17 hours Ago By GOBankingRates
With President Donald Trump having recently taken office, there are lots of conversations circulating about tariffs, the stock market, employment and more. It’s natural to feel uncertain about what you should be doing with your money during this time, especially if you’re middle class and trying to maintain your financial stability . Find Out: If Trump Eliminates the Department of Education, Do You Still Have To Pay Your Student Loans? Try This: Are You Rich or Middle Class? 8 Ways To Tell That Go Beyond Your Paycheck Though you might be tempted to make some financial changes to try and protect your money, avoid these potentially costly mistakes .
Don’t Take a Short-Term Course to Investing When news of Trump’s win spread, the stock market underwent significant fluctuations. Social media was flooded with posts from people considering pulling their money out of retirement to protect the funds against a volatile stock market, and the uncertainty hasn’t eased during Trump’s first days in office. Such actions may be a mistake.
Robert R. Johnson, Ph.D.
, CFA, CAIA, professor of finance at Heider College of Business, Creighton University , explained that it’s important not to change your investment focus in the short-term because of the presidency. “The bottom line is that investors should not change course with the results of a major election,” he said. Instead, Johnson encouraged investors to establish and follow an Investment Policy Statement, which is a written document that clearly outlines your return objectives and risk tolerance.
The document also includes essential details, like liquidity needs and your tax circumstances, and it functions as a set of ground rules for your investment process. “Investing without a plan is like driving without a roadmap or GPS,” Johnson explained. “Investors should take a long-term approach and stay the course.
” Danny Ray, CEO and founder at InsuranceForBurial.com , also recommended that middle-class families take a balanced approach to investment. “While short-term investments might seem appealing in uncertain times, focusing on a diversified, long-term portfolio often provides more stability,” he explained.
“The stock market tends to recover from temporary volatility, and panic selling can lock in losses unnecessarily.” Learn More: Here’s What Could Happen to Your Money in Trump’s First 40 Days in Office Don’t Forget To Balance Your Taxable Income The Tax Cuts and Jobs Act of 2017 is set to expire after 2025, which could mean middle-class individuals would see higher taxes. The existing legislation includes lower tax brackets and a higher child tax credit, and if the Trump administration doesn’t extend the tax cuts, higher taxes could have a significant impact on taxpayers who are unprepared for the increase.
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