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What the Record-Breaking Dow Means for Your Money

News stations and social media sites are flooded with the news that the Dow Jones Industrial Average passed 20,000 points for the first time in history. As you can imagine, investors and their brokers are incredibly happy, and experts claim the record-breaking Dow is all thanks to Donald Trump.

record-breaking dowSince Election Day

The Dow Jones has climbed some 1700 points since the day Trump was elected, and per Jeff Layman, the BKD Wealth Advisors chief investment officer, it’s all because of the new administration in the White House. Everyone sees the potential for tax cuts, both for individuals and corporations, and these tax cuts typically lead to a stronger economy. After all, the less people spend on taxes, the more they can spend in stores and on other commodities. The less corporations pay in taxes, the more money they can pass along to employees, which can also help strengthen the economy.

There’s a Catch

Even the experts agree that these record-breaking Dow numbers indicate good faith rather than actual occurrences – at least for now. Trump’s policies, which include infrastructure investments and deregulation on top of things like tax cuts have financial experts feeling confident in the growth of the economy nationwide. Although these experts believe that all the policies will inevitably go into effect, a few have concerns about delays in implementation. This means that we could see a market correction soon – at least until the policies are in full swing.

Low Unemployment Boosting Record-Breaking Dow?

There’s also some talk about low unemployment numbers across the country. Right now, the unemployment rate across the country is about 4.7 million, which means there are 7.5 million jobless people across the country. With more Americans working than this time last year, and with the significant appreciation of stock values, most families are doing much better for themselves. However, brokers caution against making hasty decisions at this point; although things look good right now, they can and likely will slow down. Major changes in investment portfolios could be a risk due to the market corrections that most experts predict.

What about Mortgage Rates?

With the economy pushing forward, many are concerned about climbing interest rates. Of course, the Federal Reserve raised its rates slightly at the end of 2016, and most experts agree that recent trends will continue to see those rates rise throughout the rest of 2017. With a strong economy comes inflation, and interest rates are expected to reflect that. However, just like delays in policy implementation may impact the record-breaking Dow and cause a market correction, these same delays are also expected to keep any interest rate increases low. In fact, they’re expected to climb by less than a point throughout the entire year.

The record-breaking Dow Jones Industrial Average is certainly exciting, and it’s a good indicator that the economy here at home is expected to thrive under the new presidency. However, it’s vital to think critically and invest smartly. It’s still a great time to buy a home, though, since interest rates remain low despite recent increases.

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