Investing and Planning for Retirement

This year, shifting government policies, corporate regulations, trade agreements, the accelerating adaption of AI, and geopolitical tensions will likely influence markets.

The U.S. Central Bank held its first 2025 policy meeting at the end of January. It left interest rates unchanged, in the 4.25% - 4.50% range. Officials are waiting for clarity on the new administration polices and their effects on inflation, employment, and overall economic activity.

Stocks finished lower on Friday, January 31 after the White House announced that 25% tariffs on Mexico, 25% tariffs on Canada, and a 10% tariff on China would take effect on February 1. Global markets mostly ended higher*.  While the new administration paused tariffs on the imports from Mexico and Canada for 30 days, 10% tariffs on China took effect on February 4, 2025.  

Seven of the eleven sectors are reporting year-over-year earnings growth for the fourth quarter of 2024. In terms of revenues, 63% of S&P 500 companies have reported actual revenues above estimates, which is below the 5-year average of 69% and below the 10-year average of 64%. **

Although past performance doesn’t guarantee future results, long-term investments (e.g. stocks, ETFs, and mutual funds) typically have higher rates of returns than savings - however, potential higher rates also come with higher risks. While investors need to stay agile and informed and follow the principles of long-term financial planning and investing, the current market trends offer investment opportunities.

As always, it is important to plan. Your long-term planning should include how much you take out from your portfolio each year; something retirees should consider carefully because people are living longer.  For the past couple of years, we’ve lived in a high interest environment. The challenge is that while you get interest on your cash, in the long run and with the constant fluctuation of interest rates, it rarely will keep up with inflation.  Some investors may have too much cash. Now is the time for investors to figure out exactly how much cash they need to keep on hand and invest the rest.  Higher interest rates present opportunities to potentially secure higher yields across short- and long- term investments.

Many investors decide to work with me for my thorough research and analyses, and a broad range of investments I can recommend as an independent financial advisor. If you are interested in learning more about investments and if they may fit in your financial plan based on your risk tolerance and other important factors, call (310) 256-4881 to talk to me and start the investment selection process.  As always, staying on top of market development, risk management, and investment suitability are paramount to choosing an appropriate investment vehicle for you, an investor.

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*Wall Street Journal, Stock Market News, January 31, 2025

** FactSet Insight, S&P 500 Earnings Season Update, January 31, 2025