2025 was a year with many challenges and changes. As the year comes to a close, we want to reflect on some of the positive highlights of 2025 – the progress made both in the market and in our personal (financial) lives. Even with uncertainty about the economy and volatility in the markets, there are things to celebrate and feel hopeful about for the year ahead.
Market highlights
- For investors, 2025 was a year of resilience. Despite a lot of volatility and sharp up- and down markets, with the deepest dip in April, stock markets in the US delivered solid returns. The S&P 500 gained about 18% since January. This was driven for a large part by technology stocks, but supported by strong corporate earnings.
- International markets performed even better, caused by a weaker dollar and the cutting of rates by central banks outside the US. Diversified portfolios, with stocks and bonds, but also gold and real estate proved their value this year. Gold rose to all-time highs and office real estate is slowly coming back.
Personal Financial Wins
- On the personal side, many households made meaningful progress. With high market returns for the third consecutive year, investment accounts and 401k savings accounts have gained a lot of value. Many people realized they were able to retire earlier than they thought and took the big step this year.
- Households with a financial plan saw real progress when they focused on staying on budget, saving as planned and reducing or avoiding debt. Tax planning and smart use of refunds helped individuals increase their cash reserve. This cash together with investments in short-term Treasury Bills will protect them from market swings which will certainly continue.
Positive trends to take into the New Year
- The Fed just lowered the interest rate for the third time. These cuts will lower the borrowing costs for consumers on mortgages, car loans and (maybe) credit cards.
- Tax policy changes this year might provide many households with higher tax refunds.
- Corporate earnings remained strong across multiple industries and with lower borrowing costs, should cause more business development and hopefully not only in AI, but also in hiring.
Closing thoughts
While many challenges remain – uncertainty in global markets, inflation, and government policy shifts – there are positive trends that give a foundation for future growth and that give us optimism that we will get through whatever the next year will bring. As 2025 comes to an end, take a moment to appreciate the progress you have made — in both big and small things.
