Your First 5 Investment Moves for 2025

Investors are heading into 2025 in an optimistic mood, believing that a solid economy, as well as a White House that is pro-growth, will be enough for the stock market to continue its climb.

That wasn’t the case at the start of last year, when even the most bullish Wall Street analysts underestimated the strength of the market. Even after slipping for the final four trading days of the year, the S&P 500 still rose 23.3 percent, roughly matching its gain in 2023. It’s the first time the benchmark index has risen more than 20 percent in consecutive years since 1998!

Can the market rally continue? Wall Street thinks so. On average, analysts are forecasting that the S&P 500 will rise around 10 percent in 2025. However, after more than 25 years in this business, I know that the biggest bull-market killer is complacency.

Markets will most likely remain volatile, and there is little that long-term investors can do in the short-term. So, what should you do now that the calendar has flipped to the New Year?

Here are your first 5 moves for the New Year:

1. Open your financial statements

Take advantage of January to start collecting all your year-end statements. These may include brokerage accounts, retirement accounts (including prior employer 401k's), HSAs, as well as stocks being held directly in-kind. You may be surprised what is out there, and more importantly, what is NOT being adequately managed.

Now is also the time to go through your bank and brokerage statements to look at high cash positions. If you've owned CD's or bonds that have matured recently, make sure that cash is reinvested to continue to take advantage of historically high rates. If you're purposely holding cash, take a look at the interest rate. Again, cash rates are still historically high, but it might mean you need to be proactive to sweep that cash into the right account.

2. Meet with your Financial Advisor

As a client of the Boone Macaluso Group of Raymond James, every client is automatically set up on a quarterly meeting schedule. Some are literally calendar scheduled, while others are simply "check-ins" on our side to proactively reach out to our clients. Although most meetings tend to be quick, we have found that holding each side to a quarterly conversation keeps everyone accountable.

Although it's the Advisor's role to talk to their clients, at the end of the day, you, the client must take ownership of their finances. This becomes particularly essential during life-changing events that need to be addressed in a timely manner.

If you've gone through the entire year without hearing from your Advisor, take this opportunity to reach out to them and schedule that meeting!!

3. Have a tax-strategy for the coming year

Building a tax-efficient portfolio is not a year-end trade...rather, with consistent rebalancing and planning, you can keep more dollars in your pocket vs waiting until the last few weeks of the year to make some tax moves. With markets screaming to new highs, and the performance broadening out to almost all sectors, losses were tough to come by last year. But that doesn't mean with a little deeper dive, you can't find something to harvest.

When left with constructing a portfolio on their own, often there is little consideration of taxes, so investors may have unachievable or unrealistic return expectations. Conversely, attempting to construct a portfolio simply to minimize taxes can also result in opportunity costs that can leave investors less likely to achieve their goals.

We feel that building a portfolio primarily based on specific life goals - retirement, education, vacation, etc. - makes the most sense and is the most realistic. However, utilizing a proactive tax strategy throughout the year can add alpha to an investment portfolio, while also giving you better control of your tax liability early enough so you're not scrambling come year-end.

4. Rebalance your portfolio(s)

Just like tax-loss selling, true portfolio rebalancing should not be a once-a-year strategy... especially when we had a market like we've experienced the last few years. AI stocks were the leaders, with other Tech names outperforming the broader markets. From a macro perspective, European equities grossly underperformed the US (only gaining 2.4%!) On the fixed income side, a steepening yield curve has also pressured bond prices.

If left alone, portfolios most likely look completely different from a year ago, especially a broad 60/40 stock to bond allocation. This outperformance from a concentrated group of leaders is even more reason to consistently rebalance your portfolio. Not only to get rid of (or at least reevaluate) the losers, but to trim back the winners to a more reasonable allocation, so you're still in-line with your financial goals and risk tolerance.

5. Update your Financial Plan

Although there's no calendar reason to update your plan, the beginning of the year is a great time to look ahead to make sure your plan is still in line with your current situation, as well as your future financial goals.

• Life Changes: major life events like getting married, having a child, or changing jobs can impact your financial situation. Updating your plan ensures it reflects your current reality.
• Market Fluctuations: 2024 has seen lopsided market gains, so review your asset allocation to make sure it's still on target with your goals.
• New Goals: whether it's buying a home, starting a business, or planning for retirement, your financial goals may change over time. Even if you don't have a new goal, now is the time to see how much closer you are to achieving your current objectives.
• Tax Law Updates: changes in tax laws for 2025 can offer new opportunities for retirement savings. Make sure your financial strategy takes advantage of these changes.
• Peace of Mind: knowing that your financial plan is up to date can put you at ease, allowing you to focus on other important aspects of your life.

With 12 more trading months ahead of us, none of the above is pressing, especially for those with a long-term investment horizon. However, by planning for the year sooner rather than later, investors can set themselves up to take advantage of the volatility the market will most likely throw their way this year. There is nothing more stressful than scrambling during the last week of December to make important investment moves.

-Jason

Any opinions are those of Jason Macaluso and not necessarily those of Raymond James.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation.

Investing involves risk and you may incur a profit or loss regardless of the strategy selected, including diversification and asset allocation. Every investor's situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.