01.14.25 Ask An Advisor With Wes Moss - 10 Things Investors Should Watch Out For in 2025
Jan 14, 2025
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Wes Moss, a fee-only fiduciary financial advisor, shares crucial insights on what investors should monitor in 2025. He discusses potential market volatility and the implications of tariffs on consumer behavior. Moss also highlights the importance of dividends and bonds in a balanced portfolio. Additionally, he tackles misconceptions about financial advisors, emphasizing the benefits of index funds. The discussion includes strategies for retirement savings and managing inherited wealth, providing listeners with valuable financial guidance.
Strong consumer spending and positive wage growth are expected to bolster economic growth and investor confidence in 2025.
Increased market volatility is anticipated in 2025, highlighting the importance of a long-term perspective on investment strategies.
Deep dives
Resiliency in the Economy and Stock Market
The economy demonstrated remarkable resiliency in 2024, overcoming various uncertainties such as inflation concerns and an unprecedented election cycle. Despite fears of recession, the economy grew nearly 3% in GDP, showcasing strength as consumer spending remained robust. The S&P 500 recorded a significant uptick of around 25%, reflecting positive investor sentiment and economic growth. This trend of resiliency is expected to carry into 2025, providing a foundation for cautious optimism among investors.
The Role of Consumers in Economic Growth
With approximately 160 million people employed in the United States, consumer spending plays a crucial role in driving economic growth, contributing to about 70% of the economy. Current savings rates are comparatively low, with only around 4% being saved, leading to a robust consumer purchasing behavior. Furthermore, wage growth is outpacing inflation, encouraging increased expenditure among consumers. This trend emphasizes the consumer's pivotal role as the economy progresses into 2025.
Productivity Gains Enhancing Economic Potential
A resurgence in productivity over the last two years is painting an optimistic picture for the economy. After a stagnant period of minimal growth, recent metrics have shown productivity increases of around 2% to 2.5%, signaling a more efficient workforce. Factors such as remote work arrangements and advancements in technology, including artificial intelligence, are driving this productivity surge. Sustained productivity improvement stands to further catalyze economic growth and investor confidence moving forward.
Understanding the Market Dynamics Ahead
Investors are reminded that stock market trajectories are often characterized by volatility rather than a smooth upward trend. Following two years of low volatility, there is a notable potential for increased fluctuations in 2025, which is typical for market cycles. Moreover, despite common assumptions that consecutive strong years must precede a downturn, historical trends reveal that markets can experience extended periods of growth. This historical context underlines the importance of viewing market cycles with a long-term lens, emphasizing that current strength can indicate future momentum.
What does 2025 hold for investors? On this episode of Ask an Advisor, fee-only fiduciary financial advisor Wes Moss breaks down 10 things investors should watch out for in 2025. Should we worry about tariffs? Will the market be more volatile? Can we expect a bull or bear market? You don’t want to miss these valuable insights and more to help you prepare for the year ahead!
Plus, Christa shares your #AskWes questions and Wes gives his take. All this and more on the January 14, 2025, Ask an Advisor episode of the Clark Howard podcast.
We hope you enjoy our weekly Ask An Advisor episodes, in which Christa and Wes discuss investing and retirement savings in depth. Let us know what you think in the comments!