Trump Era Finance Tips: How to Safeguard Your Money Without Panic

Some stores are advising Americans to make purchases now before anticipated tariff increases affect prices next year. However, financial experts argue that this is misguided advice.

President-elect Donald Trump has promised to implement a 25% universal tariff on products from Mexico and Canada and an additional 10% on Chinese imports from his first day in office. During his campaign, he suggested even higher tariffs of 60% on Chinese goods and 10% to 20% on imports from other nations.

According to economists, such tariffs would lead to increased costs for consumers, sparking fears that products ranging from iPhones to bicycles and even furniture could become more costly next year. Nonetheless, financial advisors are discouraging panic buying. They suggest focusing on strengthening your financial health instead of stockpiling goods potentially affected by tariffs.

“Ignore the hype and concentrate on your own financial situation and priorities,” advises Bobbi Rebell, a certified financial planner and personal finance expert at BadCredit.org. “Avoid making purchases out of panic.”

Navigating the Upcoming Trump Presidency: What Should You Do?

Experts recommend not basing your financial strategies on possible tariffs. As Jerome Powell, the Federal Reserve Chairman, stated in a recent news conference, “We need to see how it unfolds.”

At this stage, the tariffs are merely speculative.

“The size, timing, and duration of the tariffs are still unknown,” Powell commented. “It’s premature to make policies based on these uncertainties.”

Rather than reacting prematurely, Americans should continue to focus on saving and investing, as advised by financial experts.

Investing Strategies in a Trump-led Era

While the specifics of potential tariffs remain uncertain, Trump’s broader policy inclinations provide some guidance for adjusting investment strategies, according to financial advisors.

Investment advisors recommend considering the following when managing your investments:

• Trump’s deregulation agenda and the Federal Reserve’s trend towards lowering interest rates could benefit financial sectors.
• Industries like artificial intelligence and cryptocurrency, which Trump supports and which require significant electricity, could boost utility sectors.
• Trump’s focus on improving infrastructure and revitalizing domestic manufacturing could enhance the prospects of industrial firms such as Deere and Caterpillar.

Experts remind that stock market returns can be unpredictable and suggest more conservative investment options like Treasury bills, CDs, and high-yield savings accounts, which offer returns of 4% to 5%, for those adverse to risk or nearing retirement, according to Phil Battin, president and CEO of Ambassador Wealth Management in Warrenville, Illinois.

Advisors also suggest considering buffered exchange-traded funds (ETFs), which offer limited exposure to the stock market while capping potential losses and gains over a certain period, typically a year. These funds tend to cost more than typical ETFs and offer various levels of risk and reward.

For those nearing or in retirement, dividend-paying stocks are a viable option, according to Faron Daugs, founder and CEO of Harrison Wallace Financial Group in Libertyville, Illinois. “These stocks not only provide potential price appreciation but also deliver dividends regardless of market conditions,” he said.

Financial Planning in the Trump Era: Can You Still Save?

Experts advise against premature purchases driven by tariff-related price hike fears, especially if such purchases accrue high-interest credit card debt. Bobbi Rebell notes that the average credit card interest rate is around 20.37%, close to the record high. She suggests using funds to lower credit card debt and improve credit scores for better loan terms in the future.

If prices do rise, Rebell recommends not accepting them at face value. “Most original prices are inflated. Negotiate online, use coupon sites, and look for price matching options. Often, placing an item in your online cart and waiting can prompt retailers to offer discounts,” she advises.

Should Tariff-Related Inflation Concern You?

“This is all preliminary,” states Steven Conners, founder and president of Conners Wealth Management in Scottsdale, Arizona. “It’s too early in the process to be overly concerned.”

Financial experts view the tariff threats primarily as a bargaining strategy, similar to tactics used in Trump’s first term, which did not result in significant inflation, according to Daugs. He believes that Trump’s deregulation plans could offset some tariff impacts, expressing little worry about severe inflation.

Battin echoes this sentiment, noting that China’s current economic weakness could mitigate the likelihood of severe reciprocal tariffs. “Describing it as a potential ‘tariff war’ might be an exaggeration,” he commented.

They also recall the inaccurate economic forecasts following Trump’s 2016 victory, emphasizing that fear is often an unreliable advisor. “Decisions driven by fear or greed usually lead to poor outcomes,” Battin concluded.