Sponsored post by Principal Preservation Services and Principal Wealth Services
With the election past and Donald Trump elected to serve his second term as President of the United States, the markets responded immediately with positive results. All three major
indexes rose the very next day: Dow 3.57%, S&P 500 2.53%, Nasdaq 2.95%.
Here are some expectations that Americans could have about this second term for President Trump:
How about the markets?
I believe we will see more of what we saw in his first four years in the markets. Three
out of his four years we had positive returns in the S&P 500. He also wants to bring the
focus back to the U.S. by creating more jobs through manufacturing, drilling, eliminating
or cutting back the “red tape” on regulations put on business, and putting tariffs on other
countries like China.
Investors are feeling more and more confident that what he says he will do will happen as both the House and the Senate are majority held by the Republicans. That shows as the “risk” index (called the VIX) dropped right after the election, which indicates investors are feeling encouraged by the results.
More take-home pay
President Trump has mentioned that he wants to continue the Tax Cuts and Jobs Act income rates that went into effect in 2017 that is supposed to expire after 2025.
He also wants to not tax overtime pay. If anyone has consistently worked overtime, you
know that those hard worked hours get slashed on your payroll.
Additionally, Trump’s plan for no taxes on tips. For many in the service industry, this might be the difference of either looking for new work or now, staying in the industry that you love to do and keep more money in your pocket.
He also wants to reform Social Security to keep it solvent and eliminate taxes on it. Social Security was never taxed prior to 1984. Most people today will pay taxes on the Federal level and if you live in one of the nine states, including Minnesota, you will be paying it
on the state level as well. I recently had a couple in my office that saved over $900 per month in state taxes just by moving from Minnesota to a tax-free state. If the Federal taxes were eliminated on Social Security – just imagine what that will do for our retirees living on a fixed income!
Lower interest rates
President Trump has been appalled at the high rate of inflation that past few years.
Since President Biden took office, prices have increased 19.3 percent. This means that the average family of four is paying an additional $17,080 per year or $1,423 per month to purchase the same goods and services as they did in January 2021.
With lower interest rates, this also means lower mortgage rates. Mortgage rates soared
from 2.65% to 7.25% and have recently dipped below 6% recently. We’re expecting even lower rates with inflation coming down.
Also, we are expecting lower consumer loans on those car loans as well. The average new car price in September was over $48,000 and with an average new car interest rate of 5.25% to 6.87% with average to great credit. These payments are not cheap! That’s roughly a $900 per month car payment for a 5 year term.
Mike Kojonen
Mike Kojonen is an Investment Advisor Representative and the founder and owner of Principal Wealth Services and Principal Preservation Services. He can be reached at: zvxr@cevapvcnycerfreingvbafreivprf.pbz