It may be a key time – before mid-year – to check in on goals made back in January. These goals could have focused on saving more or differently, spending reduction or realignment and areas of investment focus and diversification.
How is your progress on certain goals? Can tweaks be made? Can specific ones be scrapped and new goals or ideas formed?
One particular goal from January was something I nicknamed FSP:
“Focus on Saving in order to maintain Patience” – in the event of the inevitable market decline, or volatility similar to that of 2025.
The chart above illustrates general categories of goals:
- near-term
- longer-term.
Near-term is more urgent and day-to-day.
Near-term and essential items need to be funded with more secure instruments such as cash and bonds.
Longer-term is more discretionary and aspirational.
Building longer-term savings requires patience. Longer-term desires can be funded with more risky assets such as stocks, or a combination of cash, bonds and stocks.
The reasoning around “FSP”, or Focus on Savings to maintain Patience, is as follows:
- Looking back at 2024, more than 20% of all trading days ended in an all-time market high* …translating into 57 new market highs…
- … and an average of more than one new all-time high per week.
- Emotional highs led lots of investors to remain concentrated in a narrow group of high-flying tech stocks.
- In late 2024, consumer debt stood at a record high; and when last reported by households in 2023, meant an average debt of $104,215 per household.** (That amount does not include mortgage debt.)
Here is where 2025 and the future could be different:
- “Crypto fever” may have worked out in 2024 for certain investors, and risks remain in terms of quantifying and tracking value.
- BUT – if building cryptocurrency exposure today is looked at as enabling a method of paying for major and minor purchases in the future, then crypto is definitely still an area that can be explored.
- In a general sense, two things are the order of the day:
1) focusing on diversification of investments,
2) on the savings side, setting aside anywhere from 2 to 5 years of projected spending.
How and in what vehicles to set aside that savings? (cash, bonds, US Treasuries, inflation-adjusted securities, stocks, crypto exposure, etc.) That is a conversation to have with your financial adviser or the person you rely on to help craft your scenario to maintain your lifestyle.
Try the FSP concept for starters.
*There are approximately 250 trading days in a calendar year, and there were 57 new all-time highs in the S&P 500 (data from Charlie Bilello) in 2024, as of the data report.
** Motley Fool
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.