A new year brings a variety of opportunities with it, and 2025 is no different. In 2025, one would have a new U.S. president and new leadership in the Senate. Therefore, there can be changes in tax laws that may affect one’s future finances. Kavan Choksi recommends people to evaluate their financial situation, reassess their goals and ultimately implement techniques that help ensure financial security.
Kavan Choksi provides insights into a few financial tips for 2025
Prior to getting started with financial planning, one needs to consider their priorities. In many cases, the personal or financial goals of a person may shift over the year. Carrying out a detailed review would help align one’s strategy with their long-term vision. Doing so is important to see to it that one’s financial resources are positioned optimally. One must additionally try to fully fund retirement accounts like IRAs and 401(k) accounts, in order to take advantage of the tax deferral benefits they offer.
Holding the right amount of cash or emergency funds is critical to financial planning. One should typically have enough cash on hand to cover living expenses for more than six months. Enough money should be kept aside to fund large capital expenditures and take advantage of opportunistic investments as well. Owing to the possibility of interest rate reductions in 2025, people should try to lock in yields that match their liquidity needs and time horizons. Excess funds can subsequently be invested to help people achieve their longer-term goals.
One needs to properly organize their accounts and estate planning at the start of the year. Reviewing the estate plan is an important step, and should start with the names of account owners and beneficiaries. One also must check their life insurance policies and retirement accounts to see to it that they have the correct beneficiaries. Proper documentation makes sure that one’s assets would be distributed just the way they want, and can also provide significant tax benefits. It would be prudent to take time to reflect on any life changes over the past 12 months that may impact the financial plan, like getting married or welcoming a new family member.
As per Kavan Choksi, to safeguard any gains made in the last year, and have a defence against increased macroeconomic volatility, investors should try to increase the resilience of their portfolio. While reassessing their position strategically, investors also need to focus on producing more income. By exploring ways of generating additional yield, investors can increase the share of their income-driven total return. Core fixed income and investment-grade corporate bonds would be good choices. Investors can also consider preferred stock or equities that pay relatively robust dividends.
Before making any investment decision, one has to think about inflation. Infrastructure, commodities and real estate have historically fallen and risen pretty differently from stocks and bonds, basically exhibiting low correlations. Therefore, offering greater portfolio diversification. Depending on the chosen strategy, hedge funds can also be pretty useful. Investors should also consider investment vehicles like ETFs. They use active option strategies for generating extra income or reducing volatility in comparison to outright equity exposure.