During his inaugural address, President Donald Trump said, “From this day forward, it's going to be only America first.”Like his campaign slogan, Make America Great Again, this call to action resonated with a particular segment of Americans who want lower taxes, more jobs and less political corruption. Trump started this work by signing a host of executive orders in the first month of his presidency.
Politics aside, is there a lesson to learn from Trump about how to better your own financial life?
It’s time to make your portfolio great again
Executive actions are directives presidents gives to the federal government and related agencies regarding politics and policy. Similarly, make sure to direct your financial future by emphasizing safety, security and control in your portfolio.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
1. Aim for safety
President Trump aims to secure U.S. borders including building a wall along the border with Mexico to “make America safe again.”
How can you do the same for your portfolio?
- Enforce boundaries between investments. Don’t let bonds with creeping correlations to stocks hold your portfolio back. Empower your investments with a healthy dose of true diversifiers, investment strategies that historically lowered risk and increased returns in declining markets.
- Stop chasing diversification for diversification’s sake. Ensure your portfolio has a blend of passive and active investments—stocks, bonds and alternative investments—to be well positioned in all market conditions.
2. Amp up security
Promising a strong America abroad, the president has promised to spend whatever is necessary to empower the military and improve national security.
Securing your portfolio requires a handful of actions that should make you much more than you spend:
- Rebalancing is key. Taking a moment once a year to reinvest your earnings from high-performing assets into underperforming ones balances risk in your portfolio.
- Look for quality. Security is often related to quality. Most people know to ask about the investment strategy and track record. Few go the extra step to find out if the money manager invests in his own strategy.
3. Stay in control
There’s no doubt President Trump likes control over his message. On Day One, he got a secure smartphone and is even keeping his personal Twitter rather than defaulting to the @POTUS handle.
Keep control of your investments by actively:
- Controlling emotions. Both fear and greed rob you of returns. Sticking to a long-term plan and staying out of the fray of day-to-day market movements can help investors do what they instinctively know is right – buy low and sell high.
- Finding the right partner. Whether that be a robo-adviser, a flesh-and-blood financial adviser or a trusted money manager, the average investor would do well to have an expert help them craft a financial plan.
Don’t let events happening around you dictate your financial legacy. Instead, move forward, take executive action and make your financial future great again.
Stephen Scott is an alternatives and hedge fund investment veteran, with more than 25 years of experience in due diligence, risk management and index construction.
-
2025 Tax Reform: Will the SALT Deduction Cap Be Repealed?Tax Deductions Some lawmakers say it’s time to end the $10,000 cap on state and local tax deductions.
-
Affordability Crisis: Florida Votes to Increase Property Tax BreakState Tax Property taxes have skyrocketed nearly 60% within the last five years in Florida, and its constituents are finally doing something about it.
-
Three Charitable Giving Strategies for High-Net-Worth IndividualsIf you have $1 million or more saved for retirement, these charitable giving strategies can help you give efficiently and save on taxes.
-
The Wealth-Building Powers of Health Savings Accounts (HSAs)Health savings accounts could be the most underutilized wealth-building tool out there. Here’s who should use them and how to maximize their benefits.
-
Seven Ways to Be an Absolute Jerk as a LawyerHere's what law students need to know about damaging their relationships with other lawyers and judges and running up the bill for clients.
-
One Good Way to Withdraw Retirement Assets (and a Bad One)Don't withdraw retirement assets haphazardly. Managing distributions intentionally can lower your taxes, conserve your wealth and reduce Medicare premiums.
-
What Is Capital Gains Tax Deferral?Spoiler alert: It's the secret weapon of savvy real estate investors. Here's how it works and details about the tools you need to do it.
-
Don't Leave Your Heirs an IRA Tax BombYour traditional IRA has served you well, but when your heirs inherit it, watch out. Consider some of these strategies to minimize their tax burdens.
-
Five Ways to Maximize Your End-of-Year PhilanthropyTo do the most good, pick the right charity, be smart about how you donate and consider giving something just as valuable as money: your time.
-
Three Options for Retirees with an Old (Forgotten) AnnuityDid you buy an annuity in the 2000s? If it’s been out of sight and out of mind since then, it's time to dust it off and start making it pay for your retirement.
