Responding to Trump’s economic moves

Deep tax cuts for corporations. Major manufacturers scrambling to bring jobs back to the United States. The threat of high tariffs imposed on imported goods. Withdrawal from trade agreements. Repeal of the Affordable Care Act. Support for the energy sector. A major infrastructure overhaul.

All of these economic moves by President Donald J. Trump have been sprinkled in with uncomfortable moments and controversy no matter your political persuasion. Whether you think Trump’s moves will be positive or negative for the economy, it’s important to be aware the new president is bringing dramatic change.

No one can know how this sharp turn in direction will affect investments and retirement accounts, but many financial analysts are cautiously optimistic from an investment perspective. Wall Street is reacting positively, with the Dow Jones Average soaring past 20,000 for the first time as investors welcome potentially lower taxes, job growth, and cuts to government spending.

Trump has promised to reverse the globalist philosophy of the last few decades, tweeting, “My administration will follow two simple rules: Buy American and hire American.” Many are open to change after three decades of losing jobs as U.S. firms fled high corporate taxes by relocating plants overseas. It remains to be seen whether the end result warrants the early market enthusiasm, though, as the philosophy of economic isolationism has never worked well in the past. Indeed, before Trump even took office, Ford announced plans to cancel a planned Mexico plant and invest in a Michigan plant instead, and General Motors decided to relocate investment from Mexico to Michigan as well. Wal-Mart, Bayer, Hyundai and others announced new plans to invest in U.S. facilities and create new jobs.

Critics worry that erecting trade barriers could result in retaliation from other countries, particularly China. Others cite the potential for rising inflation as the Federal Reserve raises interest rates in response to higher projections for economic growth.

Another worrying factor: The stock market has been moving ahead for seven years, making it the third-longest bull market in U.S. history. As I wrote in October, a correction or even a bear market could normally be expected. Of course, Trump’s moves may change the usual calculus and instead set off another period of rising market values.

No matter who occupies the office of president, your investment portfolio should be well diversified, and you can take the following steps as well to be prepared for change:

Set aside cash. Place a portion of your assets in money market accounts and highyield online savings accounts. You will be sure that this portion of your money is safe. While the returns have been historically low, rising interest rates may increase the yield from these types of accounts in the coming months.

Rebalance. Don’t let your portfolio drift and get out of balance. A Certified Financial Planner (CFP) will periodically buy and sell assets to maintain your desired asset allocation percentages in a tax-efficient manner to help keep your personal finance plan on track.

Consider your age. If you are nearing retirement, look to your retirement planning: You can’t afford to lose a major percentage of your portfolio’s value this late in the game. This is all the more reason to shelter some assets in money market accounts and stay committed to rebalancing and diversification.