Happy New Year! We hope you had a very enjoyable Holiday Season and we hope you have a very healthy, happy, and prosperous 2025!
RSWA 2025 Outlook Webinar: Before we dive into our newsletter, here is a reminder that economist and market analyst, Fritz Meyer, will be presenting next Thursday, January 9th at 4:30 PM. He will review the economy and markets that were 2024 and the trends shaping 2025. Be sure to register on the link below to join us or to receive the replay. Feel free to share the invite with anyone interested. If you would like to receive the slides from the webinar, just ask your friendly RSWA contact and we will be sure to get it to you! RSWA Webinar Series – Fritz Meyer Q1 2025
Tale of the Tape for 2024: I am going to dive into some tables and charts displaying the returns (including dividends) for various asset classes. I will be using various investment vehicles as proxies, considering investors can’t invest in indexes, only investment products that track them. Therefore, the returns may be slightly different from indexes given tracking errors or expenses. Here we go…
Stock Markets:
| Index | Product | Stock Market Represented | Return |
| S&P 500 | SPY | Large U.S. | 24.89% |
| S&P Midcap 400 | IJH | Midsized U.S. | 13.92% |
| S&P Small Cap 600 | IJS | Small U.S. | 7.33% |
| S&P 500 Value | IVE | Large Value | 12.03% |
| S&P 500 Growth | IVW | Large Growth | 35.82% |
| MSCI International | IDEV | International Large | 4.54% |
| MSCI Emerging | EEM | Emerging Market Large | 6.49% |
Stock Commentary: As has been the case for years, the U.S. and, in particular, U.S. large growth companies outperformed. Many market experts have been predicting for years that growth will pull back or slow down and other areas will start performing better than growth, but it has yet to happen. OK, let’s move on to bonds and fixed income:
Bond Markets:
|
Index
|
Avg. Duration of Bonds
|
Product
|
Market Represented
|
Return
|
|
U.S. Aggregate Bond
|
6.0 years
|
AGG
|
Intermediate-Term, 75% Gov’t/Agency and 25% Corporate
|
1.31%
|
|
U.S. 1-5 Year Gov’t/Credit
|
2.6 years
|
BSV
|
1-5 year, 67% Gov’t/33% Corporate Bonds
|
3.78%
|
|
U.S. 1-5 Year Corporate
|
2.6 years
|
IGSB
|
Corporate Bonds
|
4.97%
|
|
U.S. Treasury Floating Rate
|
.01 years
|
TFLO
|
Ultrashort U.S. Treasuries
|
5.34%
|
|
ICE U.S. Treasury 20
|
16.0 years
|
TLT
|
Long-dated U.S. Treasuries
|
-8.05%
|
Bond Commentary: Reading the tea leaves regarding bonds can be a little more difficult since many of the most widely used indices have multiple sectors. But one obvious fact is that shorter-term (duration) bonds outperformed long-term bonds. This is because, for longer-term bonds, yields moved higher during the year. 2024 started with the U.S. ten-year Treasury yielding just over 3.90% and ended the year at 4.57%. Bond prices are inversely correlated with yields, so when the yield moves higher the prices decline, therefore longer-dated bonds struggled last year. Also, corporate bonds outperformed their government peers. Corporate bonds generally yield more than government bonds due to the possibility of defaults. But because the economy was solid, there were generally few corporate defaults leading to outperformance versus government bonds.
2025 Outlook: Almost every asset management firm and market analyst has a prediction for what the markets will do in 2025. Take them all with a grain of salt. As a reminder, at the beginning of 2022, most predictions for the stock market were for high single-digit returns and the markets ended up being down double-digits. With that said, I think many would be shocked if the stock market were to have another big up year after two big return years, so keep expectations more modest. Also, it is always a good reminder that a portfolio based on solid asset allocation, risk tolerance, and financial goals is built to last the long term – not just for one week, one month, one quarter, or even one year, but for many years. WSJ
Financial Planning/Investment Strategy Corner:
Lost 401(k) and Retirement Accounts: When the government passed the Secure Act 2.0 it contained provisions affecting retirement accounts including one that the U.S. Department of Labor would create in 2025 a “Retirement Savings Lost and Found” database which is now live. If plan sponsors have been unable to contact retirement account holders either due to old email addresses or participants moving, they will report the account for listing on the database. It is estimated that over 1 trillion dollars are left in old retirement accounts. If you are already registered on the new U.S. government’s citizen portal at Login.gov you should have access to it, if not use the link below. So, go find some dough! Department of Labor – Retirement Lost and Found Database Registration
More Lost Money: As long as we are speaking of lost money, what about other forgotten funds? The Missing Money website is a website in partnership with U.S. State Governments and Canadian Provinces in reporting unclaimed property. Be careful when researching lost money, you should never have to pay for a service to recover your own accounts. So, go find some more dough (and maybe we can split it! 😊)! MissingMoney.com | Search for Unclaimed Property
Quick Hits:
- How to exercise for better sleep: NYT
- Here is how much you need to make to join the top 1% in each state: Visual Capitalist
- The Russian people seem to be ready to end the war: BBC News
- One key to losing weight may be to quit drinking your calories and diet drinks: WSJ
- Best underrated and best places to travel to in 2025: Business Insider Readers Digest
Thoughts and a Question to Ponder in the New Year:
“We undervalue health if we have not recently experienced illness.
We undervalue wealth if we have not recently experienced poverty.
We undervalue kindness if we have not recently experienced cruelty.
What might you be undervaluing right now?”
By James Clear
Thank you for reading RSWA Financial Advisor Insights! We welcome feedback, and please forward this to a friend! Be well, take care, and stay safe! Click below for past weekly emails and financial planning/investment articles from the RSWA Blog:
