Will President Trump Ruin Our FIRE Journey?

Will the New President Ruin Our FIRE Dreams?

Welcome to the first post of our FIRE movement journey…As expected, the financial world has been set on fire with the President of the United States threatening to slap a 10% tariff on China, and a 25% tariff on Mexico and Canada. As expected, all countries are threatening retaliation tariffs on the USA, creating a potential tariff war in our very near future. Oh Canada, oh boy does it look like things are getting scarier out in the world. Could I please go back to the easy days of being a kid.

According to the Canadian Chamber of Commerce, the estimated economic impact of President Trump's tariffs could cost Canadians $1,900 per year, Yikes!!! All of this considering that the average Canadian is already struggling financially doesn’t bold well for our economy.

So, with all of this negative news in mind, you’re probably wondering what our complex master plan is to avoid this affecting our financial journey. Drum roll please…

Absolutely nothing!

In our post titled “what is investing?” we discussed that investing is about thinking long term. In other words, it is about thinking in years not days. We know that today looks scary, but when you are investing, you always have to ask yourself this question. Will what is happening today really matter in 5, 10, 15 or 20 years from now? If the answer to that question is no, then likely no change on your part is necessary. There are a few reasons for this.

Firstly, When you think with a long time horizon, all of today’s concerns seem to drift away. Chances are that in a few years there will be new political leaders with their own policies, and all of this tariff talk will be a thing of the past.

Secondly, thoughtful portfolio management means that you are diversified across the whole world. As of February 1st, 2025, Canada only represents 30% of my total portfolio in one account and 3% in another account. The majority of my holdings are in the US stock market (46% in one portfolio and 65% in the other). The remainder is allocated to a variety of international markets.

One of the rationales for why Trump is doing this is to bring more business investment from other countries to America. This means that even if Canada gets hit with tariffs, although Americans will feel the effects of retaliatory measures, the US stock market may fare better than the Canadian one. Now don’t get me wrong, I am 100% patriotic to my own country, but this highlights the need for every investor to be diversified. Anyone who has 100% of their portfolio in the Canadian market likely should approach the next 6-12 months with caution.

Neither you or I can predict the outcome of the market, all we can do is exercise risk management. This tariff threat teaches us all a crucial lesson about the the importance of diversification. Like the great Jack Bogle said, just stay the course and make sure to continue with your investment contributions. Stay bullish everyone—see you next time!

Disclaimer: The information discussed in this blog is not intended to serve as financial advice. It is meant for educational purposes only. Please consult a personal financial expert before making any financial decisions.

If you liked this post then you may also like:

• [What Is Investing? A Beginner’s Guide to Growing Wealth]

• [The Only News That Matters For Your FIRE Journey This February]

Citations

1. BBC News. (n.d.). Could this be the future of retirement? BBC. Retrieved February 1, 2025, from https://www.bbc.com/news/articles/ckg0m79gm10o

2. The Plain Bagel. (2023, December 14). Why mutual funds are losing to ETFs [Video]. YouTube.https://www.youtube.com/watch?v=ScDYqeEbNGo