No Dumb Questions with Connell McShane and Doug Flynn, CFP - Trump 2.0 and Your Money: Investing during the Trump Presidency. No Dumb Questions with Connell McShane and Doug Flynn, CFP. Ep. 4

Trump 2.0 and Your Money: Investing during the Trump Presidency. No Dumb Questions with Connell McShane and Doug Flynn, CFP. Ep. 4

11/18/24 • 24 min

No Dumb Questions with Connell McShane and Doug Flynn, CFP

Connell and Doug discuss the potential impact of Donald Trump's presidency on the stock market and the economy, including the effects of lower corporate tax rates and tariffs.
Trump's Presidency and Economic Impact

Doug suggested that Trump's administration might lead to less regulation in energy and financial sectors, which could result in increased mergers and acquisitions. He also noted that the economy is in good shape, with the consumer being a significant contributor. However, Doug acknowledged the risk of going too far with business-friendly policies, which could lead to unnecessary risks and potential economic dangers. They also discussed the potential impact of Trump's proposed corporate tax rate of 15%, which could be a significant factor in the economy.
Corporate Tax Rates and Earnings

Doug discussed the potential impact of lowering corporate tax rates on company earnings and stock market valuations. He suggested that a lower tax rate could lead to increased earnings and potentially higher stock prices, making the market more fairly valued. Doug also emphasized the importance of considering the domestic revenue of companies when assessing their potential for growth. He used Walmart as an example, noting that 68.2% of its revenue is from the US. Doug also discussed the potential for onshoring due to tariffs, suggesting that this could benefit smaller companies with a higher US presence. However, he acknowledged that there might be short-term negative impacts from tariffs, such as higher inflation and a temporary hit to GDP.
Tariffs, Politics, and Economic Implications

Doug and Connell discussed the potential impact of tariffs on their company's profitability and the overall US economy. Doug suggested that while the tariffs might slightly increase costs, the long-term benefits of keeping production in the US could outweigh these costs. They also discussed the implications of the recent change in the US political landscape, with the GOP now controlling both the White House and Congress. Connell expressed concern about the potential for the GOP to go too far with their policies, leading to a ballooning deficit. Doug noted that the highest percentage of promised legislation ever passed was 8%, and that any significant increase could lead to extreme policies. They concluded by speculating on the potential for extending tax cuts, which Connell believed the GOP would support.
Tax Cuts and Bond Market Impacts

Doug discussed the impact of tax cuts on the middle income spectrum, noting that most people now file with the standard deduction due to the increased standard deduction amount. He also mentioned the potential for economic growth and the need for smaller government to control deficits. Connell then shifted the discussion to the bond market, asking about the implications of Trump's policies on bonds. Doug explained that short-term interest rates may remain higher due to anticipated higher inflation, but could eventually decrease. He suggested that a safer investment strategy in the current market is to stay shorter term on the yield curve.
Tax-Free Bonds and Economic Growth

Connell and Doug discussed the current economic situation and the potential for growth. Doug emphasized the benefits of tax-free bonds for those in higher tax brackets, highlighting their potential for high after-tax effective yields. He also expressed optimism about the economy, noting that the market is anticipating positive changes. Doug agreed to participate in a longer discussion on financial literacy topics in future episodes of their podcast.

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Previous Episode

The Election & Your Money. No Dumb Questions with Connell McShane and Doug Flynn, CFP. Ep. 3

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Connell and Doug discussed the potential impact of the upcoming election on the stock market and investment strategies, emphasizing the importance of taking a long-term view. They also touched on the historical accuracy of presidential campaign promises, the potential effects of Trump's proposed trade policies, and the impact of tax changes on small businesses and the stock market. Lastly, they addressed the anxiety surrounding the election, attributing it to the polarized nature of information sources and differing perspectives on the candidates.
Election Impact on Stock Market
Connell and Doug discussed the impact of the upcoming election on the stock market and investment strategies. Doug emphasized the importance of taking a long-term view and not making short-term decisions based on emotional responses to the election. He suggested that divided government tends to be more beneficial for the market, as it provides certainty and slows down policy changes. Connell agreed, noting that the market tends to go up regardless of who is in charge.
Presidential Promises and Trade Policies

Doug and Connell discussed the historical accuracy of presidential campaign promises and their likelihood of being implemented. Doug noted that, on average, only 5% of promises are fulfilled, with the highest success rate being around 8%. Connell agreed, adding that Trump's promises are particularly numerous and ambitious. They also discussed the potential impact of Trump's proposed trade policies, with Doug suggesting that there is room for negotiation to make deals more favorable for the US.
Tax Changes and Market Resilience

Doug discussed the impact of tax changes on small businesses and the stock market. He argued that raising taxes doesn't always lead to increased revenue, as businesses may adjust their operations or delay decisions due to higher tax rates. Doug also pointed out that the stock market is comprised of companies, which can adapt to changes. He suggested that the current administration's policies, including boosted oil production, have contributed to the market's resilience.
Election Anxiety and Polarized Perspectives

Connell and Doug discussed the anxiety surrounding the upcoming election, attributing it to the polarized nature of information sources and the differing perspectives on the candidates. Connell noted that people are anxious due to the perceived high stakes of the election, and that this anxiety is different from previous elections. Doug agreed, highlighting the unique challenges posed by the current candidates and the differing rules they operate under.
US Election Impact on Economy

Doug and Connell discussed the upcoming US election and its potential impact on the economy and business. Doug emphasized the importance of long-term investing, regardless of the election outcome, and suggested that the market would not be significantly affected. He also mentioned the possibility of a slight increase in long-term capital gains tax rates, which could affect business owners. Connell advised listeners to stay calm and focus on long-term strategies, suggesting that more specific discussions could be held after the election results. Both agreed that the US is a resilient country and that the economy would continue to grow despite changes in leadership.
Next Steps

More strategic long-term investment advice after the election results, considering who will control Congress and the presidency.
Potential impact of the candidates' policy proposals on the stock market and individual investments.
Insights on small business impact.

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Next Episode

Year-End Tax & Investing Tips. No Dumb Questions with Connell McShane and Doug Flynn, CFP. Ep. 5

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Connell and Doug discussed year-end tax planning strategies, including the benefits of selling off "losers" in investment portfolios to save on taxes and setting up a self-employed retirement plan. They also emphasized the importance of considering tax implications when making investment decisions, such as selling stocks with gains to offset losses. Additionally, they discussed the tax implications of gifting money to family members and the potential benefits of prepaying property taxes.
Year-End Tax Planning Strategies

In this episode of the podcast, Connell and Doug discuss year-end tax planning strategies. They emphasize the importance of considering 401(k) contributions, especially for those receiving year-end bonuses or extra taxable income. They also discuss the benefits of setting up a self-employed retirement plan, such as an individual 401(k), before the end of the year. Additionally, they advise on selling off "losers" in investment portfolios to save on taxes and taking inventory of one's portfolio. They caution against the 30-day "wash sale rule" when selling securities.

Managing Investments and Tax Implications

Doug and Connell discussed strategies for managing investments and tax implications. Doug explained the process of offsetting losses against gains, and the possibility of carrying over losses to future years. He also highlighted the importance of recognizing and booking losses, particularly in cases of worthless securities. Doug further discussed the strategy of selling stocks with gains to offset losses, allowing for a reset of the cost basis and potentially lower future tax liabilities. Connell agreed with Doug's points and emphasized the importance of considering tax implications when making investment decisions.
Year-End Tax Strategies and Giving

Doug and Connell discussed year-end tax strategies, focusing on capital gains tax treatment, selling gains against losses, and bunching up deductible expenses. Doug emphasized the importance of consulting with an advisor before the end of the year to optimize tax benefits. They also touched on the topic of charitable giving, with Doug noting that people are motivated by tax breaks, but also suggesting that giving to charity should be done regardless of tax benefits. Lastly, they briefly discussed the gift tax limit and its implications for giving away assets during the year-end.
Tax Implications of Family Gifts

Doug and Connell discussed the tax implications of gifting money to family members. Doug explained that each person can gift up to $18,000 per year without filing a gift tax return, and the husband and wife can each give this amount to their children. Doug also advised that gifts should be made in cash to avoid potential tax issues. Connell agreed, noting that while the tax implications may not be significant for most people, it's still important to consider them. Doug also suggested that new homeowners could potentially prepay their property taxes to take advantage of the tax deduction in the current year.
Podcast Success and Tax Tips

Connell and Doug discussed the success of their podcast, particularly the latest episode which they found to be their best yet. They emphasized the importance of considering tax implications when making financial decisions, such as buying a house. They also encouraged listeners to leave comments with future podcast topic suggestions. They mentioned that they will be posting about the podcast on various platforms and that tax tips will be featured in upcoming episodes.

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