This week's newsletter is brought to you by Fundrise, my favorite private real estate and venture capital platform. With just a $10 minimum, Fundrise makes it easy for everyday investors to diversify into some of the best alternative investments. Fundrise is a long-time sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise.
Dear Financial Samurais,
What an eventful week it’s been, with Trump’s decisive win and the Fed's rate cut that some worried might be delayed. Just last week, we discussed how these events could spark a positive market shift, and that’s exactly what happened. The S&P 500 has reached a new all-time high, driven by increased clarity and reduced uncertainty.
Historically, the S&P 500 has seen a median return of around 4% between Election Day in November and year-end. If this trend holds, we could be looking at an S&P 500 level of approximately 6,015 by December 31, 2024, with a forward P/E multiple of around 22X.
From a personal finance standpoint, here are two intriguing takeaways from Trump’s victory:
- Tech and Finance Get a Boost: With potential tax cuts and deregulation on the horizon, tech and finance are likely to benefit. For those aiming to maximize income, these sectors offer strong career prospects. But it’s worth noting that major tech and finance hubs are in blue cities in blue states—except for Charlotte, NC, a blue city in a red state.
- Inflation Concerns Resurface: Possible tax cuts, deregulation, and new tariffs on foreign goods have stoked inflation worries. Following Trump’s win, we saw a 15–20 basis point uptick in the 10-year bond yield on November 6. However, Trump has stated he wants to bring mortgage rates down to 3% to make homeownership more accessible for Americans.
The counterforces in each point makes me believe there won't be extreme action either way, e.g. record-high tariffs, M&A free-for-all. I’ve updated my post, What a Trump Presidency Means for Your Finances, with more details on these impacts.
Choosing Optimism After The Election
Before the results came in, I wrote about why we might be better off in four years than we expect. In times of division, we often dwell on the negatives. Inflation has certainly been slapping us in the face for too long. But if we take a moment to reflect, most of us have likely seen significant improvement since 2020. Four years from now, I believe many of us will be in an even better position.
On election day, I also started another post on financial planning through various presidencies. I wanted to recount an honest assessment over the past 16 years and see if I could discover anything new. Ultimately, we are the architects of our financial futures. A president doesn’t dictate how hard we work, how much we save, or how we treat others—that’s up to us.
Still, reflecting on my financial decisions under past presidents, I noticed subtle nudges that influenced my actions. Often, we just need a push to make a change we already know we want. It's worth reflecting on how you changed your financial plans under each presidency as well. You might be pleasantly surprised by what you find out.
Regardless of your political affiliation, now’s the time to look forward with optimism. For me, my main priority is my children’s safety, as they’re too young to look out for themselves. Next is my goal to regain financial independence by December 31, 2027.
Private Growth Companies In Greater Favor
If Trump favors deregulation, we could see a rise in mergers, acquisitions, and companies going public. This would be a boon for investment banks and would likely encourage more capital to flow into private companies.
With private firms staying out of the public eye longer, more of the gains are captured by private investors. Stripe, the payments giant, is a prime example—remaining private for over a decade.
To tap into these gains, it makes sense for investors to allocate more capital to venture capital funds, rather than trying to navigate the individual angel investing landscape. Limited partners in VC funds often gain access to better opportunities, sometimes with co-investing options.
Sitting here in San Francisco, I’m anticipating an acceleration in fundraising by top private companies and an IPO surge from 2026 through 2028. As a result, I’m investing in San Francisco real estate to capitalize on the expected liquidity flow into the housing market. With our new mayor elect, Daniel Lurie, there’s also optimism about better governance moving forward.
A Renewed Focus on Heartland and Sunbelt Real Estate
Finally, given Trump’s strong support from these regions, it seems likely he would introduce policies aimed at strengthening the economies of heartland states. As someone who built his own fortune in real estate, Trump may have a vested interest in fostering growth in these areas.
Here are some initiatives we could anticipate:
- Infrastructure Investment: Increased funding for roads, bridges, and broadband to improve connectivity and access.
- Manufacturing and Job Creation Incentives: Tax breaks for companies that bring jobs back to the U.S., supporting onshoring and reshoring initiatives.
- Tax Credits for the Energy Sector: Support for both traditional and renewable energy projects.
- Small Business Grants and Loans: Expanded funding for programs that support entrepreneurs in rural communities.
- Opportunity Zone Enhancements: Additional incentives for investment in economically distressed areas.
- Agriculture-Focused Trade Agreements: Policies that favor American agricultural exports, helping support the backbone of many heartland economies.
- Lower Corporate Taxes and Expanded Rural Tax Credits: Additional tax incentives for businesses and families in rural areas.
These policies would aim to create jobs, attract businesses, and improve the quality of life in heartland states, making them more competitive in the broader U.S. economy. As a result, we’d likely see increased demand—and rising prices—for heartland real estate.
The long-term trends of remote work and migration to more affordable regions remain strong. With Trump back in office, there could be an additional boost to these areas, particularly as the excess housing supply from 2021 and 2022 is gradually absorbed by the market.
My preferred way to invest in heartland real estate is through Fundrise, which concentrates most of its investments in heartland and Sunbelt regions. I prefer investing in a diversified fund rather than individual deals for risk management and ease of exposure. Fundrise has been a long-time sponsor of Financial Samurai, and I’ve invested over $270,000 with them to date.
If you're still in the early or middle stages of your financial independence journey, focus on working hard and investing with intention. Achieving financial success will be one of the most rewarding victories in your life.
To Your Financial Freedom,
Sam
If someone forwarded this newsletter to you, join 60,000+ readers and sign up here. To receive my posts directly in your inbox as soon as they’re published, you can also subscribe here.
Prefer podcasts? I release a couple of episodes each month on Apple and Spotify, diving deeper into my posts for added insights and nuance.