Should I Sell My Stocks Before Trump's 'Liberation Day' Tariffs Affect My Retirement in 3 Years?

In April, which is observed as National Financial Literacy Month, GudangMovies21 plans to release a collection of "Financial Fitness" pieces aimed at assisting readers in enhancing their financial well-being. These articles will provide guidance on saving, investing, and spending money prudently. Read more here .

Dear Quentin,

Given everything going on globally—including the ongoing U.S. trade war—what potential impacts might we see for the U.S. markets come April? Considering recent losses, should I consider selling off some of my stock holdings as a way to minimize further damage? At my age, nearing retirement in three years, recovery from these setbacks would likely be slower. Losing additional funds isn’t an option for me at this stage.

Soon-to-be Retiree

Related : I put $100,000 into the S&P 500 back in February and ended up losing $10,000. Could you tell me how long it might take for my investment to bounce back?

Dear Soon-to-be,

If I advised you to sell and we went through an extended downturn, you would be grateful. But if I suggested selling and global leaders found solutions for tariffs and trade, causing the market to recover, you'd likely express your frustration extensively. So, I won’t advise you to sell nor will I encourage you to do so. not I truly think it would be unwise to withdraw your funds amidst the recent fluctuations in U.S. stock prices. Given that you still have over three years until retirement, it’s important for you to continue generating investment returns even after you retire.

Attempt to remain optimistic regarding fluctuations in the Dow Jones Industrial Average, S&P 500, and Nasdaq indices similar to how you've maintained composure during the bullish trend over the past ten years, particularly as you approach your retirement phase. Keep in mind that the decline in business investments—such as manufacturing, employment expansion, et cetera—due to global trade tensions has triggered the current downturn on Wall Street. However, recall that this follows a robust period of growth for U.S. equities spanning one decade, excluding the years 2015, 2018, and 2022.

To address your query, I'd require a crystal ball—and even with that, I doubt the dark arts would yield precise insights. However, the upheaval in the markets can actually be beneficial for you. The U.S. stock market doesn’t move solely in one direction; it fluctuates both upward and downward. If we allow politicians, business leaders, investors, and economists sufficient time to digest current occurrences, peace of mind will follow.

Rather than relying solely on precise forecasts, we must depend on economists' predictive skills for April and 2025. A span of three years holds significant uncertainties within both political landscapes and financial markets, making accurate prediction just as challenging. Up until now, our understanding has been clouded by an overwhelming mix of apprehension, chaotic information, strategic politicking, and drastically varying projections. This scenario feels familiar, having played out numerous times throughout the past decade. market corrections , shifts in government leadership, threats of trade conflicts, and even a global pandemic. Despite all of this, the market has remained resilient.

When you reach your 60s, it’s advisable to allocate around 30% to 50% of your portfolio to stocks, keeping the remainder in bonds and perhaps holding about 10% in liquid assets like cash.

I'm reluctant to forecast what might occur over the coming month or even the next three years, but Goldman Sachs has attempted to do so (to some extent). The firm anticipates that the S&P 500, which has already slipped into correction mode (dropping by more than 10% from a recent high point), could decline an additional 5% within the following quarter. They don’t foresee the S&P 500 reaching new heights above its most recent peak of around 6,000 for the remainder of this year. Rather, they project the index will fluctuate between 5,300 and 5,900.

Here’s a revised version of your paragraph:
“Now comes a cautionary message, particularly directed at you. The bank's experts stated in their report issued on Monday: ‘We still advise investors to look out for signs of better growth prospects, uneven price patterns in markets, or low investment positions before attempting to bet on a recovery.’ Their recommendation follows concerns over increased tariffs, diminished economic expansion, and higher-than-anticipated inflation rates. These factors have prompted the bank to lower its forecasted earnings per share (EPS) growth rate for the S&P 500 Index down to 3% for 2025 from an initial estimate of 7%.”

In light of President Trump's tariffs, which include a 25% levy on imported cars and car components, Yardeni Research has adjusted its optimistic projections for the "booming twenties." They have increased their likelihood estimate of stagflation—a period characterized by consistently high inflation alongside sluggish economic expansion and elevated joblessness—from 35% to 45%. This assessment encompasses the potential for a mild downturn later in the year, potentially triggered by an earlier surge in pre-emptive purchasing observed in April and May.

A hint of optimism remains: "Despite expecting the booming twenties scenario to continue dominating through this decade, similar to how it has up until now, we anticipate an increased risk of stagflation lasting between six to twelve months," explains Ed Yardeni, President at Yardeni Research. Consequently, we're revising our forecast downward for both S&P 500 earnings per share and the overall S&P 500 index.

Stock price projections for 2025 and 2026. Our objective remains set at 10,000 for the S&P 500 by the end of the decade."

Most economists dislike tariffs primarily because they increase the price of goods and lead corporate executives to adopt more conservative forecasts. "An ideal scenario would involve the U.S. negotiating lower tariffs," explains Yardeni, "but this isn't likely to occur if the country imposes a flat 20% tax on every imported item." Peter Navarro has persuaded the president that tariffs will generate $6 trillion in revenue over the next decade."

Attempt to remain as optimistic regarding the declines in the U.S. stock market as you were during the bullish phase.

As mentioned earlier, I trust you maintain a well-rounded and varied investment portfolio. When you reach your sixties, it’s advisable to allocate around 30% to 50% of your investments into equities, with the remainder distributed among bonds and possibly holding about 10% in liquid assets as an emergency fund. As retirement approaches, it becomes increasingly important to reduce your risk exposure to stock market fluctuations. For those shares, T. Rowe Price recommends allocating 60% to U.S. large-cap equities, 10% to U.S. small-cap equities, 25% to developed international stocks, and 5% to emerging market stocks.

T. Rowe Price states, " Retirement may span twenty-five years or longer, which implies your investment portfolio must continue growing to sustain you." They also emphasize, "Maintaining some stock holdings remains crucial within your asset mix during retirement. Nonetheless, since you might require liquidity from these investments soon, you become more vulnerable to market volatility. Therefore, adjusting your portfolio to include greater portions of bonds and cash is essential."

That does not alleviate your current worries. Similar to many baby boomers, you too are gearing up for retirement shortly. In my view, the key principle for both retirement and life is this: There’s no need to subject yourself to undue stress about making it to the bank by 3 p.m. if you can handle matters the following day. Avoid burdening yourself with anxiety by treating your life as merely a countdown leading towards retirement within the next few years. Unexpected challenges such as trade disputes or real estate downturns may arise; hence, adaptability serves as an asset.

I suppose few seniors have the luxury of losing funds, yet one cannot defy physical principles. Despite adding greater adaptability to your retirement strategies, it’s crucial to keep some level of cognitive and emotional suppleness. Being adaptable mentally as well as financially allows for increased toughness when facing market fluctuations.

Economic calendar: Keep an eye on this week’s releases of manufacturing, construction, and employment statistics.

You can send your financial and ethical queries to The Moneyist via email at qfottrell@GudangMovies21, and follow Quentin Fottrell on X, which was previously called Twitter. Twitter.

The Moneyist regrets that he is unable to respond to individual inquiries.

Additional entries from Quentin Fottrell:

Could Trump's policies result in an economic downturn? Since I'm 62 and make $50,000 annually, what's the best way for me to invest $100,000?

“She has been feeding him untruths”: My sibling persuaded our dad to transfer all his assets to her. Is there anything I can do about this?

After my father passed away and left everything to my 90-year-old stepmom, do I have the right to inquire whether she has included me in her will?

Check out The Moneyist's confidential Facebook community , Where members assist in tackling the most challenging financial concerns. Share your queries or contribute insights on recent Moneyist articles.

By sending your queries via email to The Moneyist or sharing your predicaments in the The Moneyist Facebook group, you consent to having them posted anonymously on GudangMovies21.

When you submit your story to Dow Jones & Co., the publisher of GudangMovies21, you acknowledge and consent to our potential usage of your story or modified versions thereof across various media and platforms, possibly involving third-party entities as well.