The beginning of the Trump administration may have investors feeling ecstatic, uncertain, or some emotion in between those two extremes. Wherever you may stand on that emotional spectrum, I believe there are a few things that investors should be considering as we move through 2025.

Investments

The potential market impacts of the Trump administration remain to be seen. Investors have seen markets increase in value since Trump’s election win, signaling that markets could do well over the next four years. Investors have also heard about tariffs and other protectionist policies that could hurt the US economy and put negative pressure on markets. These varying ideas could mean uncertainty and volatility for the markets during 2025.

On one hand, markets tend to go up during most presidencies (both Democrat and Republican). On the other hand, every U.S. president going back to Herbert Hoover has seen a bear market during their administration (Baird Research, 2024). ¹

So, what is an investor to do? I think its important to stay focused on the long-term. First, it’s important to review your short, medium, and long-term financial goals. Do you want to buy a new house? Do you want to fund a grandchild’s college education? Or do you want to continue saving for your retirement? Once those goals have been confirmed and clarified, its important to review your asset allocation and ensure that it is in line with those goals. These simple but incredibly important steps may help to ensure our portfolios continue to grow over the long-term.

Taxes

Another policy issue for investors to watch is what happens with the Tax Cuts and Jobs Act. If it is allowed to sunset at the end of 2025, taxes could increase for 62% of Americans (York, 2024). ² Because of this, it’s important for investors to understand how things may change and what sorts of proposals may be included in a new tax bill. Changes could be seen to the State and Local Tax (SALT) deduction, tax credits for electric vehicles, and/or the alternative minimum tax. Overall, I think it’s important for investors to first clarify their tax goals and then remember what they control from a tax perspective. That includes taxable income and their deductions. Because of this, it may be more important to consider strategies such as when they take distributions from traditional IRAs, Roth conversions, and qualified charitable distributions, among others.

This too shall pass.

Returning to the optimism or pessimism that investors may be feeling after the election, it’s important for all of us to remember that “the present is a magnifying glass.” The emotions we are feeling now, whether they are positive or negative, can seem outsized, which can lead to investing mistakes. This is why it’s important to have a future-oriented outlook, and remind ourselves of tomorrow’s goals. Doing this through a written financial plan that you can refer to, or by meeting with a financial advisor, allows us to thoughtfully reflect on these goals. Finally, the phrase “this too shall pass” is an important reminder for all of us. If we are feeling negatively, reminding ourselves that “this too shall pass” gives us hope. If we are feeling ecstatic, reminding ourselves that “this too shall pass” keeps us humble. In either case, we are able to gain perspective, which allows us to decrease emotions and focus on our longer-term financial goals.

The opinions and views expressed are as of the date published, are subject to change, and may not reflect the views of others in the organization. They are for information purposes only and should not be used or construed as an offer to sell; a solicitation of an offer to buy; or a recommendation to buy, sell or hold any security, investment strategy, or market sector. There is no guarantee that the information supplied is accurate, complete, or timely, nor are there any warranties with regards to the results obtained from its use.