Tips for Investing in the Trump Presidency

A picture of Donald Trump is displayed as traders work on the New York Stock Exchange (NYSE) floor alongside a red Trump hat — (Image credit: Spencer Platt/Getty Images)

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.

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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.

With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at a local investment research firm. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.