Presidential election years are often filled with anxiety about the country’s future. This anxiety even spills into stock market investments. A recent poll by the Nationwide Retirement Institute found that 76% of respondents are feeling on edge about the upcoming election and 32% are planning to make changes to their portfolio allocations depending on the outcome in November.
No matter who you want to see win, that person will have the ability to influence many things in the country, including the economy. If former President Donald Trump wins the election, there may be money moves that you want to make in response.
Target Stocks Benefiting From Tax Cuts
During Trump’s previous term as president, he cut the corporate tax rate from 35% to 21%. If Trump wins again, he may do the same during his second term. Companies that would benefit from further tax cuts may prosper, so targeting these stocks could benefit your portfolio.
Invest In Banks and Financial Services Stocks
During Trump’s previous term as president, he loosened financial regulations imposed after the 2008 financial crisis. If elected to a second term, he will likely continue working to roll back oversight of banks and Wall Street. This would benefit major banks. However, lower regulations can also increase risk across the board.
Look Into Real Estate
Trump is known for real estate. It’s where he’s generated the majority of his wealth. Because of this, his policies generally favor the real estate industry. If Trump wins, real estate investment trusts (REITs) or direct real estate investments might be a good choice.
“I plan to take advantage of any tax cuts by investing in income-generating real estate,” said Joe Stance, founder of Stance Commercial Real Estate. “The tax benefits of real estate investment, like depreciation, become more valuable if rates are lowered under Trump again. I’m looking at purchasing a mixed-use retail property where the additional income and tax offsets could significantly boost my returns.”
Invest In American Companies
Several of Trump’s campaign promises involve trying to bolster American companies and bring business back home. Trump has said he wants to rekindle and expand the tariffs he enacted during his first term. This includes imposing a 60% tariff on all goods from China and a 10% tariff on goods from other countries.
These trade policies may make American-made products more affordable than imported goods, which would increase American companies’ profits and stock prices.
“Small companies in flyover states, often overshadowed by larger corporations, could find themselves in a more favorable operating environment,” said Ryan Jacobs, founder of Jacobs Investment Management. “Enhanced support for domestic production and reduced regulatory burdens could level the playing field, allowing these businesses to thrive. Investors who identify and invest in these overlooked stocks can capitalize on the growth opportunities presented by these policy changes while supporting the broader American economy.”
Set Up a Grantor Retained Annuity Trust
The federal estate tax applies when people with large estates transfer property to their heirs. Under the Tax Cuts and Jobs Act, the Trump tax plan increased the lifetime estate and gift tax exemption from $5.49 million for individuals in 2017 to $13.61 million in 2024. However, this exception is temporary and will expire in 2025. However, if Trump is elected, he’ll most likely extend this exception.
If you have acquired enough wealth to surpass the gift and estate tax exemption but are far from the end of your life, you can take advantage of the exemption by setting up a grantor retained annuity trust, or GRAT for short. A GRAT is a financial instrument used to minimize taxes on large financial gifts to family members.
Under a GRAT, an irrevocable trust is created for a set period. Irrevocable trusts cannot be modified, amended or terminated without the grantor’s beneficiary’s permission or by a court’s order. Assets are placed under the GRAT, and then an annuity is paid out to the grantor every year. When the trust expires, the beneficiary receives the assets and pays little to no gift taxes.
“Grantor retained annuity trusts (GRATs) allow clients to transfer assets to heirs at a reduced gift tax cost,” said David Brillant, founder of Brillant Law. “The lower the interest rate, the more effective a GRAT. I have set up several GRATs for clients this year to leverage low rates, potentially saving over $1 million in gift taxes if assets appreciate as expected.”
Of course, no one can predict the future. Choosing your investments based on Trump’s future presidency would be risky at this point in time, although these options and outcomes are based on Trump’s previous term and campaign promises.
Most financial advisors advise their clients that diversifying is the best way to invest. Putting all your money on one speculative outcome is extremely risky, no matter the political climate. Instead, you should diversify your investments based on your long-term goals and risk tolerance.
