My Acorns account has lost 3.5% since Trump started office in 2025. Will Trump ever stop doing things that hurt the U.S. economy, and soon, or should I transfer my money to my savings account, where it will at least earn 4% per year?

 

Let's explore the potential impacts of government policies on the economy, the long-term performance of investments like Acorns, and whether shifting your funds into a savings account that earns 4% per year is a better move.

1. Understanding the Economic Climate Under Trump's Leadership in 2025

Donald Trump, having returned to office in 2025, has continued to push forward with policies that impact both the U.S. economy and global markets. His administration is likely marked by pro-business and conservative fiscal policies, including tax cuts, deregulation, and trade policies. These actions can have both positive and negative effects on economic performance.

• Pro-Business Policies: Trump has a long history of supporting corporate tax cuts and deregulation. In theory, these policies can lead to increased business profits, which can boost stock markets and, over time, increase the value of your investments.

• Global Trade Tensions: On the flip side, Trump's stance on international trade, particularly his focus on tariffs and protectionist policies, has often led to increased tensions with other nations. These policies can disrupt global supply chains, leading to higher costs for businesses and consumers, and volatility in the stock markets.

• Inflation and Interest Rates: Economic growth spurred by tax cuts and government spending can sometimes lead to inflationary pressures. If inflation rises, the Federal Reserve may raise interest rates to curb inflation, which can negatively affect stock prices and bond yields. However, a growing economy could offset some of these risks.

2. The Volatility of Acorns and Stock Market Investments

Acorns is a robo-advisor that automatically invests your money in diversified portfolios of stocks and bonds. Stock market investments, especially those in equities, inherently carry a degree of risk due to market volatility. Over short periods, as you've experienced with a 3.5% loss, the market can be unpredictable.

However, the stock market historically has provided higher returns over long periods compared to savings accounts. Since you’re investing through Acorns, the expectation is that your portfolio will grow over the long term. Short-term losses, while concerning, are a natural part of stock market investing, especially in volatile times.

• Stock Market Recovery: History suggests that after periods of downturn, the stock market has tended to recover. Even in the wake of economic challenges under past administrations, including the Great Recession or the pandemic in 2020, the market has bounced back over time. Patience and a long-term perspective have often been key to realizing substantial returns in the stock market.

• Diversification: Acorns offers diversification, spreading your money across a variety of assets, which can mitigate the risk of individual stocks or sectors experiencing a downturn. While it’s possible to experience losses in a diversified portfolio, the risk is generally lower than investing in individual stocks.

• Dollar-Cost Averaging: Acorns uses a strategy of dollar-cost averaging, which means your contributions are automatically invested at regular intervals, regardless of market conditions. This strategy helps reduce the impact of market volatility on your investments, smoothing out potential losses and allowing you to take advantage of market gains over time.

3. The Stability of a Savings Account

A savings account offers a safer alternative, providing guaranteed returns in the form of interest, typically around 4% per year in the current economic climate. This certainty can feel reassuring, especially when the stock market is volatile.

However, it's important to consider the broader economic context and the long-term effects of keeping money in a savings account:

• Inflation Impact: While your savings account might offer a 4% return, it’s essential to keep in mind that inflation can erode the purchasing power of that money. If inflation is higher than your interest rate, you may lose real purchasing power. For example, if inflation is 5% but your savings account earns 4%, you're effectively losing 1% in real terms.

• Opportunity Cost: By keeping your money in a savings account, you’re missing out on the potential for higher returns in the stock market. While Acorns has experienced a 3.5% loss, the historical average return for stocks over the long term is around 7-10% annually. The trade-off for the stability of a savings account is that your money may not grow as much as it could in the stock market over time.

• Liquidity and Access: A savings account offers more liquidity than investments in Acorns. If you need quick access to cash, a savings account is ideal. However, stock market investments, even in a robo-advisor platform like Acorns, are meant to be long-term investments and should not be viewed as an emergency fund.

4. Should You Transfer Your Money to a Savings Account?

Given the 3.5% loss in your Acorns account since Trump took office in 2025, it’s understandable to be concerned about the performance of your investments. However, the decision to transfer your money to a savings account should take into account the following:

• Time Horizon: If you’re investing for long-term goals, such as retirement, switching to a savings account may not be the best decision. Historically, stock market investments have provided better returns over long periods despite short-term volatility.

• Risk Tolerance: If you’re feeling uncomfortable with the volatility and are worried about further losses in the market, shifting some of your money into a more conservative investment, like a savings account, might be appropriate for part of your portfolio. However, doing so with all your money might limit your long-term growth potential.

• Economic Outlook: If you believe that Trump's policies will continue to negatively affect the economy in the long term, moving some of your money to a safer, more stable option like a savings account may help mitigate potential future losses. However, it's also important to recognize that political administrations can change, and economic conditions are always shifting.

5. Final Thoughts

The loss in your Acorns account may be a cause for concern, but it’s essential to keep in mind the cyclical nature of markets and the long-term approach to investing. While a savings account may provide a guaranteed return of 4%, it comes with its own risks, such as the potential erosion of purchasing power due to inflation and missed opportunities for higher growth.

If you are uncertain about the direction of the market and are concerned about short-term volatility, you could consider rebalancing your portfolio within Acorns or moving some funds into safer investments. However, unless you have a short-term need for the funds, staying invested for the long haul in diversified assets is typically a more effective strategy for growing wealth.

Ultimately, your decision should align with your personal financial goals, risk tolerance, and time horizon. Consulting with a financial advisor to discuss your options in greater detail is always a prudent move when making significant financial decisions.