Many clients have expressed concerns and requests for what to do in the face of Trump’s tariffs and other possible policies. I recommend doing nothing at all differently UNLESS you believe your personal situation will change as a result (i.e.: slowdown in Tech or Federal employee purge might hit your job. Have more cash on hand, and keep that resume fresh.)
Markets are generally ‘efficient’ in that all available knowledge is baked into stock prices already. Even if it’s true that investors think Trump (or something else) will tank the economy, those viewpoints should already be in the market’s current prices. There’s no gain for us to, say, try to sell now and buy back later (when..?)
Only ‘surprises’ move the market, and very few of us have enough insider info & wisdom to predict these surprises in advance.
But aren’t tariffs bad for the economy?
Yes, yes they are. All economists generally agree that artificially changing prices is ‘bad’ in terms of economic efficiency. Taxes, tariffs, price controls, etc reduce the amount of free trade that would go on between individuals– including individuals across national borders.***
Either the market has already priced these things in, OR the market doesn’t really believe that Trump will stick to the tariffs in a meaningful way. Trump has already decided to wait a month on the Mexico tariffs, a day before they were scheduled to roll out. I believe that the feedback of markets will hit Trump and his wealthy advisors hard enough that they back off later.
The market (and I) could be terribly wrong, and Trump– or something else– may tank the market for a long(er) time. No one knows, so the best thing to do is just ride out any bumps. The amount of time your money sits in the stock market is the best predictor of your future wealth. Investors who trade the most frequently have the worst returns.
(0) Pay off any high interest debt (> ~8%) (1) make sure you have a cash cushion of 3-6 months’ living expenses on hand. Count what you have in other investments as well when thinking about how well you could weather a financial storm. (2) max out your tax-advantaged accounts (HSA, 401k, Roth IRAs, 529 plan) (3) invest the rest in a taxable account if you still have more take-home cash (4) Enjoy life to the fullest and strike the right balance between spending now on making great memories & living a fine life vs saving for the future.
If you’re not currently a client, or have family or friends that could use a good advisor, contact me to learn how I can help.
COVID and the virtue of doing nothing
Pretend you knew with certainty that COVID was coming and it’s December 2019. Patient Zero just started to feel sick in his home in Wuhan. The S&P 500 is at 3,200. You pull all of your money out of the market, intending to move back in when the pandemic feels over. The S&P 500 craters to 2,600 by Feb 2020, dropping 20%. You pat yourself on a market well-timed, but remind yourself that things could get worse! Schools are closed, unemployment has spiked, and the Federal government is running huge deficits trying to deal with the fallout. Best to wait a few more months.
In July 2020, the market is hovering around 3,400, but you continue to wait: new variants keep coming up all the time. What if a majority of people won’t take the vaccines being worked on, or what if it’s not effective? (The first COVID vaccine didn’t start until Dec 2020. ~80% of schools were still closed in Jan 2021.)
You wait a full year, but by Dec 2020, the S&P 500 has climbed to 3,700, and has never gone below that to date (it’s over 5,000 today.) You missed out on a 16% gain during the year you were out of the market, not to mention the missed dividends, even though you KNEW (correctly) that the pandemic would tank the market. Timing is hard. Better just to buy & hold those index funds after all…
***Microeconomics 101 sidebar: If you want to buy Canadian whiskey at $30/liter, and the Canadian Club people want to sell it to you at that price, adding a 25% tariff to make it $37.50/liter cuts out all those Americans that would’ve been happy to pay up to, say, $36, but not $37.50. This loss of trade means someone who valued the whiskey at $35/liter loses out on his $5/liter ‘gain’ above the original $30 asking price.
WARNING: This article is just a stub for now. I intend to expand upon it later, but don’t hold your breath…
Establish your estate planning goals
List out assets & debts: retirement accounts, IRAs, HSAs, taxable brokerages, bank accounts, real estate, personal property: vehicles, jewelry/precious metals, cryptocurrency wallets & access to them
Assess long-term disability insurance needs & have/purchase policy (check at work. Standard coverage is 60% of salary up to a max monthly limit.)
Establish a trust if you have minor children or other beneficiaries that can’t take care of their own money (e.g.: special needs adult children.)
Make sure your beneficiaries are updated on each of your investment accounts (IRAs, 401ks, taxable brokerages), bank accounts, and life insurance policies.
Access to any safes (combinations/physical keys) and safe deposit boxes
List out digital accounts, profiles, and passwords. Keep them in a safe place.
If your accounts are inactive for a period of time (3, 6, 12 months) and after Google has attempted to reach you by phone and email addresses. You can give access to parts or all of your Google account.
This will help loved ones get access to things they might need to keep your household running in your absence.
Print it out, highlight the most important things, and start putting them together in one place. I recommend using a fire & waterproof safe, or bank safe deposit box if you have one, to store it in. Make sure you, your spouse, and your executor(s) know that these documents exist, and how to access them.
Earthquakes? Pandemic? Civil unrest? Zombies? What’s your ‘favorite’ disaster scenario? Whatever it is, you’ll want at least 3 days’ worth of food, water, and potentially other supplies to hold out against the forces of doom. Why not git ‘er done right now?
Water
Count your family members and multiply by 3. That’s the # of gallons of water you should have on hand to survive for 72 hours. For our family of four, that’s 4 * 3 = 12 gallons. Then, buy your containers (check Walmart too as a cost comparison. Walmart had some nice, stackable 5 gal containers with spigots, which would be easier to transport vs 7 gals.)
Be able to lift a full container above your counter
Make sure you can lift them to counter or car trunk height when full. A gallon of water weighs a little over 8 lbs, so a 6 or 7 gallon tank is 50 or 58 pounds. If you’re smaller or frailer, consider getting 2 – 2.5 gallon– or even 1 gallon– containers instead of 6 – 7 gallons. Here’s a 4 gallon one with a useful handle, but just ok rating, or this 2.6 gallon one that would sit upright nicely and has a spigot.
Get containers with spigots
I also recommend containers with spigots that can be opened and closed so that you could set one on your kitchen counter or bathroom sink and use it like a faucet. These 7 gallon jugs I use have spigots, as do these stackable 5 gallon ones.
Consider one or two for car travel
In addition to the blue Reliance 7 gallon ones linked above, I bought two of these 6 gallon upright ones (no closable spigot; just a pour spout) that would be easier to put in a car for bugging out or camping.
Order your water containers
Calculate the volume of water you need (people * 1 gal / day # of days = total gallons. If you’re European, multiple by 4 to get it in liters.) For a family of four for 72 hours, that’s 12 gallons, or two 6 or 7 gallon containers for ~$60.
When they arrive, rinse them per any instructions then fill themfrom the tapwith clean, slightly chlorinated water ASAP! They won’t do you any good if they’re empty.
Store plastic in a dark, cool place. UV light and temperature extremes are enemies of plastic. If they might freeze, only fill ~3/4s of the way full to allow room to expand. I like to add an eye-drop of plain, chlorine bleach per gallon of water (maybe 1/8th tsp per 5 – 7 gallons) for longer storage. The chlorine will evaporate over time, so your water shouldn’t smell or taste like chlorine when it comes time to drink it. (If it does, let it sit open for longer before drinking.)
Label the jugs with a piece of masking tape. Write the date, then try to remember to empty and refill them every couple of years to keep the water fresh. Worst case, you can always re-sanitize with bleach if you’re concerned.
Longer water supply
If you have a water filter or other means of sanitizing (see bleach notes above), a 50 gallon rain barrel that your gutters filter in to could hold a lot of water and be a more renewable source for holding out longer.
Emergency stashes already in your house
There’s also clean drinking water in your water heater as well as your toilet tank (not the bowl!)
Food
Assume 2,000 calories per family member per day * 3 days = 6,000 calories * the # of people in your house. For us, that’s 6,000 * 4 = 24,000. Now, what ready-to-eat, non-perishable foods could you eat for 3 days?
Laziest option: Peanut butter for the win
This 5 lb tub of peanut butter— available in Seattle-area Costcos, and delicious!– has 14,000 calories split between fat, carbs, and protein, is ready to eat, and loved by kids and adults alike. Two of those for ~$20 – $30 and you’re all set!
Store what you eat, eat what you store
Check your cabinets and pantries for what you already have on hand, as well as how much food is usually kept in your fridge. Add up the calories on the labels and log a rough total: multiply # of servings per container * calories per serving = calories per container. You might already have enough to survive for 3 days, but if not, supplement with some more non-perishables the next time you go shopping: Get thee to a Costco, and stock up.
Longer-term food storage
If you want to have food on hand for 2 weeks or more, the adage in the prepper community is to ‘store what you eat, eat what you store’. While it’s tempting to just buy a tub of Mountain House and call it a day, (1) have you eaten freeze dried meals for any length of time? They ain’t that tasty, and (2) they’ll eventually expire worthless if you aren’t regularly eating them as part of your usual meals.
I recommend you think about the non-perishables your family already eats, and just buy more of those to keep on the shelves. Eat the stuff with the most recent ‘best buy’ date first– keep them in the front of your cabinets, putting new stuff behind– so that you’re always renewing your supply with fresh canned or dried goods.
Ready-to-eat all-in-one foods like peanut butter or canned chili are good ones to start with, if you like them, since they don’t require fuel and equipment to cook. If you have a camp stove that can be used indoors and enough fuel on hand, supplement with dried pasta, rice, white flour, canned or dried proteins, and canned or dried veggies.
A tub of cooking oil is very calorically dense, since pure fat has 9 calories/gram, and (completely dry) carbs or protein have only 4 calories/gram.
72 hour survival, check!
Once your water jugs are filled and your food is purchased, pat yourself on the back! You and your family can make it 72 hours. If you want to prepare more, keep reading.
Fuel and stove for cooking
If you plan on cooking when the grid is down, a one-burner butane stove and some 8 oz canisters are an easy solution. Butane is apparently safe for indoor use (unlike propane!), but make sure your carbon monoxide detector is working (or get a portable one) and crack a window if you’re concerned.
Never use charcoal to cook indoors, but it’s a great outdoor option–as is propane– if you already have a grill.
Battery packs for emergency communication
A few battery packs to keep your phone or portable radio charged are good investments as well. You’ll want to listen in for emergency broadcasts and stay in touch with family and friends in unaffected areas (if cell towers are up.
Ham radio when cell towers are down or overloaded
To communicate when they aren’t, get a ham radio and/or a license to transmit on one. Some (non-transmitting) radios will have ham band ranges if you just want to be able to listen in. Make sure it can get the popular 2 meter band from 144 – 148 Mhz frequencies.
If you live in a small, well-insulated apartment, you might be able to get by with a ~5,000 BTU candle lantern like this one. Buy extra candles too. Be very careful with open flames. Make sure a child or cat won’t knock it over and start a fire. Never leave it burning while you’re not watching it!
Woodstove
If you have a wood burning stove, make sure you have enough wood stacked and seasoned to keep the house warm on the coldest winter day for three days.
Get by without heat in a temperate climate
If you live in a temperate climate like we do in Seattle, you could put on your outdoor clothes during the day and tough it out under a stack of blankets at night.
Lighting
Make sure you have enough LED lights or lanterns to leave around the house, and extra batteries or a way to recharge them (say, a portable power pack or station.) You can of course use candles, but be very careful with open flames: keep them away from kids, pets, curtains or other flammables, and never leave them unattended. LEDs are so cheap and plentiful, it’s hard not to make the case to use them instead.
Flashlights or– my preference since they are hands-free– headlamps are also critical.
Medical supplies
Make sure you have any prescriptions filled, and have some band-aids, painkillers (ibuprofen or Tylenol) appropriate for the entire family (e.g.: children’s liquid version(s).) If you want to go down the medical prepping rabbit hole, I recommend this. It’s an overwhelming list, so maybe just start with
ibuprofen (Advil) (don’t give to children under 1 year’s old!)
Tylenol (acetaminophen) (generally the best choice for kids; check with your doctor),
Pills keep longer than gel tabs which keep longer than liquid meds. Keep your extra meds cold and dry, like in a basement. The effectiveness of most meds is much longer than the expiration dates on the bottles, per US military + FDA, and other studies. I feel comfortable stocking painkiller or anti-allergy pills for at least 10+ years unopened and away from heat & light, with the assumption that, worst-case, they’ll just be slightly less effective over time. (I’m not medical professional. Read the studies linked below or consult your doctor!)
[A] former director of FDA’s military drug testing program, said his experience with the program showed him that a manufacturer’s expiration date doesn’t indicate anything about a drug’s effectiveness […]:
“Manufacturers put expiration dates on for marketing, rather than scientific reasons,” he said. “It’s not profitable for them to have products on a shelf for 10 years. They want turnover.”
“[Circa 2006 study:] Dr. Cathleen Clancy, associate medical director of National Capital Poison Center, a nonprofit organization affiliated with the George Washington University Medical Center, had heard of anyone being harmed by any expired drugs. Cantrell says there has been no recorded instance of such harm in medical literature.”
Costco is great for bulk meds, rubbing alcohol, and sometimes band-aids. Amazon is great for anything you can’t find at Costco (gauze, medical tape, etc.) Your local drug store should also have these, but probably at double the price for some things.
Vitamins
I have Vitamin D and C on hand for winter grayness– or the possibility of being forced to stay indoors– and lack of fresh fruits in a prolonged emergency, respectively. Costco is great for big bottles of pills.
Antibiotics
Save any unused antibiotics, or consult your doctor for an extra prescription of a broad-spectrum antibiotic like doxycycline or amoxicillin. Don’t use these without doctor’s advice unless necessary.
Those over 70.5 can save big on income taxes by sending charitable distributions straight from their pre-tax IRAs to eligible 501(c)3 organizations (no Donor-Advised Funds or private foundations, however) up to $105,000 in 2024 and $108,000 in 2025. (Double that limit for married couples.) Talk to your brokerage or financial advisor if you want to pursue this strategy.
What are QCDs?
Qualified Charitable Distributions (QCDs) let those that are over age 70.5 deduct the amount of any distributions made directly from their IRA(s) to a eligible 501(c)3 charity. An individual can contribute a maximum of $108,000 in 2025. Individuals can make multiple gifts from multiple IRAs as long as the total for the year is under the limit.
This limit is indexed to inflation.
Tax-free way to handle Required Minimum Distributions (RMDs)
QCDs also satisfy any RMDs you might have, so using a strategy of sending your RMDs (assuming they’ve under the limit) straight to a charity each year means you never have to pay taxes on those IRA RMDs.
Example: if your RMD for 2025 is $50,000, you could send $10,000 of it straight to a charity and pay no income tax on that portion. The remaining $40,000 that you receive will be taxable as normal. If you were in the 22% tax bracket, that’s a savings of $2,200 vs receiving the additional $10 K and, say, making a $10 K donation from other funds.
Married couples get twice the limit
Married couples can do twice the limit, $216,000, in 2025, from their IRAs.
I’m unclear on whether they each person in the couple must stay under the limit for their individual IRAs, or whether they can pool all other their IRAs together.
Check with your brokerage on how to process the QCD, and make sure that they make the check out to the charity directly. Handling QCDs for clients is a service I provide, in case you’re looking for an excellent financial advisor.
Talk to your charity to make sure you have the right mailing address, and whether you should have your brokerage include anything in the check’s memo field that will help it be used for what you want. You can have the check mailed to you (but still made out to the charity) and then can forward it on, but it’s nice if they’ll send it straight to them. (Last I checked, Vanguard will only mail the check to you and you have to forward it on.)
