris to anticipate the economic policy changes that could affect millions of Americans.
“Under a Trump administration, individuals can anticipate potential tax cuts, such as lower income tax rates, especially for wealthy individuals,” said Michael Collins, a chartered financial analyst (CFA) and founder and CEO of WinCap Financial.
Collins explained, “They may also see changes in retirement savings options, with the possibility of additional contribution limits and options for tax-deferred growth.”
To take advantage of these changes, here are five financial moves Collins and other economic experts said you should make before 2025 if Trump wins the election.
Safeguard Against Inflation
Wayne Winegarden, an economist at the Pacific Research Institute, said inflation could pose the biggest risk if Trump is elected.
“Due to Trump’s advocacy of tariffs, his intention to make the tax code more complex and farther from the ideal of imposing the lowest possible tax rate on the broadest possible tax base, and his comments in support of politicizing the interest rate decisions of the Federal Reserve, a resurgence of inflation is a real threat under a Trump presidency,” Winegarden said.
In addition, Collins said Trump’s policies could impact inflation through changes in trade agreements and tariffs on imported goods, which could lead to a rise in prices for everyday goods.
“To safeguard purchasing power, individuals should consider keeping a diverse portfolio that includes assets such as commodities, which tend to perform well during periods of high inflation,” Collins said.
Diversify Your Portfolio
Collins also said changes in corporate taxes or deregulation under a Trump administration could potentially increase stock prices, particularly in industries that may benefit from less regulation or lower taxes, such as energy and financial services.
“Investors may want to consider diversifying their portfolios to include companies from these sectors before the new policies are implemented,” Collins said.
For example, given Trump’s focus on energy independence and fossil fuel industries, individuals may want to adjust their portfolios or retirement accounts to capitalize on potential shifts in these industries.
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Consider a Health Savings Account
Potential changes in healthcare or Medicare under a Trump presidency could increase individual healthcare costs.
While Trump said he is working on “concepts of plans,” it’s possible that a second Trump administration could renew his earlier efforts to offer more short-term health plans, which don’t have to cover everything required under Affordable Care Act plans.
“To prepare financially, individuals should consider investing in health savings accounts (HSAs), which offer tax advantages for medical expenses,” Collins said.
A health savings account is a special savings account you can use to set aside money, tax-free, for healthcare expenses. You can contribute money to your HSA and use it to pay for medical costs like doctor visits, prescriptions and dental care.
Keep an Eye on Mortgage Rates
To tackle the affordable housing crisis, Trump promised to offer tax incentives for homebuyers, remove “unnecessary” regulations on home construction and make some federal land available for residential construction.
Collins said homeowners or prospective buyers should also monitor potential changes in mortgage rates and housing market regulations during a Trump presidency.
“If there is a possibility of stricter lending requirements, it would be wise to secure financing sooner rather than later,” Collins said.
Take Advantage of Tax Breaks
Collins said small business owners may benefit from potential tax relief or deregulation under a second Trump administration, allowing them to retain more profits and invest in their businesses.
For example, Trump has discussed several measures, including extending the 2017 Tax Cuts and Jobs Act changes that are set to expire next year, reviving the deduction for state and local taxes (SALT), reducing corporate tax rates for domestic production, and exempting various types of income from the income tax.
“They should also consider taking advantage of any tax breaks for small businesses and look into ways to increase efficiency and reduce costs,” Collins said.
In addition, Collins said it is anticipated that estate and inheritance taxes may be reduced under the Trump administration.
“High-net-worth individuals should consider making moves such as gifting assets or creating trusts before the end of 2024 to take advantage of potential tax savings,” Collins said.
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. For more coverage on this topic, please check out I’m an Economist: 4 Financial Moves You Should Make Before 2025 If Harris Wins the Election.
