2025: Beginning of Year Preview

Main Idea: While nobody knows what will make 2025 memorable, there are a few main items on the agenda to begin the year with a focus on your finances.

Please take this one-question poll to help me out for next year!

Look, 2025 is essentially a guessing game at this point.

Almost none of the important questions many people have on the economy or stock market can be answered on December 27 for the following year.

If a recession is not able to be identified in retrospect after 2 quarters, then it's certainly difficult to know what to expect in the near future financially.

What that in mind, I'm going to list 5 important financial topics for 2025 and a few things to be on the lookout for.

1. Economic Trends and Inflation

• The last few years have been stressful in terms of price increases, and 2025 will be no different.
• Federal Reserve interest rate movements affect borrowing costs, mortgage rates, and savings yields, so the decisions the Fed make around cutting rates will again impact next year's prices.
• Trump's foreign policy also is set to include a new batch of tariffs, which could potentially raise prices due to the amount of goods we receive from out-of-country, but this too is yet to be seen.

2. Tax Changes on the Horizon

• The potential expiration of provisions from the Tax Cuts and Jobs Act (TCJA) at the end of 2025 could be an issue, but given how pro-business Trump is, it's looking likely he extends the TCJA at this point in time.
• I shared a lot more on this a few months ago.
• Essentially, several tax rates will go up if this expires. You can see the changes here.

3. Retirement Planning Adjustments

• SECURE 2.0 now allows individuals aged 60 to 63 to make higher catch-up contributions to their 401(k), 403(b), or 457(b) plans, if those plans allow it.
• For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500. (IRS)
• I'm not suggesting doing this as it will ultimately depend on your situation, but it's important to know if you fall in this age gap and you feel as though you're behind in retirement savings.

4. S&P 500 Performance After Two Great Years

• The S&P (and similar indexes, honestly) have knocked the ball out of the ballpark the last two years. It's worthless to predict what it will do in 2025, but the market is not a machine that only goes up and to the right, it will always correct itself at some point.

5. Housing Prices and Affordability

• As mentioned above, the impact of rising interest rates on home affordability and mortgage demand will continue to be interesting to follow.
• While interest rates play a crucial role, housing prices are also influenced by broader economic factors, such as the 10-year Treasury yield and other market expectations.

CONCLUSION

I remind myself regularly, not just at the start of a new year, that focusing on what I can control will have a far greater impact on my life than how the stock market performs in a given year or how much a house costs in 2025.

For those still focused on growing your portfolio, remember that much of your growth will come more from contributions than investment returns. I believe the same can be said for most areas of life—put more intention and focus on what you put in, and you’ll be happier with what you get out.

Follow Up to Read or Watch: The day after Donald J. Trump won the election I shared this article on some changes he had stated throughout his campaign (financially speaking). Although not everything will come to pass, it's worth reviewing.

Action Item: Remember, any article, post, news show, etc. claiming to accurately predict the future in ways that experts who earn hundreds of thousands of dollars can’t is likely more focused on getting clicks or making money than providing valuable insights. Be cautious about who you trust, and even more cautious about whose advice you follow.

My name is Jordan McFarland and I'm a CERTIFIED FINANCIAL PLANNER? at SageSpring Wealth Partners in Dallas, TX.

My goal with these brief articles is not to make you an expert, but get you thinking about ways you can optimize your finances and get ahead for tomorrow.

If any questions or thoughts come up during your reading, you can email me at [email protected].

Unfortunately, I must keep these articles rather vanilla and short in order that I do not trip any compliance wires. I'd be happy to meet with you to hear about your specific goals when the time comes.

This content reflects the opinions of the author and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as financial, legal, tax, or investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance is not indicative of future results. All investing involves risk, including the potential for loss of principal. The information contained in the commentaries is derived from sources deemed to be reliable, but its accuracy and completeness cannot be guaranteed. This material does not have regard to specific investment objectives, financial situation, or the particular needs of any specific reader. Any views regarding future prospects may or may not be realized. Asset allocation nor diversification guarantees a profit or protect against a loss in a declining market. They are methods used to help manage investment risk.