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.
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. 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
-
Is the GOP Secretly Planning to Raise Taxes on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Can the 'Guardrails Approach' Protect Your Retirement Investments?This investing method helps retirees avoid running out of money, even in a highly volatile market.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
What Wall Street's CEOs Are Saying About Trump's TariffsWe're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
When to Sell Your StockKnowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
-
The Home Stretch: Seven Essential Steps for Pre-RetireesThe decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
