Wow! Donald Trump will be the 45th President of The United States. The polls were wrong. The political pundits were wrong. And I was wrong as well. We're now going to experience a hammering in all stock markets around the world due to policy uncertainty. Hopefully the sell-off is very temporary like Brexit's. The only thing I was right about was aggressively saving cash all year and nibbling on some bonds. I've been waiting to build a large bond portfolio for a while and am surprised the 10-year yield is surging to ~2%.
If you stayed up late enough to listen to Donald's victory speech, you should come away feeling better that everything will be OK if you are a Hillary supporter. Donald spoke with a lot of humility. He talked about bringing the nation back together, working with every country, and helping every citizen. In a word, he sounded presidential. Have a listen if you haven't already.
With Republicans winning the Executive Office, Senate, and House, we should expect lower income tax rates and the potential repeal of Obamacare, which is truly costing middle class Americans much more than expected. I'll write more about this later. Donald said he'll raise tariffs, get tough on immigration, and decrease oil and gas regulations, among many other things. We shall see.
As financial freedom seekers, we should accept the outcome and look at the bright side of change. Out with the status quo and in with the new. Let's see what a businessman can do versus a career politician.
Where It All Went Wrong And How Did Donald Trump Win?
It's now clear Hillary had too many trust issues to overcome. Further, instead of sounding like she was always reading from a script, she could have spoken in a more natural, genuine tone. Charisma counts.
Joe Biden probably should have run instead. He must be feeling pretty guilty right about now. Donald Trump has the charisma that won a lot of voters over.
As I wrote in Affirmative Action Based On Income and Wealth, there's a large part of the country that feels ignored by the establishment. They've seen their jobs evaporate due to globalization and their incomes decline over the past eight years. Yet they see Obama being soft on immigration and favoring minorities. Of course they want change.
On the flip side, look at all the states that voted for Hillary. It's not a coincidence the blue states have seen some of the fastest increases in employment growth, property price appreciation, and wealth creation. When things are going well, the last thing you want is change.
It's pretty amazing that despite a biased media and tremendous celebrity backing, Hillary still lost. It just goes to show you how bad things are for many Americans.
Here's a fascinating snapshot of how people ages 18-25 voted. It's not a big surprise given young people pay less taxes. It's a good life lesson of not always getting what you want. Be nice to your elders. Your massive inheritances may depend on it!
Time To Get Back To Work
I told myself if Donald Trump wins, I'll probably do these three things:
- Look for a full-time job again
- Increase the amount of consulting clients (corporate and personal)
- Publish more content
Lower tax rates is an incentive to work harder. I've had it really good since 2012, but all good things have to come to an end. Besides, paying for your own healthcare is so damn expensive!
Here is Trump's tax plan from his website:
The Trump Plan will collapse the current seven tax brackets to three brackets. The rates and breakpoints are as shown below. Low-income Americans will have an effective income tax rate of 0. The tax brackets are similar to those in the House GOP tax blueprint.
Brackets & Rates for Married-Joint filers:
Less than $75,000: 12% (from 10% – 15% currently)
More than $75,000 but less than $225,000: 25% (from 25% and 28% currently)
More than $225,000: 33% (from 33%, 35%, and 39.6% currently)
*Brackets for single filers are ½ of these amountsThe Trump Plan will retain the existing capital gains rate structure (maximum rate of 20 percent) with tax brackets shown above. Carried interest will be taxed as ordinary income.
The 3.8 percent Obamacare tax on investment income will be repealed, as will the alternative minimum tax.
The Trump Plan will lower the business tax rate from 35 percent to 15 percent, and eliminate the corporate alternative minimum tax. This rate is available to all businesses, both small and large, that want to retain the profits within the business.
Besides starting a business, the biggest benefit under Donald's tax plan is to therefore try and make as much above $466,000 (current married couple income minimum for 39.6% tax rate) as possible. Tough for many to do, but worth a shot. For all incomes less than $466,000, not much changes except for the Net Investment Income tax going away for those making more than $200,000/$250,000 as individuals/married couples.
The sweet spot for maximum happiness continues to be an individual or married couple income of around $200,000 – $250,000. They should hopefully pay an effective 25% tax rate or less as a result, although it's unsure exactly whether individuals making between $91,150 and $190,150 will really see an increase in their taxes from a 28% marginal rate to a 33% marginal rate. A 25% tax rate is just the right amount for everyone to feel good about contributing to our great nation. It's also low enough that it may increase tax revenue overall due to lower tax fraud.
I don't think I'll have too much trouble finding more consulting gigs and writing more content to boost online revenue. My main problem will be finding a full-time job. After almost five years away from the system, it's going to be very difficult for me to assimilate. Employers are always skeptical of me wanting to come back to work as well. At the very least, I can entertain you with new job failure stories!
Finally, for those folks who say they plan to move to Canada, come on now. They've got some of the most unaffordable real estate in the world, high-paying jobs are not plentiful, and you'll be freezing for five months a year. Besides, America needs your tax dollars. If you're a disappointed Hillary supporter who must move, just move to California or Hawaii. Life is really nice out here.
Readers, how are you feeling post election? Have you properly hedged your portfolio for volatility? Are you buying stock in the sell-off? Or do you see money flowing into real estate given the volatility? Now is a great time to revisit my post: Real Estate vs Stocks: Which Is A Better Investment?
Trump Will Be The 47th President In 2025
After the failed assassination attempt on July 15, 2024, Trump will likely beat Biden and become the 47th president of the United States. Here's a detailed article on what Trump's presidency means for your money. In general, he should be positive for your investments.
As a result, with greater incentives to earn money due to lower tax rates and more career opportunities, it may be best to grind for four more years. The time to press will be when taxes are low and there's a bull market.
Donald Trump Wins is a FS original post. Now we've got President Biden. Let's hope he does much better. Donald Trump is likely going to go down as one of the worst presidents ever.
I’d be interested in a Trump report card post. You seemed pretty confident in his skills upon election and now I wonder if those hold true.
Financial Samurai says
November 9, 2016 at 7:27 am
Canada property prices might surge again, or be saved if Americans downstairs actually relocate upstairs! But, you and I know it’s mostly rhetoric.
I’m glad the stock market is FLAT and Trump’s words sounded assuring
I’m a progressive and I hate that so many progressives/liberals pretend that they will abandon this country whenever a leader we consider bad gets elected. It’s especially upsetting this year when so many people throughout the world are actually displaced and trying to find somewhere to live. End rant.
I will continue to build up my business. My clients/potential clients are terrified of what the Administration will look like, and they are coming calling. This may make it possible for me to leave my FT gig and do my business FT. I don’t know what I would do about insurance if the ACA goes away. Probably go without and pray I don’t get sick.
The winning of Trump is a surprise for all.But anyways, in the long run, it should not matter who wins.We should focus on ourselves.
Sam, great post. I was thinking the same. Paying your own health ins sucks I could make payments on a new Caddy for what I’m paying in insurance. Considering going back to work after a few years too. It will be difficult to do it and actually find a place that offers health benes. Will be looking forward to see how it works for you and will be checking back to see your progress. Its nice to see someone in the same position as me. Doesn’t have to work, but why not.
After the Wells Fargo scandal, I had been watching WFC in the $44-45 range waiting to get the capital to buy. Trump gets elected, and now the stock is at $51/share. I guess people are bullish on banks now that the candidate who supports deregulation is now going to be in office.
#thankstrump
Sincerely,
ARB–Angry Retail Banker
Are you really serious about finding a new full-time job? Why – to earn few more extra $$ that you don’t need?
Considering the fact that you are very well off financially what upside of having a job is there? If you want “private jet-set, yacht” lifestyle then a job won’t help. So it really doesn’t click in my head :)
Why not enjoy more of life instead?
I’ve always enjoyed work, especially when the work is meaningful and with a good group of people. If I can get paid to do something fun, and pay less taxes, then absolutely I’d be willing to go back to work full-time.
Imagine getting paid $700,000 a year to get back massages, and foot rubs for four hours a day and then write a report about how good these massages and foot rubs are. That would be a pretty sweet job! These type of jobs are out there. You just have to go find it.
See: https://www.financialsamurai.com/its-impossible-to-stay-retired-once-you-retire-early/
If Clinton supporters really want to do something they shouldn’t move to California or Hawaii. They should all move to Ohio. 100,000 politically active liberals could make that no longer a swing state.
Regarding the map showing what the results were for people 18-25… that is not surprising at all. The majority of these people like what the democrats promise them: fee college, free healthcare, free whatever.
It is even more interesting to see how their views change as their perspectives change. Once these people start working career jobs and start seeing what the true costs of these social programs are, many start to change their minds.
The next 4-8 years are going to be very interesting indeed. I think the Republicans will be able to get a lot done (as far as what is on their agenda). This is the first time in a VERY long time since the presidency, the house and the senate have all been under control/majority all of the same party.
Also, the Republicans have the majority of governors across the states. And don’t forget the Supreme Court… it is likely a few very conservative justices will be appointed in the next few years and will become the majority.
It is very interesting to see the pendulum swing back to the right. We have had 8 years of very liberal policies in place, probably enough to start tipping the scales back in the other direction. Very interesting indeed.
I’m just happy the election is over so we can get back to our regular lives! Good luck with your employment hunt. :)
I can’t believe it. I was very surprised at the result. I had thought the market would drop dramatically on a Trump victory due to shock and surprise. It didn’t quite work out that way thankfully. The futures did drop overnight but came back and then the market went UP. Wow.
It is times like this though that make me glad that I am a patient, slow, and long-term investor. Blips like this just don’t matter. We’ll have many presidents over the next 40 years.
Don’t move to Canada people! Think about why people felt like they had to vote for someone like Trump. Its an interesting thing to consider.
Female, minority, non-Trump voter here. I, too, was stunned by the election results. And I agree with you, don’t move to Canada. Move to Mexico! Great weather, low cost of living, and think of the benefits that would accrue to that nation by virtue of an influx of highly skilled, well-educated go-getters. Ask not what your new country can do for you — ask what you can do for your new country!
The election results were devastating, can’t believe everyone here is simply gloating about bit lower taxes and putting a fascist, racist, sexist demagogue to the highest office. I am a minority woman and I feel incredibly sad and afraid of what the future holds with complete GOP control at every level of government without any practical checks and bounds in place. They can enact all their crazy plans, my elder sister will loose their insurance coverage due to pre-existing conditions when ACA is repealed. Roe vs wade will be overturned, if I have unplanned pregnany, what are my options? Go back for a back alley abortion and put my life at risk? We can obviously forget about any parental leave and childcare policies for good. We are back to the 50s and women should forget abour career advances, so incredibly financially liberating!! Obviously most male commenters here will never have to deal with this, you can enjoy your 6% tax break. And just to be clear, I am a high earner as well, but still disgusted and angry at what this win means for anyone not white and male. FS I am disappointed at your very one sided analysis here. Trump voters cannot be excused for ignoring his horrible sexist record and giving him a free pass just so they can have low taxes. Ones who do that are sexist jerks themselves, no hiding away from it.
What I realized all these years is that we must learn to accept those things we cannot control and work our hardest to improve those things we can control.
If we dwell on the past, we will end up being miserable. Try to look on the bright side of things and move forward. You will find greater happiness this way.
I refuse to let being a minority in America negatively affect my lifestyle. Instead, I will cherish my differences and work hard to provide the best life so possible for me and my family.
Sam, some of us can’t control whether being a minority in America negatively effects our lifestyle. That control has been stripped from us and no one has our back.
Sometimes, the things we cannot control will harm us the most. People in Syria could focus on the things they can control, escape the country, choose to live there and fight, but I would think not even you would consider theirs a situation where self control can offset the reality of their country being reduced to rubble and their families being killed.
Having the right to control your own body taken away from you is such a frightening prospect, that we, women, can be excused from feeling scared.
Since Texas introduced their draconian rules for abortion, the pregnancy related deaths doubled. A repeal of Roe vs Wade could make this the new reality all over the US.
Making more money does not sweeten the deal when you know that your like might be in danger. Money did not save jews in Germany, in fact, money made them the target.
What are your thoughts about moving to a blue state if you are planning on having an abortion? Do you feel that America may turn into Nazi Germany now?
I’d think the easiest thing for people who dislike Republican rule is to move to states that voted majority Democrat according to the map.
I don’t think I would move to a blue state in order to have an abortion. I would move to a blue state because I need to have my dignity respected. Having somebody else decide what they will do to my body is not acceptable to me. Pregancy and it’s result should not be left up to the state, because the state will obviously NOT suffer the consequences.
I believe that the people that surround Mr Trump will have a great impact on his policies. Mike Pence, his vice-president is staunchly anti-abortion. I’m looking forward to see whom he will appoint next, and that will probably tell us a lot about his term in office.
Also: https://edition.cnn.com/2016/11/10/us/post-election-hate-crimes-and-fears-trnd/index.html
Ok, so what are some of the actions you plan to take now? I definitely Believe in a woman’s right to choose. Although past a certain number of weeks, things get very very difficult.
I’m entering politics as of today. Taking action, as you say.
Awesome! I wish you good luck in trying to enact the change you want to see in the world.
Definitely an EXCELLENT time to start an online business. Thanks for your encouraging email!
5 years out of the workforce and trying to get back in does sound challenging. Will be interesting to see how that works out. Do share. Would you take a job out of state?
Alternatively building more products is also an excellent path too.
P.S. It’s not freezing 5 mths of the year everywhere in Canada, but the Pacific NW does get depressingly rainy and cloudy like Seattle and Portland. Eg it rained 2 weeks straight before a little sunlight came out for 2 hours and everyone took pictures in downtown haha.
I have to agree there are more career opportunities in LA/NY. Also notable is the entire country’s population of Canada is 35MM vs the state of California is 38MM. Large land mass for the former, but most people just huddle around Toronto, Vancouver, and Montreal.
The polls were way off but I can see why. All the Trump supporters I know are closeted. I supported him shortly after his announcement and have no problem being open about it. I live near Seattle where they think all Trump supporters are Nazis, but after I opened up coworkers and friends also revealed they were supporters. Nobody wants to feel ostracized or be grouped in a bucket of deplorables so they keep it to themselves except when they vote.
Anyway, I am positive about the long term changes. Short term there might be a market pullback which presents a good buying opportunity. Long term I look forward to less military adventurism, cheaper health care premiums, tax savings, and other things. I am hoping we can put a dent in the billion dollar lobbying industry as well.
Looks like the business has to be something other than an LLC or partnership though?
I’m pretty excited about these lower tax rates. Interestingly, I like you, assumed that Hillary Clinton would win. Psychologically, because of that, I thought it would be best to make as much money as I can now because taxes will be going up with Hillary Clinton.
However, now I feel more motivated to grow my income because otherwise, I will have paid all this tax at a higher rate for nothing and current high earners will be at an advantage over me.
It is strange actually how much of a psychological impact this was for me that I didn’t even realize.
The majority of my income has been in the 39.6% bracket for the past few years.
If you’re looking to take advantage of the potential changes to gas regulations and get a full time job at the same time, you should check out Booster Fuels. We’re in the Bay Area, we’re hiring, and we love FS :)
Thanks Valeri! Could be good! Thanks for the offer.
Well for the rest of the non politically interested folks out there like me!! :) Im just going to keep doing what I have been doing. Investing, being frugal and trying to reach financial independence.
As a non-american I’m just glad this election is over. People from all around the world are going crazy on Twitter etc. They forget that working and continued learning is a garantee for succes no matter who lives in the White House. Focus on yourself – it is the only thing you can control.
Amen!
You mention 200k as the sweet spot for a single earner, with a 25% tax rate. But the tax plan states that “brackets for single filers are half the amount.”
As a single filer, I took that to mean that the maximum income for 25% tax rate is around 112k.
Am I misunderstanding?
Aaron, I need to go and clarify this tax proposal because I know that the Republican Party has been adamant on not raising income taxes for any income group. It wouldn’t make sense to raise ones tax rate by a person who is earning $125,000.
I supported him the day he started running, and had no doubts he would win.
Hey, Sam, I think there’s a mistake in your math here:
“The sweet spot for maximum happiness continues to be an individual income of around $200,000 a year (25% tax rate).”
If Trump’s tax plan puts the rates at 25% for married couples up to $225k, and if the single limits are half that, then for individuals the cap is $112,500 to be in the 25% bracket. As a single taxpayer with income in the high $100,000 range, my tax rate is actually going to go UP to 33%.
Not that I’m expecting anyone to cry for me about it, but I’m just saying, this tax plan isn’t saving me any money. It’s going to cost me quite a bit, I think. I’m really trying to think of the potential positives of a Trump presidency, and I’ve come up with a few (much to my own surprise), but there are still sooooo many negatives that it’s going to take me a while to come out of this funk.
You might be right. I wrote this article at 3 AM in the morning and I need to look further into one half actually means. Because I know for a fact that the Republican Party will not be raising taxes, therefore, in your example, you shouldn’t see a massive tax increase at all.
Oh man, 3 am writing. Of course that makes sense since you got this article out RIGHT after the election results. Sorry, man, I didn’t mean to shove a stick in your eye after you did all that late-night work. It’s still a great post overall.
Unfortunately, I think I’m right about the math, though. See: https://www.forbes.com/sites/anthonynitti/2016/11/09/president-trump-what-does-it-mean-for-your-tax-bill/#501337224b8b
Trump’s tax plan said that it would reduce taxes across the board, meaning that every tax bracket would be seeing a tax cut. But that’s just an average of the people in those brackets; it doesn’t mean every taxpayer within those brackets is seeing a cut. In this case, because he changed the single/married bracket cutoffs to their previous 1:2 ratio, the high income earner singles are going to feel a hit when they’re moved up from the 28% bracket to the 33% for every dollar above the $112.5k cutoff. For me, it’s going to cost me about $3,375 per year more than before. Not the end of the world, but there it is.
No worries. I’m surprised more personal finance sites haven’t published their thoughts.
Jumping to a 33% marginal federal tax rate for those making $112,500 or higher is pretty surprising compared to those paying 28% between $91,000 – $190,000. I really can’t imagine it happening.
Best to get married and have one spouse not work, and one spouse make $225,000 then!
Related: At What Income Levels Does The Marriage Penalty Tax Kick In?
Yeah that jump to 33% is really going to suck. Getting married wouldn’t change my tax situation as I would have to do married filing separately. My student loans are a % of my income, with extra going towards them of course, but it wouldn’t unfair to expect a spouse to also pay 15% of their gross income towards my debt. Therefore I have to stay “single”. So much for tax breaks for the middle class!
What website did you get the 18-25 demographic from? Looking to check it out and share it with some people.
The silver lining for those of us seeking financial freedom, as you’ve suggested, is his tax plan (with the exception of taxing carried interest as ordinary income – that doesn’t jive with the rest of his plan). In particular, I’m glad that he’s willing to address the extremely high cost of childcare through the tax code (much thanks to his daughter). Like you, I’m inclined to work harder now (laffer curve in action), but I know some of my peers who are compensated through carried interest feel otherwise.
I never thought he’d win, and if he did win, I thought the markets would crash, but it seems my ability to make predictions is quite terrible!
Same here, I was ready to make money on gold and short positions in this situation, but didn’t happen. We’ll see what happens, thanks Obamacare for letting me mooch until age 26.
What’s funny is that I was right, but wrong where it counted.
I knew that Donald Trump would win.
And I thought I knew that stocks would drop like a rock. I bought a bunch of SPY puts and was licking my chops when I saw futures down 5%.
Morning comes and NOTHING. Didn’t win on my bet.
Whats hilarious is that when futures were down 5% I was saying “Man wish I could go back in time and bet the house on SPY puts”…
Glad I don’t have a time machine!
This was a good experience for me because it reinforced that even if you know what will happen, the market may react completely different.
My next prediction: I see the fed raising rates in December, combined with Donald Trump angst it will fuel a similar drop to what we saw in the beginning of 2016. Don’t know how I will play this yet. I will probably buy some gold calls early November.
This is all in my play money account so its not a big deal. I am however up 400% since 2015.
Fun times ahead. Go America. Let’s be great again!!!
I was watching the Futures like a hawk too, since I was up until 3am PST to write this post!
If you are up 400% since 2015, I presume you don’t work? What type of dollar amount is that? Hope it is huge!
Don’t move to Canada. Move to a swing state!