Kickstarting investment – Our 5-point plan for 2025
The beginning of a new year – when markets tend to take a pause, and the world recovers from a winter break - may often be a good time to look at investment strategies.
What are the factors that might influence the fortunes of the global economy and individual companies? How can you tap into the potential and try to avoid the risks?
At Continuum we are looking at the key factors for the beginning of 2025 – and presenting a 5-point plan to help take advantage of them.
Investing in the UK
The UK stock market is still recovering from the pandemic, Brexit-related uncertainties and the shock of the labour budget.
Chancellor Rachel Reeves's October budget was designed to stimulate growth. It significantly increased taxation and borrowing to fund spending and investment, which led to rising bond yields but stressed the economy.
The measures in the budget may actually have helped reduce economic output, while stimulating inflation – delaying further cuts in bank rate. However, longer term, the outlook could be more optimistic, with growth outpacing the economies of the EU.
Investing in the US
Donald Trump’s return to the White House is already affecting the global economy and markets.
Trump’s likely internal policy measures will probably include extending tax cuts and new business tax giveaways to boost economic growth, support corporate risk, and even reduce concerns about government debt.
The US economy may possibly remain strong and the Nasdaq and S&P 500 indices are likely to attract significant attention as investors seek exposure to leading tech giants and high-growth companies. Equity markets could benefit from increased investor confidence.
Investing in global markets
President-elect Trump also promises a set of policies which will affect the global economy, including tariff increases which could disrupt trade with China and the Eurozone – although it has to be said that these could simply be bargaining tools.
With tariffs on Chinese imports to the US threatened to rise to 40%, there could be a shift in global supply chains, and opportunities for emerging economies, India, Mexico, Korea and Taiwan.
The Eurozone is facing political and economic challenges, with elections in Germany and the collapse of France's government. The German auto industry is especially vulnerable to any trade measures.
It is at last looking possible that ceasefire could be reached in Ukraine, but tensions may be increasing in the Middle East. There could be an impact on oil prices and on the wider range of commodities.
Investing in AI
Artificial intelligence is a new factor in investment and could disrupt many sectors from healthcare and finance to manufacturing and retail. Companies at the forefront of AI development, such as those specialising in machine learning, robotics, and cloud computing, and could potentially outperform traditional businesses.
AI-focused companies and funds in the UK and US markets continue to draw investment, a trend that may persist through 2025.
Our 5-point plan
- Diversification is Crucial: Spreading your investments across markets, sectors, and asset classes reduces risk and enhances potential returns. It could be particularly important in 2025 with global tensions high.
- Focus on Funds: These investment vehicles offer simplicity and ready-made diversification, making them ideal for most investors – along with ample choice to let you follow your instincts.
- Stay Informed: Keep track of economic trends, monetary policies, and technological advancements to make informed decisions. New opportunities can appear rapidly, particularly with AI and green investments.
- Consider Long-Term Potential: Focus on industries and companies with sustainable growth prospects, such as renewable energy, technology, and Ai
- Get expert help: Working with an expert to develop an investment strategy that is appropriate for you will be essential in 2025, and in every other year. To get the expert help you need, call us at Continuum.
Trump to unleash nearly 40% tariffs on China in early 2025, hitting growth: Reuters poll | Reuters
Euro zone economy seen hit early next year by Trump tariffs, say economists: Reuters poll | Reuters
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Europe wants affordable electric vehicles from China. But not at the cost of its own auto industry
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to investment strategy, you should seek independent financial advice before embarking on any course of action.
The value of an investment can go down as well as up and you may get back less than you invested. When investing Capital is at risk.
The Financial Conduct Authority does not regulate taxation advice.