Stock Market and Trump’s Tariffs: 4 Things You Should Do Now To Secure Your Retirement
Written by
Heather Altamirano
Edited by
Jenna Klaverweiden
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While the current economic landscape is already posing great challenges for Americans, there are more signs of a recession coming. In his annual letter to investors, JPMorgan CEO Jamie Dimon cautioned that the “recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession.”
Meanwhile, economists for Goldman Sachs released a note titled “Countdown to Recession” that upped the chances of a recession from 35% to 45%, Fox Business reported.
President Donald Trump’s sweeping tariffs announcement caused market chaos. Stocks plummeted and people watched their retirement savings dwindle as a result. While the pause on most reciprocal tariffs have helped the market some, investors are still worried.
With the market volatile and some countries threatening a trade war with the U.S., it’s vital to safeguard your investments and retirement. Here are four ways finance experts suggest keeping a hold of your money.
Diversify Beyond Domestic Stocks
Having a diversified portfolio is typically recommended by experts. Andrew Lokenauth, a finance and money expert, suggested looking to international investment opportunities.
“I’ve shifted about 30% of my portfolio into international markets (especially emerging markets in Southeast Asia),” he explained. “The thing is, when Trump’s tariffs hit certain sectors hard, my international holdings help balance things out.”
He explained that he saw this happen with his investments last year. “Last May, when the trade war headlines tanked my U.S. stocks by 12%, my Asian investments actually went up 8%. That’s exactly why I don’t keep all my eggs in one basket anymore,” he said.
Rebalance Your Investment Portfolio
Your portfolio should be diversified but balanced, according to Danny Ray, founder of PinnacleQuote.
“Because tariffs and market volatility go hand in hand,” he said. “When tariffs are imposed, certain sectors, like manufacturing or agriculture, can take a hit, while others might benefit. If your portfolio is too heavy in one area, you’re taking on more risk than necessary.”
Therefore, investors should consider rebalancing their portfolios. “Rebalancing brings your mix of stocks, bonds and other assets back in line with your goals and risk tolerance. Above all, it helps protect your retirement savings from big swings in the market,” Ray said. “In fact, rebalancing forces you to sell high and buy low, one of the golden rules of investing. Over time, this can increase stability and keep your long-term plan on track, no matter what happens in Washington or Wall Street.”
Add Some Defensive Stocks to Your Mix
Don’t be afraid to invest in less exciting stocks. Just because it’s not the latest tech idea doesn’t mean it won’t pay off.
“I’ve loaded up on consumer staples and utilities — companies that make stuff people need no matter what (think toilet paper and electricity),” Lokenauth explained. “These boring stocks saved my portfolio during the last tariff panic. My utilities stayed steady while tech stocks dropped like rocks. My favorite defensive pick, a major consumer goods company, only dipped 2% when the broader market fell 15%.”
Build a Cash Reserve
Have your emergency savings of three to six months’ worth of living expenses accessible and ready to go, but also have cash on hand.
“I keep roughly 15% to 20% in cash these days,” Lokenauth said. “It seemed crazy at first — letting that money sit there earning nothing.”
But the money expert explained why cash can come in handy during economic shakiness.
“When tariff news sent good companies into a nosedive last September, I had dry powder ready. Grabbed some fantastic deals on solid blue-chip stocks that were suddenly on sale. Those same stocks bounced back 25% within 60 days,” Lokenauth said.
With consumer spending down, fears of a recession growing and the cost of goods rising, keeping every dollar in your wallet counts. Lokenauth explained that while his strategy might seem “overly cautious,” his portfolio is protected against the wild market swings and has held up better than those of others he knows who are still recovering from “betting everything on U.S. tech stocks right before the tariff announcement.”
He explained that it’s not about timing the market perfectly because that’s impossible, but rather “having a solid plan that lets you take advantage of opportunities while protecting what you’ve already built.”
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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