New Year, New Financial Resolutions: Expert Advice for 2025
As the calendar flips to a new year, it’s the perfect time to reassess your financial situation and set goals for the future. With the market’s recent ups and downs, it’s essential to be prepared for whatever 2025 may bring.
Avoiding Mental Traps
According to Joseph Boughan, CFP and founder of Parkmount Financial Partners, investors need to be aware of two mental biases that can hinder their financial progress. The first is the fear of missing out (FOMO), which can lead to overlooking increasing risks in a particular investment. The second is the assumption that the market will continue to rise indefinitely, causing complacency and potential mistakes in the event of a correction.
Taking Control of Your Finances
To avoid these traps, Rob Williams, managing director of financial planning at the Schwab Center for Financial Research, recommends making financial planning a top priority. “Resolutions are a way to take ownership of your finances,” he says. By taking small steps, such as reviewing your portfolio and creating a plan, you can regain control of your financial situation.
Portfolio Rebalancing and Fee Awareness
Rebalancing your portfolio is crucial to ensuring it remains aligned with your goals. Joe Marquez, wealth advisor and co-CEO at Bolin Creek Wealth Advisors, suggests hiring an hourly fee-based financial advisor to help you calculate your portfolio’s weighted average fee and identify areas for improvement. Additionally, be aware of hidden fees and expenses that can eat into your returns.
Tax-Loss Harvesting and Retirement Planning
Tax-loss harvesting is a valuable strategy for capturing tax savings by selling underperforming stocks at year-end. However, it’s essential to work with a financial or tax professional to understand the tax consequences. Don’t forget to top off your tax-advantaged accounts, such as IRAs, 401(k)s, and 529 college savings plans, to maximize your savings.
Diversification and Emergency Funds
A diversified portfolio is crucial for navigating market volatility. Peter Hughes, founder and principal at Evolve Investing, recommends having a solid cash reserve to avoid liquidating investments during market downturns. The amount of the emergency fund will depend on your living expenses and income predictability.
Sustainable Investing and Global Exposure
Todd Ahlsten, chief investment officer at Parnassus Investments, believes that investing in high-quality, sustainable companies will be increasingly important in 2025. Alvin Carlos, financial planner and managing partner at District Capital Management, suggests evaluating global index funds or ETFs for cost-effective international exposure.
Expert Insights for 2025
As we enter a new year, experts predict a broad-based rally in stocks under a Trump-orchestrated economy. George Milling-Stanley, chief gold strategist at State Street Global Advisors, recommends having some gold in your portfolio due to its protective attributes. With the right strategies and mindset, you can navigate the market’s ups and downs and achieve your financial goals in 2025.
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