Investment Insights: Wall Street’s Shift, Tax Changes Boosting Paychecks, And Top Gold ETFs For Inflation Protection
Birgul COTELLI, Ph. D.
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Wall Street’s stellar performance has delivered blockbuster returns, but as we stepped into 2025, the financial landscape could be set for significant changes.
From shifts in tax brackets that might leave one with a bigger paycheck to investment strategies that can help weather persistent inflation, staying informed is key. Whether one is looking to capitalize on market trends, maximize take-home pay, or hedge against economic uncertainty with gold ETFs, 2025 offers opportunities—and challenges—for savvy investors.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
Wall Street Has Racked Up Blockbuster Returns. 2025 Could Change Everything
Wall Street has delivered remarkable gains over the past two years, with millions of Americans witnessing significant spikes in their net worth. The post-pandemic stock market boom has fueled consumer confidence and spending, but 2025 may present a turning point. Concerns are mounting over sky-high valuations, potential asset bubbles, and economic vulnerabilities that could reshape the market landscape.
Record-Setting Gains Fuel Confidence
The Nasdaq, buoyed by the artificial intelligence (AI) revolution and the dominance of the Magnificent Seven tech giants— Alphabet Inc., Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla —soared by 29% in 2024, following a 43% surge in 2023. Meanwhile, the S&P 500 added $10 trillion in value last year, marking the strongest back-to-back returns since the Clinton-era boom of the late 1990s.
This unprecedented rally has elevated consumer spending, with stock market gains playing a critical role in bolstering the economy. According to Mark Zandi, chief economist at Moody's Corporation, this wealth effect has been a driving force behind economic success. However, Zandi warns that a sharp market downturn could erode confidence and spending, posing a significant threat to the broader economy.
Bubble Warnings and High Valuations
Concerns about overvalued markets are intensifying. David Kelly, chief global strategist at J.P. Morgan Asset Management, highlighted the dangers of "asset bubbles" driven by optimistic valuations untethered from reality. "A lot of castles in the sky have been built on the foundations of this very stable economy," Kelly observed.
UBS’s December report identified nearly all seven preconditions for a market bubble, including excessive retail investor participation, overextended profits, and a narrative of “it’s different this time” often associated with technology dominance. While UBS suggests the market has not yet entered full bubble territory, the bank warns that stocks could rally another 15% to 20% before clear bubble signals emerge.
The Risks of a Correction
The Magnificent Seven’s outsized influence on market performance adds to concerns. S&P Dow Jones Indices reported that the S&P 500’s two-year total return was an impressive 58%, but this figure drops to just 24% without contributions from these tech giants. High expectations for these stocks mean any missteps could trigger widespread market volatility.
Adding to the uncertainty is the looming debt ceiling crisis and potential economic policy shifts under the newly elected U.S. administration. Investors are grappling with potential tax cuts, tariff hikes, and deregulation—all of which could impact inflation and market stability.
Bond Market and Broader Economic Implications
Beyond equities, the bond market could signal trouble. Edward Yardeni, president of Yardeni Research, Inc., warns that a selloff in bonds pushing the 10-year Treasury yield near 5% would spook markets. He also cautions that unchecked federal budget deficits could exacerbate market stress.
Despite these concerns, the broader economic outlook remains strong. Layoffs are low, inflation has moderated, and wages are outpacing price increases. Yet, as Yardeni notes, even a modest correction of 10% to 15% could be uncomfortable for investors, though he views it as a buying opportunity rather than a cause for panic.
Looking Ahead
Long-term investors are urged to maintain perspective. Kristina Hooper, chief global market strategist at Invesco US, advises that while a market pullback could occur, it would likely be temporary and ultimately healthy. "It’s irrelevant in the grand scheme of things," Hooper remarked, emphasizing the long-term potential for stocks and risk assets.
As 2025 unfolds, investors face a delicate balancing act: capitalizing on continued market strength while preparing for potential disruptions. Whether this year will mark a turning point or another leg up in the ongoing bull market remains to be seen, but vigilance and strategic planning will be crucial.
Tax Bracket Changes Could Mean Paychecks Are Slightly Bigger In 2025 — Here’s What To Know
As 2025 begins, many Americans may notice a modest boost in their take-home pay thanks to inflation adjustments in federal income tax brackets. While the changes may be smaller than in previous years due to cooling inflation, they still provide an opportunity for taxpayers to re-evaluate their finances.
What do these updates mean for paychecks and financial planning in 2025?
How Inflation Impacts Tax Brackets
Every year, the Internal Revenue Service adjusts federal income tax brackets to account for inflation, ensuring that taxpayers aren’t pushed into higher tax brackets solely due to cost-of-living increases. For 2025, the brackets increased by approximately 2.8%, a notable reduction compared to the 5.4% adjustment in 2024. This smaller increase aligns with the broader trend of cooling inflation, as evidenced by the Consumer Price Index (CPI), which rose 2.7% year-over-year in November 2024, down significantly from its June 2022 peak of 9.1%.
What This Means for Paychecks
If wages remain similar to 2024, one might notice a slight increase in take-home pay. This happens because higher tax bracket thresholds mean a smaller portion of income is taxed at higher rates. According to Brian Long, CPA and senior tax advisor at Wealth Enhancement, “When all the tax brackets go up, but your salary stays the same, relatively, that puts you on a lower rung of the ladder.”
For example, the standard deduction—the baseline income shielded from taxation—also rose. Married couples filing jointly can now claim a $30,000 deduction in 2025, up from $29,200 in 2024. Single filers will see their standard deduction increase to $15,000, up from $14,600. This adjustment could further reduce taxable income, potentially leading to a lower overall tax liability.
Real-World Impacts on Take-Home Pay
While these changes offer some financial relief, they may not fully counterbalance elevated living costs. Sheneya Wilson MS, MBA, CPA and founder of Fola Financial LLC, notes that “It ends up nearly balancing out.” Although inflation has slowed, the costs of groceries, gasoline, and new cars remain higher than pre-pandemic levels, according to the Bureau of Labor Statistics.
Additionally, whether paychecks feel noticeably bigger depends on one's specific circumstances, such as salary level, withholding choices, and benefit deductions. “Even if you make a little more than last year, you could actually pay less in tax in 2025 compared to 2024,” Long explains, highlighting the interplay between adjusted tax brackets and increased standard deductions.
Why Monitoring Withholdings Is Crucial
Regardless of the tax bracket adjustments, it’s essential to review federal and state tax withholdings regularly, especially after major life changes like marriage, the birth of a child, or a significant salary increase. Withhold too much, and one will receive a refund—effectively giving the government an interest-free loan. Withhold too little, and one risks owing taxes come April.
Sheneya Wilson emphasizes the importance of aligning withholdings with financial goals. “Whether your take-home pay is higher or lower than expected, proactive monitoring can help you avoid surprises,” she says.
Looking Ahead
The modest adjustments to tax brackets and deductions in 2025 reflect a stabilizing economic environment. While the changes may not be as pronounced as in previous years, they still offer an opportunity to revisit budget and financial plans. By understanding how these updates affect paychecks, one can make informed decisions about savings, investments, and tax planning for the year ahead.
As always, consulting with a CPA or financial advisor can help navigate these changes effectively, ensuring optimization of one's financial situation in 2025 and beyond.
The 5 Best Gold ETFs For Sticky Inflation In 2025
As sticky inflation continues to linger in 2025, savvy investors are seeking effective hedges against rising prices and market uncertainty. Gold, a timeless store of value, remains a trusted asset for preserving purchasing power. Among the various ways to invest in gold, exchange-traded funds (ETFs) offer a cost-effective and convenient alternative to physical gold.
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Five top-rated gold ETFs that could help investors navigate the challenges of sticky inflation this year:
1. SPDR Gold Shares (GLD)
GLD is the largest and most well-known gold-backed ETF, holding 99.99% pure gold bars. With nearly $75 billion in assets, it’s highly liquid and closely tracks the price of gold after fees. As the first gold ETF in the U.S., GLD remains a favorite among institutional and retail investors for its simplicity and cost efficiency.
2. iShares Gold Trust Micro (IAUM)
IAUM is the go-to ETF for cost-conscious investors. As the lowest-cost physical gold ETF, it provides direct exposure to gold bullion without the high fees associated with physical ownership. Managed by BlackRock, IAUM’s low expense ratio makes it an attractive option for diversifying portfolios while maintaining inflation protection.
3. VanEck Junior Gold Miners ETF (GDXJ)
For investors seeking exposure to gold prices with growth potential, GDXJ focuses on small-cap gold and silver mining companies. This ETF tracks the MVIS Global Junior Gold Miners Index, offering indirect exposure to gold with the added upside of equity appreciation.
Top holdings include Alamos Gold Inc. (AGI), Pan American Silver Corp. (PAAS), and Harmony Gold Mining Company Limited. (HMY), which together make up over 19% of the fund’s assets. GDXJ also provides a modest dividend yield of 0.57%, adding to its appeal.
4. ProShares Ultra Gold (UGL)
For aggressive investors, UGL offers leveraged exposure to gold prices. This ETF uses derivatives to provide approximately twice the daily performance of the Bloomberg Gold Subindex. While leverage can amplify gains, it also increases risks, making this fund suitable for short-term trading rather than long-term holding.
Investors should closely monitor this fund due to its daily rebalancing and potential for volatility over extended periods.
5. VanEck Merk Gold Trust (OUNZ)
OUNZ stands out for its versatility. Like other gold ETFs, it tracks the price of gold bullion, but it offers a unique feature: investors can exchange shares for physical gold bars or coins. This added flexibility makes OUNZ appealing to those who value the option of owning the actual metal.
Despite this feature, OUNZ maintains a competitive expense ratio of 0.25%, making it a practical choice for both traditional and physical gold enthusiasts.
Why Gold ETFs Are Essential in 2025
Inflation rates have eased from the peaks of 2022 but remain above central bank targets, resulting in persistent uncertainty. Sticky inflation, driven by factors like strong employment, rising wages, and resilient consumer sentiment, keeps upward pressure on prices and complicates monetary policy.
Gold ETFs offer a convenient way to hedge against inflation while avoiding the costs and logistics of physical gold ownership. Whether one is a risk-averse investor seeking stability or a trader looking to capitalize on market volatility, these ETFs provide a range of options to suit different goals and risk tolerances.
Choosing the Right ETF
When selecting a gold ETF, consider factors like expense ratios, liquidity, and investment goals. For straightforward inflation protection, GLD and IAUM are excellent choices. If one is interested in growth potential, GDXJ offers exposure to mining equities. For those who want leverage, UGL provides amplified returns, while OUNZ bridges the gap between ETFs and physical gold ownership.
With inflation likely to remain sticky in 2025, adding gold ETFs to portfolios could provide both protection and peace of mind.
Conclusion
As we stepped into 2025, the financial landscape offers both opportunities and challenges. Wall Street's historic rally, fueled by technological advancements and a robust economy, has set a high bar, but concerns about overvaluations, asset bubbles, and potential corrections loom large. Meanwhile, modest changes to tax brackets provide an avenue to reassess personal finances, enabling taxpayers to maximize take-home pay and refine financial strategies.
For investors seeking stability amid persistent inflation and market uncertainty, gold ETFs remain an attractive option. With choices ranging from cost-efficient options like iShares Gold Trust Micro (IAUM) to the flexibility of VanEck Merk Gold Trust (OUNZ), these instruments offer a range of benefits tailored to diverse risk profiles and financial goals.
In a year marked by potential market volatility and evolving economic policies, long-term perspective and strategic diversification are crucial. Maintaining a balanced portfolio—leveraging equities, fixed income, and inflation hedges like gold—can help investors navigate uncertainty and capitalize on growth opportunities.
The key to success in 2025 lies in staying informed, being adaptable, and planning strategically.
Disclaimer: the Newsletter Investors Board is not an investment advice. The sole purpose of its publication is informative.
Sources: Edition.cnn.com Cnbc.com Money.usnews.com
Nasdaq Alphabet Inc. Amazon Apple Meta Microsoft NVIDIA Tesla S&P Global,Moody's Corporation J.P. Morgan UBS Dow Jones Yardeni Research, Inc. Invesco US Wealth Enhancement Internal Revenue Service Fola Financial LLC Bureau of Labor Statistics BlackRock Alamos Gold Inc. Harmony Gold Mining Company Limited Pan American Silver Corp. CNBC CNN @j.p. morgan asset management @invesco
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