How To Invest In The Stock Market In 2025: The Best Strategies & What I’m Doing to Grow My Wealth!

Matt | Personal Finance

How To Invest In 2025: The Best Strategies & What I’m Doing to Grow My Wealth! #indexfunds #goldinvestment #stocktips  Are you wondering if now’s the right time to invest in 2025? In this video, I’ll break down everything you need to know about the stock market, ETFs, and alternative assets like gold and cryptocurrency. Whether you’re new to investing or looking for ways to grow your wealth, this beginner-friendly guide covers it all.   I'll share my personal investment strategy, including the dollar-cost averaging method, and discuss why diversification is key to long-term success. I’ll also cover the impacts of tariffs and what stocks to consider for a secure investment future. Let’s talk about the best investments in 2025, including stocks, index funds, and treasury notes. Don’t miss out - let’s make sure you’re on track to grow your financial future this year!  #investing #stockmarket #stocks #shares #s&p500 #beststocks #stockpicks #personalfinance #moneytips #howtobeamillionaire

Transcript

00:00Over the last couple of months, the world of investing and stock markets has been on a bit

00:04of a wild ride. And after Trump announced sweeping tariffs on the 2nd of April this year,

00:10we've seen large declines in the stock markets in the US, Europe and Asia. Since then,

00:15the stock markets have staged a recovery, but the outlook for 2025 remains uncertain

00:21and the financial markets are expected to continue to be volatile, at least in the short term.

00:26In this video, I'm going to cover how to navigate and invest in 2025, looking at when to invest,

00:33what to invest in and the key principles that I use when investing.

00:37So let's start with what's happened in the financial markets so far this year.

00:41In the US for the S&P 500, we've seen a decline by 18.9% from the high point on the 19th of February

00:50and then a recovery back to around the level just before Trump announced tariffs on the 2nd of April.

00:56And we've seen similar declines and bounces back in the major stock markets in Europe and Asia too.

01:02What the S&P 500 experienced is called a market correction, which is a drop of between 10 and 20%.

01:09And these are actually very common. It's happened in 47% of years since 1980.

01:15Every so often, we have a big drop, a bear market, which is a decline of 20% or more.

01:20And since 1929, we've had 26 bear markets.

01:25Although Trump's tariffs may have been a shock, we've seen much larger stock market crashes in the past.

01:31We had a 49% decline from the dot-com bubble bursting between 2000 and 2002,

01:38a 57% decline from the 2008 global financial crisis,

01:43and a 34% decline from the COVID pandemic.

01:46The reality is that if you're planning to invest for the next 30 years until you retire or as you continue into retirement,

01:54then based on history, you're likely to experience another seven bear markets.

01:58We need to be comfortable when investing that market corrections and even bear markets and crashes are common

02:04and all part of the life cycle of the stock market.

02:07Even within a single year, we can see big swings.

02:11For example, last year, we had an 8% decline on the S&P 500, but we finished the year with a 23% gain.

02:19So given the market volatility, is now the right time to invest?

02:22Well, financial markets like certainty.

02:25And right now, with tariffs being announced, paused, removed for certain goods and basically changing regularly,

02:31it's causing confusion and we're likely to see markets remain volatile, at least in the short term,

02:38going up with daily good news stories and going back down again with bad news stories.

02:42Some people will look to buy the dip after bad news and then sell again after good news

02:47and go through this cycle over the coming months and across the year.

02:51But it's very hard to time the market and come out on top.

02:55And there are so many different views on what's going to happen next.

02:58But no one truly knows what the stock market will do.

03:02There have been some positive developments over the last couple of weeks,

03:05with the US and UK agreeing terms to a trade deal

03:08and the US and China agreeing to reduce tariffs during the pause period.

03:12But no deal has been signed yet.

03:14And we've still got some key moments to come in 2025,

03:18which could swing the stock markets one way or the other.

03:21In July, the tariff pause will come to an end for the majority of markets

03:25and the same for China in August.

03:27And we'll see the outcome of whether the major trading markets

03:30have agreed deals with the US or not.

03:33There's some key data points that we need to see.

03:35For example, what happens to GDP figures,

03:38i.e. are the economies of the US, Europe and Asia growing

03:42or are they heading into a recession?

03:44Is inflation increasing or decreasing?

03:47And are the central banks such as the Federal Reserve or the Bank of England

03:51making decisions to cut interest rates?

03:54And then ultimately how all of this impacts corporate company earnings.

03:58So as you can see, there are lots of different factors

04:01which could create either good or bad news stories

04:04and will impact the direction that the stock market goes in.

04:08That's why it's so hard to predict in the short term.

04:10But with investing, you need to step back.

04:13Despite all of the market dips and crashes that we've seen,

04:16the S&P 500 has still delivered an average annual rate of return of 10.2% since 1957.

04:24With all the noise and uncertainty happening right now,

04:27instead of sitting on the sidelines trying to time the market,

04:31it's better to keep consistently investing to capture the market returns.

04:35That way you average out whether the market falls again later in 2025

04:39or whether it goes up.

04:41Data also shows us this between 1994 and 2023.

04:46Although the S&P 500 averaged a rate of return of over 10%,

04:50the average investor buying an S&P 500 index fund only averaged 8% return.

04:57So that means if you had invested $100,000 at the start of the period,

05:01you'd have ended up with over 1 million.

05:03But that's still $800,000 less than if you had stayed fully invested for the full period.

05:09The reason the average investor achieve less returns is because they react to news

05:14and go in and out of the market.

05:16And this tends to be a bad approach when capturing the long-term gains

05:20of a stock market going up over time.

05:22Vanguard did a study that found the chances of you underperforming the stock market returns

05:27if you switch to cash for three months is 61%.

05:30And then for six months is 72%.

05:33And for 12 months is 79%.

05:36Vanguard also found that the best and worst trading days

05:39happen close together.

05:41And that 13 of the best 20 trading days occurred in years with negative returns.

05:46So if you're out of the stock market, sitting on the sidelines in cash,

05:50then you're going to miss out on these gains.

05:52So if consistently investing is the best way to capture market returns

05:56for the average person who invests,

05:59the next thing to talk about is what to invest in.

06:01There are loads of different options,

06:03whether you're buying individual shares, index funds, or ETFs.

06:07If you're in the UK, the tax efficient way to invest is via a stocks and shares ISA

06:12or a self-invested pension, a SIP.

06:15And if you're in the US, you can also do this via your 401k or a Roth IRA.

06:20When considering what to buy,

06:22I normally view buying individual company stocks

06:24with a shorter time horizon to manage risk.

06:27Tech stocks like NVIDIA and Palantir have seen enormous growth recently,

06:32but history has shown us that doesn't always last.

06:35Cisco is a very relevant example of this.

06:38Between January 1995 and March 2000,

06:42Cisco's share price went from $2 to $79,

06:45making it the largest company on the planet at the time.

06:49But when the dot-com bubble burst,

06:51Cisco's share price fell by 89%.

06:53When buying individual company shares,

06:56you can get huge reward,

06:57but you also take on higher risk.

06:59What if a competitor comes along and offers more value to customers

07:03so they switch to them,

07:05or the management team commits fraud like in the example of Enron?

07:08If we look at the top 10 companies on the S&P 500 back in 2000,

07:13out of all of the companies,

07:15only Microsoft were also in the top 10 in 2024.

07:19So knowing which company is the right one

07:21and is going to grow over the next 5, 10, 20 years

07:25is a really hard thing to do.

07:26Investing in index funds like the S&P 500,

07:30the FTSE 100,

07:31or MSCI World Funds enables you to do this,

07:34as although companies change over time,

07:37the bigger stocks are part of the index funds.

07:40So by buying an index fund,

07:41you're buying a diverse mix of companies,

07:44which helps to dilute your risk.

07:45There are a few key principles that I use

07:48to decide what to invest in,

07:50how to invest,

07:51and when to invest.

07:52The first is to set clear investment objectives,

07:55as ultimately what's the right investment for you

07:58really depends on your investment time horizon.

08:01I invest using both a stocks and shares ISA

08:03and also a self-invested pension,

08:06and my objectives and appetite for risk

08:08are different for these two accounts,

08:10and therefore my approach is also different.

08:12For my self-invested pension,

08:14I have a long-term objective of around 25 to 30 years,

08:18whereas for my stocks and shares ISA,

08:20I have a mid to long-term objective,

08:22as I want to be able to use some of the gains

08:24from my investments to cover large expenses,

08:26which I can enjoy now,

08:28for example, moving home and paying for a wedding.

08:31So the way that I've approached it

08:32is that I focus on having index funds for my pension,

08:36and then I have a mix of individual company shares

08:38and index funds for my stocks and shares ISA.

08:41The second principle that I use

08:43is to stick to a consistent investment strategy.

08:46I pound cost average,

08:48or the other term for this is dollar cost averaging.

08:51If you're not familiar with the concept,

08:53it's simply setting a fixed budget

08:55that you invest every week, month, or quarter,

08:58and you consistently invest that money

09:00into stocks that you previously picked,

09:03no matter what the price is

09:04or the stage in the market cycle.

09:06I don't try to time the market,

09:08buying and selling,

09:09and going in and out of the market all the time,

09:11and I try to avoid the media frenzy and noise

09:14which can artificially pump stock prices.

09:17The third principle I use

09:18is to diversify my investments.

09:21Personally, in 2025,

09:23I've weighted more of my investments

09:25to global index funds

09:26so I'm not overly exposed to the US financial markets.

09:30A global index fund allows me to spread my money

09:33across companies in different sectors

09:35and different countries.

09:37So instead of buying an index fund,

09:38just focus, for example, on tech stocks

09:41or just focused on the US market,

09:43a global index fund is more diversified

09:46and shields from things like a downturn

09:48in a particular sector

09:50or a recession hitting a particular market.

09:52I fully understand that it does reduce the extreme ends

09:55on investment returns,

09:56so I probably won't wake up

09:58and my investment portfolio has increased by 100%,

10:01but it also means it's highly unlikely

10:03that I wake up and everything is gone.

10:05There are lots of different ways

10:07that you can diversify your investment portfolio,

10:10for example, in government bonds,

10:12in funds in different geographies or sectors,

10:15or investing in alternative assets

10:17and commodities such as gold.

10:19I personally have the majority of my portfolio

10:21in lower risk investment funds

10:24with steady long-term growth as the goal,

10:26and then I have 15 to 20% of my portfolio

10:29in higher risk assets,

10:31which has the potential for much larger growth,

10:33but also the risk of larger downsides too.

10:36The fourth principle is to double down in moments

10:39of extreme fear in the stock markets.

10:41Although my overall strategy is to pound cost average,

10:45when we experience market dips and bear markets,

10:48I try to double down and increase slightly

10:50the amount I invest each week during those moments

10:54where there's lots of fear and uncertainty

10:56in the financial markets.

10:57I'm still sticking to the principle

10:59of consistently investing each week,

11:01but where financially possible,

11:03I up the budget I set

11:05to take advantage of large market downturns.

11:08The legendary investor Warren Buffett famously stated

11:11that investors should be fearful when others are greedy

11:14and greedy when others are fearful.

11:17And what he means by that is during market downturns,

11:20when stock prices drop due to widespread fear,

11:23it can be a great opportunity to invest

11:25in quality companies at discounted prices.

11:29The fifth and final principle

11:30is to watch out for fees involved in investing

11:33as it can erode your gains over time.

11:35If you're investing in funds,

11:36then research the fund management fees before investing,

11:40as some of them can be quite high

11:41and they'll eat away at your investment returns.

11:44There are plenty of low cost funds to choose from,

11:47which track the major stock markets.

11:49And these are the ones that I tend to go with.

11:52The other thing to watch out for

11:53is the currency that you buy your investments in,

11:56particularly if you're doing short to midterm investing,

11:58as currency values can be very volatile.

12:01For example, the dollar value recently decreased

12:03by 3.7% against the pound

12:06from the beginning of January this year

12:08to the beginning of May.

12:10So if you purchase stocks or a fund in dollars

12:12at the beginning of January,

12:14and then you try to sell back into pounds

12:16at the beginning of May,

12:17then even if the stock price hadn't changed,

12:20you'd get less money back.

12:21I think this is less of a worry

12:23if you're investing over the long term,

12:25as currency values fluctuate all the time.

12:27The key thing here is to understand any FX changes

12:31in your investments before selling them.

12:33And it goes without saying,

12:34make sure you research your investments

12:36so you understand what you're getting

12:38before buying anything.

12:40This video is not investment advice,

12:42it's for educational purposes

12:43to try to help you in your investment journey.

12:46So that wraps up how to navigate investing in 2025

12:49and the five key principles that I use when investing.

12:53If you found the video helpful,

12:54please do subscribe to my channel,

12:57give the video a like,

12:58and I'll see you on the next video.

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