Like it or not Donald Trump is going to be your new president! There are many people upset with the fact that he won the Electoral College not the Popular Vote. People have two choices; we can march and protest in the streets or we can adapt to the changes that are coming. Based on history and what Trump said on his campaign trail, there is going to be some major changes when it comes your finances. If we continue in denial we can wait for them to enact or we can learn about them ahead a time and take full advantage of the changes coming.
HEADED FOR RECESSION
As we have seen in the past, history repeats itself. With this being said we are heading into a recession. If we look at the last 100 years whenever a two-term presidency ends and the next president is from the opposing political party we go into a recession within 12 months. So, we need to get ready. Instead of buying new cars and luxuries, this should be our time to save and gather our resources. Do I know what will cause the next recession? No!!! But I believe it will bring an opportunity of a lifetime for anybody who is prepared.
TAXES WILL CHANGE
According to donaldjtrump.com, Trump will make the IRS tax code simpler. He will switch from a 7 income brackets down to a 3 income tax bracket for individuals and families. He will also raise standard deductions for families from $12,600 to $30,000. This would be a great benefit for many individuals and families. The quadrillion dollar question is… will it allow our countries economy to grow? Let’s face it, our countries economy still has not grown to the level of pre-2008 great recession. If the tax plan does not make the economy grow we are just growing our budget deficit long term. By the way for tax purposes it would not make a lot of sense for most Americans to buy a primary home with the changes. The reason being is that tax deduction for home mortgage interest would not be worth it unless you purchase a home over $775k. If you don’t, you should simply rent and use the standard deduction.
Trump does not plan to cut Social Security benefits and he does not plan on increasing taxes to pay for it. His plan is to grow the economy to pay for it. Let me say this, the biggest issue of the world is aging. Aging brings a natural slow down to the economy as buying trends of older people change. We see this in every major country Germany, Japan, Unites States and China. Every one of these countries have been trying to figure out how to grow their economy for the last 10-20 years and have not figure it out yet. If Trump’s plan works in growing the economy he is a genius and would be consider a legend. If his plans does not work, get ready because Social Security will be broke by 2034. In any case we should starting saving more for the day of reckoning.
INCREASE IN INTEREST RATES
Trump does not have the power to print money or control interest rates. That power and control comes from Janet Yellen, head of the Federal Reserve. Based upon past comments of Trump, he believes interest rates are falsely low and they will eventually have to go up. If interest rates go up it will benefit savers, not investors or people who borrow money. The reason it benefits savers is because they will get more interest on their money at banks and insurance companies. While borrowers will have to pay more to service their debt. If interest does go up we can see a major collapse in areas like home prices, auto industry, tech-startups, cities and local governments. Remember news is news. So, if you are a saver you could be in position to buy a lot of items for pennies on dollars.
The biggest expense for the United States government is not defense, or Social Security but healthcare. If the price of healthcare keeps going up the United States, our country will go broke over it. Just like thousands of Americans do every single year. The Affordable Care Act had a lot of major perks such as everyone has access to healthcare even if they have pre-conditions and children are able to be on parents plan till age of 26. But it did not take care of one issue most Americans hate about healthcare the cost!!! The law mandates that people get healthcare. The problem is price for healthcare has soared while the quality of care has went down. Many hard working middle-class American families cannot afford to keep their health insurance. It’s sad that they have to decide on paying for baseball for their kids or pay healthcare premiums. Trump wants to repeal Affordable Care Act. He wants everybody to have health insurance but what is going to happen is unsure.
There is going to be some changes that happen in our country for the good, the bad and the ugly. For the prepared ones, we will see an opportunity of a lifetime. For those who are not prepared they may suffer a lot. If you like more ideas on how to be more prepared feel free to contact us.
President/CEO Matthews Financial & Insurance Solutions