My Investing Plan for 2025

as we head into 2025 we should be thoughtful about our investing plans after all we have to factor in that there will be new policies under the presidential Administration the threat of possible tariffs and elevated although easing interest rates so to ensure that we're optimized going into 20125 I made this video for you and I will share with you how I'm personally investing as well but first let's take a look back at this year recap what my investing strategy was for 2024 and if it's going to change a lot or a little bit in the

next year so 2024 was insane I mean the S&P 500 started the year at 4742 and mostly just stayed in a straight up and to the right pattern throughout the past 11 and 1 12 months-ish or so as of filming it's right over 6,000 with a 27% year-to-date gain the NASDAQ started off the year at 14765 and now is well over 19,000 for an overall year-to-date gain of 30% again these numbers are unusually high the stock market on average returns about 9 to 11% per year for like the past 100 years and the market as

of right now seems frothy and trading at higher than average multiples you can see here that the S&P 500 Index is trading close to a 25 price to earnings ratio and one year ago it was trading at a 21 PE ratio the average for the S&P 500 is typically around 15 to 20 so these multiples are unusually high and even the forecasted PE for the next 12 months is close to 25 now my plan going into this year 2024 was simple I wanted to do the following things number one keep contributing regularly to my Investment

Portfolio I did that number two if I wanted to buy individual stocks I wanted to make sure that I had a solid hypothesis for them and actually buy with conviction instead of getting distracted by shiny object syndrome like I had in the past and number three mostly I just wanted to sit on my hands for the entire year and just kind of let investing and compounding do its thing last year I thought that sustained elevated interest rates would slowly suck money out of tech and growth stocks but I was wrong about that as the tech

sector continued to perform even well before the hinting of even an rate cut on the other hand I was right about some things including how the presidential election year could be bullish for stocks which it indeed has been with the Trump Victory and if we did get an interest rate cut that we should dollar cost heavier into equities because it would make Capital flow easier into equities lower interest rates that is and that has been pretty much true since the FED cut rates back in September I began the year with about 20% of my portfolio

in cash but around the summertime when I got wind of an expected interest rate cut I fully deployed my portfolio into equities one of my favorite individual stocks this year was Robin Hood which I did a lot of research for over the summer and I bought that and it just continues to chug along if you do want to see everything I invest in as well as get at least two exclusive videos per month not here on YouTube make sure to check out my WAP Community WAP is a platform kind of like patreon or Circle it

allows you to have a private Community to get together and share ideas I will leave a link to it down below now as someone in their mid-30s I'm still fully invested into the market and from a traditional portfolio point of view my portfolio is 90% equities 5 to 7% is crypto and the rest are B bonds or cash if I were to judge myself from an objective point of view someone looking in might say I have too much risk on exposure to equities now while I don't think I need fixed income now I am making

sure that going into 2025 my portfolio will be Diversified enough and for me that looks like possibly holding some more cash as I mentioned earlier the PE ratio on the S&P 500 is higher than average and another signal to me that you may just want to hold more cash is to just look at Warren Buffett's portfolio he's holding a record high amount of cash for his portfolio amounting to 28% of berkshire's asset value the highest level since 1990 now that could just be coincidence or he could just be hedging a little bit against a frothy

Market but even though people think that the market has topped out or is close to a top people have been saying the same thing since the S&P was around 4100 so who is right in this situation I think the truth is is that nobody knows what I do want to share with you now is what I think is important to look out for in 2025 so that you can position yourself accordingly that way you can manage your own risk and make decisions that you are comfortable with at the end of the day so in 2025

we're going to get a new president inaugurated in late January Donald Trump and while Trump hasn't unveiled His official economic plan there are a few broad economic proposals worth talking about including the desire to battle inflation lower taxes enforce less regulation as well as impose an import tariff tariffs are a big subject but I'm actually going to cover that later on in this video in a dedicated section so first let's talk about the other broad economic policies that may affect our investments on battle battling inflation Trump has promised that his policies would lower inflation however

he has been vague about exactly how they would do that he says that he wants to lower gas prices through increasing domestic oil and gas production that's one promise he's made but other than that the president has not laid out much detail in how he plans to battle inflation he also wants to lower interest rates but that's going to be difficult because interest rates are the one tool that we have in order to combat inflation I'm not sure how exactly that's going to play out how he wants to lower interest rates but also lower inflation

I don't think those two go hand inand if we do see interest rates get cut this should be your sign again to consider dollar cost averaging heavier into equities in 2025 another broad idea Trump's party has is to cut regulation that quote stifles jobs Freedom Innovation and makes everything more expensive it's likely during this presidency we're going to see a shift to America first which means that you would assume domestic producers and manufacturers and their corresponding stocks will probably Faire better than say International stocks but that's not always the case just because there's a new

president in town does it mean that some sectors will always outperform due to presidential policies or presidential biases so take a look at this chart from Fidelity which details sector performance in presidential election years since 1976 you can see that it's kind of all over the place not a single sector consistently outperforms depending on who is in power the takeaway here is that often times the president might not have as big of an influence on stock market performance especially of certain companies than you might think and according to the market sentiment newsletter the party in

power does not significantly impact the S&P 500 that much you can see the compound annual growth rate of the S&P 500 when a Democrat versus a republican is in power and the difference is about less than 1% these pieces of data show me that we should still remain levelheaded with our own investing invest for the long term and stick to the plan of dollar cost averaging into the markets when we can now when it comes to tax policy this may impact your capital gains or your Roth conversions Trump wants to extend the 2017 tax cut

and jobs act permanently that means that the individual income tax cuts as well as favorable capital gains rates will remain in effect your short-term capital gains rate at its maximum is going to be lower and also long-term capital gains rates are tied to income thresholds instead of income tax brackets while this doesn't seem huge it just means that you will have slightly more flexibility when it comes to taking capital gains for Roth conversions the tax cuts and jobs act lowered ordinary income tax rates making Roth conversions more tax efficient when you convert funds from a

traditional IRA to a Roth IRA pay income taxes on the amount converted lower rates means that you can convert more at a lower tax cost so for your Roth conversions it would be good if this act remains in effect one thing I'm going to be paying attention to is if tariffs are actually going into effect under the new president as of the latest article that I could find the president-elect pledged a 25% tariff on all products from Mexico and Canada that's along with a 10% levy on Chinese Goods on the day that he is inaugurated

tariffs in very basic terms from the US point of view is a tax on any good that is brought into the country from somewhere else now something you may not know is that the tax is actually paid for by the us-based company that's right Trump may make it seem like China or Canada or Mexico is paying for the Tariff but no the us-based company actually pays for it so let's say Walmart wants to import a toy from Canada and Canada wants to charge you $10 now unfortunately at this time even though Canada wants to charge

you $10 for it there's a 25% tariff on Canadian goods Walmart actually pays $10 to Canada but then they have to pay $2.50 or 25% to US Customs as a tariff to make up for this tariff Walmart then might just raise the price of that new toy when it's sold in their stores by the amount of the Tariff so that you the buyer actually end up paying more so what does that do theoretically Trump wants tariffs to accomplish three major things number one is to protect American jobs the idea is that a tariff will make

foreign Goods more expensive so american-based Goods will become relatively cheaper and maybe American companies will want to produce Goods in the US again number two is that it's revenue for the government which means that it could help pay off the deficit maybe and number three it could just be a negotiation tactic pressuring other countries to fall in line with US policies while those are some of the things that might get accomplished there is another side to this coin According to taxfoundation.org which is an independent Think Tank they say that quote tariffs could have an inflationary

impact or cause an economic downturn in the short run and that over the long run tariffs shrink the size of the economy by reducing work and investment that's because because tariffs increase the relative prices of imported and protected goods and after paying those higher prices people have less income left to spend elsewhere you can see in all these estimates the impact of the proposed tariff policy on the change in Real GDP now this is estimated by these organizations in short it's not great for the end consumer in terms of how it affects investing industries that

are protected by tariffs like domestic agriculture farming manufacturing companies those could benefit the most the first company that comes to mind is a company like Ford Motors as an example companies that rely heavily on Imports Also may face higher costs due to tariffs which could reduce their profits for instance Apple which sources many of their components and finished products from China they might see their stock price decline if those goods are subject to a significant tariff so that's what's going on with tariffs it's definitely something that we're going to have to keep an eye on

but let's actually shift our Focus now into asset allocation for 2025 now in terms of asset allocation for the next year what I'm going to be doing is very similar to what I did this year which is to maintain a strong position position in ETFs in 2025 I also want to focus on trimming individual stocks when they get my portfolio out of balance even if that means taking capital gains on them I also want to ensure my portfolio stays balanced in case we do have some sort of Correction so that means I might shift away

from some growth and tech stocks and more into Staples lastly I still want to add a little bit of cash to my portfolio as I will talk about shortly now depending on who you are and what your risk tolerance and goals are you may be a lot different than me if you're wondering what you should be doing for your exact age or your asset allocation I will leave some video resources down below for you guys as well as the Vanguard questionnaire that can give you a good idea and good sense of what your risk tolerance

and time Horizon are my goal on the channel is to always get you to think for yourself and make investing decisions on your own I will say though if you have an investment time Horizon of say 10 20 or 30 years the best thing that you can do is continue to dollar cost average into the market stay committed to investing and optimize for endurance Morgan housel of the psychology of money book says that it's extremely hard to beat the market and that if you can just earn average returns for an above average period of time

it's actually going to lead to an amount of success that will put you in the top 5% of investors so that's what I would always suggest people look at and I hope that you take that more seriously now with that being said what about crypto because that is something that's a little bit of a black sheep asset that's been really pumping as of late and this is especially true because Trump has been very Pro cryptocurrency in what he says publicly at the time of this recording Bitcoin has nearly crossed the $1,000 Mark but it still

has not broken it yet and other major altcoins like salana ethereum and even Ripple have been ripping this year there's also a rumor that Trump will eliminate capital gains taxes on us issued cryptocurrencies so coins like cardono ALR harar as well as Ripple I've always thought that having a small exposure to crypto as a percentage of your overall portfolio is generally good I'm mostly in the Bitcoin ethereum salonic Camp so just major major coins and if I'm going to choose one to buy and hold forever it's probably Bitcoin my Holdings of crypto currently represent around

5 to 7% of my total investing portfolio and I think if you want some exposure to crypto without having to deal with the whole buying and keeping custody of the coin itself you could simply just buy the Bitcoin ETFs that were introduced this year since Bitcoin Supply is capped and the belief that it is here to stay I can only see the price of this alternative asset slowly grinding upwards Over time however that's not to say that there won't be any corrections at all and historically we've even seen Bitcoin correct up to 70% downward at

times and if you can't stomach this type of volatility then perhaps you probably shouldn't be investing in Bitcoin or any types of cryptocurrency as always if you are investing in cryptocurrency just be reasonable and responsible don't risk more than you can afford to lose and make sure you understand your own investing temperament because if you're just buying small meme coins I think that's essentially just gambling all right now let's talk about my thoughts on cash going into 2025 I personally want to have a little bit more cash on hand going into 2025 when I started

this year in 2024 I had about 20% but now I am personally deployed into the markets that's making me a little bit nervous now of course I still have my emergency fund and my business bank accounts those sit in high yield bank accounts high yield savings but I think having some cash on the sidelines for 2025 is probably going to be prudent the thing is that when it comes to risk you can't prepare for these one-off scenarios and the biggest risk is something like a Black Swan event or a major correction in the stock market

and I would personally hate to not have any extra cash or dry powder as they call it on the sidelines to take advantage of those opportunities heading into 202 so by the end of this 2024 calendar year I will highly consider selling off some of my individual stocks just even a small percentage of them to lock in those gains that way it's also going to give me some cash to operate going into 2025 I don't know how much or when or if I'm actually going to do that so I'm still kind of deciding but I

will keep you guys updated on the channel and also in my community all right so this was my investing plan for 2025 let me know what you thought of it down below in the comments I'll try to reply to every single one I will see you guys in the next video on the Channel have a great week all right peace [Music]