Just to preface the obvious, what will Donald Trump do in his next term as President of the United States, and even what existing powers will he have to carry out many of his plans, such as imposing tariffs? There is even more uncertainty than usual about whether or not we even have one.
Nevertheless, when it comes to policies that affect investors rather than investments, the direction is fairly clear.
1. Tax changes are coming
As I have previously observed, the last election was not fought over tax policy, but now that the election is over, there are some tax ideas that could dramatically change the attractiveness of some investment strategies in the United States. No doubt you will be asked a lot about. next two years.
In particular, I think “Losification” will at least be seriously considered as a somewhat cynical ploy to increase income in the short term. This will definitely change the way investors think about saving for retirement.
Conversely, further cuts in corporate business taxes could help stock valuations.
2. Briefly touch on cryptocurrency
The incoming Trump administration's theme for investors may be “buyer beware.” Especially when it comes to virtual currencies, we expect a lighter response from regulators.
Whether you believe in cryptocurrencies or not, it is important to carefully check for yourself whether you are purchasing through a reputable exchange with reasonable fees. And the high numbers are The reality of scams and outright scams surrounding cryptocurrencies This is likely to continue to be a problem for investors.
It is possible that Congress could legislate some kind of regulatory framework for cryptocurrencies, but that is not the most likely outcome in a Congress that is deeply divided on other priorities.
3. Fiduciary protection for retirement investors will be weakened.
Recent Joe Biden-era rulemakings (somewhat similar to Barack Obama-era rulemakings) extending additional protections to investors in retirement accounts such as 401(k)s and IRAs before they take effect It is likely to be overturned. If that sounds similar to what happened during the last Trump administration, that's because it is.
Returning to the “buyer beware” theme from earlier, if you think your advisor is a fiduciary and has a duty to put your interests ahead of their own, but you're not sure; Ask me a question. Why not discuss this as well? brokercheck.org To ensure that unreliable professional brokers have a clean record.
4. Anti-ESG regulations may have little practical effect
The incoming administration is certainly hostile to environmentally, socially and governance-focused investments. But as a practical matter, investors who want to incorporate ESG analysis into their investment strategies do so because they believe it will allow them to outperform investors who avoid this analysis, or because they believe that investments align with their values. Because you want them to do so, they should do so without any problem. . The only exception? Workplace retirement accounts like 401(k) plans can largely avoid ESG.
This is because the regulations governing ESG in these plans are likely to be much more difficult for plan sponsors, thereby reducing their incentive to offer ESG options to their employees.
5. Regulators aim to accelerate integration of public and private markets
Private markets, historically accessible only to accredited and institutional investors, have grown over time to become more accessible to ordinary retail investors. Much of this change will not be driven by regulators or regulations, but by industry and investors.
But one would hope that regulators at the SEC and the Department of Labor (which regulates private workplace retirement plans) would make it easier for individual investors to invest in the private market. Whether investors embrace these opportunities as the industry hopes is another matter entirely.
