Donald J. Trump was sworn in as the 47th president of the United States earlier today. Trump was one of the best presidents for the stock market in his first term, with the S&P 500 averaging a 13.6% annual return over his four years in office.
This, alongside expectations Trump and a Republican-controlled Congress will pass business-friendly and pro-growth policies, have many folks optimistic that the bull market will continue. Some analyst expect the S&P 500 to be above 7,000 by year's end.
With this in mind, we look at five ways to invest in the new Trump presidency.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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. Bitcoin
Trump warmed up to bitcoin throughout his 2024 campaign – marking an about-face from his previous stance toward digital currencies.
While bitcoin has come off its mid-December peak above $100,000 amid some profit-taking, Wall Street anticipates another leg higher in 2025.
"[S]peculation surrounding the incoming Trump administration's potential establishment of a U.S. bitcoin reserve – an initiative analysts estimate has a 60% likelihood – could help the cryptocurrency reclaim" the key $100,000 level, says Matt Mena, crypto research strategist at 21Shares.
Investors wanting to capitalize on potential upside while limiting risk should consider these bitcoin and crypto ETFs.
2. Stay domestic
Recent reports have indicated the Trump administration may do a gradual rollout of tariffs vs a blanket increase on Day 1. While this could have a more muted impact on inflation, higher tariffs have the potential to weigh on profits of American companies with strong sales.
Kiplinger contributor James K. Glassman says one way investors can hedge against tariffs is to focus on domestic companies with little to no international exposure. His top stock picks include insurance giant Allstate (ALL) and credit card company Capital One Financial (COF).
3. Buy dividend stocks
Trump's proposed policies – including on tariffs and immigration – have the potential to reignite inflation and put the Federal Reserve's rate-cutting plans on ice. The stock market has shown that it is quick to react to such scenarios. Indeed, the S&P 500 spiraled nearly 3% back on December 18 after the Fed projected higher inflation and fewer rate cuts for 2025.
Including some of the best dividend stocks for dependable dividend growth in your portfolio can help mitigate some of this risk.
4. For-profit prison stocks are expected to rise
The Trump administration's mass deportation efforts are not only expected to lift inflation but also the share price of for-profit prison stocks such as GEO Group (GEO). "The company designs and delivers support services for prisons, immigration processing centers and community reentry centers," writes Kiplinger contributor Will Ashworth in his feature "5 Stocks to Buy for a Trump Presidency."
With Trump back in office, this creates "a more clear positive for the company, in our view, both from an investor sentiment perspective and from the belief that Trump would look to increase detention utilization," says Wedbush analyst Brian Violino.
5. Stay the course
As we learned during Trump's first term, the stock market can be quick to react to the president's policies, comments and posts. However, investing is a marathon and not a sprint and the most reliable gains occur over long time frames. Indeed, the S&P 500 has averaged an annual return of 10% over the past 20 years.
Investors who have trouble stomaching the daily ups and downs of the market should take a closer look at low-volatility ETFs, which tend to have a lower risk profile that the typical index fund.
Related content
-
S&P 500 Hits New Highs as Rally Resumes: Stock Market TodayTech stocks were the biggest gainers on Wall Street today, with Nvidia and Dell making notable moves.
-
The Shutdown Standoff Is Heading for Its Next Big TestA key mid-October deadline could intensify the shutdown fight in Washington, and the fallout could soon hit workers and your wallet.
-
S&P 500 Hits New Highs as Rally Resumes: Stock Market Today
Tech stocks were the biggest gainers on Wall Street today, with Nvidia and Dell making notable moves.
-
Should You Buy Gold as It Tops $4,000? Here's What the Experts SayRate cuts, a weak dollar and macro uncertainty have helped create a "perfect storm" for gold this year. Should investors add exposure or is it too late to buy?
-
Preferred Bank Stocks: The Investment Retirees (and Others) May Be Missing Out OnMost large banks issue preferred stocks that pay out fixed dividends, often with higher yields than bonds. Should you make room for them in your portfolio?
-
Don't Let Your Equity Compensation Trip You Up: A Financial Expert's GuideStock options, RSUs and other executive perks can come with some serious strings attached. To avoid a nasty tax surprise, you need a plan.
-
Rally Fades on Mixed AI Revolution News: Stock Market TodayAll three main U.S. equity indexes opened higher but closed lower as a seven-session winning streak for the S&P 500 came to an end.
-
The Spendthrift Trap: Here's One Way to Protect Your Legacy From an Irresponsible HeirA spendthrift clause in an estate plan can protect an inheritance from a financially irresponsible child's debts and poor decisions.
-
Adapting to AI's Evolving Landscape: A Survival Guide for BusinessesLike it or not, AI is here to stay, and opting out could be disastrous for your organization. Instead, focus on what you can control and be flexible, as AI is still evolving.
-
S&P, Nasdaq Hit New Highs: Stock Market TodayA late-day rally wasn't enough to lift the Dow into the green as its six-session winning streak came to an end.
