Oh boy. I didn’t think it would ever come to this.
Apparently U.S. voters are more fed up with “the establishment” than I thought – they’d rather have a reality TV star *cough* run their country.
Welcome to the White House Mr. Trump. Like the American public maybe you have little idea of what you’ve really done.
Like U.S. market futures crashing the night of the election last week only to rebound higher, like a yo-yo, I have no idea what the future holds when it comes to the economy, markets, oil prices or our Canadian dollar. I like to make predictions, and some of them turn out to be true, but nothing is assured when it comes to the future.
Will Trump send Canada and the rest of the world a message with U.S. protectionism? Is he going to repeal every move Obama made?
Here’s how I’m going to invest with Trump in office.
Stay the course – focus on investing in equities
With interest rates moving higher this winter, it might get more expensive to borrow money during Trump’s term. That will likely trickle over to Canada. Low rates have been around for what seems like forever, and low rates have pros and cons.
Pros of low rates:
- Great borrowing costs to finance homes and cars.
- Great borrowing costs for business investments and ventures.
In general, credit is cheap. This makes spending money look like the right thing to do.
Cons of low rates:
- They hurt folks with fixed income assets like bonds and saving accounts.
- They do not reward fiscal responsibility, by businesses or individuals.
In general, money is too cheap. It makes saving money look like the wrong thing to do.
I don’t hold any bonds or fixed income in my portfolio because of this reason. So, what I have left is staying the course – which means for us a focus on investing using equities. In our portfolio this is done via dividend paying stocks and indexed Exchange Traded Funds (ETFs). Regardless of what policies The Apprentice puts in place or reverts we’re going to continue to invest the same way we always do.
Stay the course – focus on debt reduction
People who forecast the weather, pollsters, and talking heads on TV who forecast the markets are the only folks that get to keep their job when they are consistently wrong. Must be nice…
Although my crystal ball is always cloudy there is one thing I’ve learned over the years – with servicing debt you pay other people first. For most of us holding long-term debt obligations to other people is not a great recipe for success.
Here’s what we plan to do with our debt during Trump’s time in office:
- Continue to slay the mortgage dragon via mortgage prepayments. The more money that goes on our mortgage principal, the more our net worth will grow. Net worth up, debt down. This is good.
- Avoid using our line of credit. We won’t touch it unless we absolutely have to.
- Continue to pay off all credit card transactions every month. This means avoiding purchases on our credit cards we cannot pay off in cash the following month.
- Kill off our car payment next month. This means the end of car payments for the foreseeable future for us (we intend to pay cash for our next used car in 2017 or 2018). Along with the other 2012 car we own I’ll drive this luxury beauty in the meantime.
Trump might blow up trade agreements. He might build a wall (and tell other countries to pay for one). He might deport millions. He might accidentally use his Twitter account to share FBI security details. He might do all these things and much, much more.
When it comes to our finances, we’re not planning on doing anything different with Trump in the White House.
As for finishing off the bunker in our basement, and ensuring our generator can support it, that’s another story.
What are your investing plans with Trump in the office?