NerdWallet's Smart Money Podcast
From Meme Stocks to Index Funds: A 2025 Investing Guide
Thu, 09 Jan 2025
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode: Learn how to balance risk and reward in your investments, rebalance your portfolio, and avoid common investing pitfalls. How can you manage risk and reward when investing? What are the best strategies for rebalancing your portfolio for 2025? Host Sean Pyles and Investing Nerd Sam Taube discuss how to set yourself up for long-term financial success by evaluating your investment strategy and taking actionable steps to achieve your goals. They begin with a discussion of investment basics, including tips and tricks on building a balanced portfolio, understanding stock market trends, and preparing for potential risks and rewards. Then, Sean and Sam discuss strategies for rebalancing your portfolio to align with your financial goals and risk tolerance. They cover how to identify when it’s time to rebalance, the benefits of diversifying investments, and common investment pitfalls to avoid. The episode also dives into avoiding scams and red flags in the investing world, so you can make the smartest decisions to set yourself up for long-term growth. NerdWallet’s roundup of the best IRA accounts: https://www.nerdwallet.com/best/investing/ira-accounts Best brokers for beginner investors: https://www.nerdwallet.com/best/investing/online-brokers-for-beginners Best brokers for options trading: https://www.nerdwallet.com/best/investing/options-trading-brokers In their conversation, the Nerds discuss: how to invest, risk and reward in investing, rebalancing portfolio strategies, building a balanced portfolio, stock market trends, long-term financial success, avoiding investment scams, index fund investing, S&P 500 index fund, how to diversify investments, financial goals for investing, portfolio risk tolerance, investment basics, retirement account strategies, financial planning for 2025, clean energy stocks, tech stocks, financial services sector, meme stock trends, solar energy investments, tech regulation, banking regulations, index fund advantages, tax credit changes, and smart investing strategies. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend.
Chapter 1: How should I assess my investments for the new year?
Well, here we are. It's a new year. Time to take stock of how things are going with our investments. Are you thinking maybe it's time to take a bit more risk? Or are you looking at your portfolio and wondering if it's time to pull back? We've got some ways for you to consider all the options for investing in your financial future.
I do believe that people should generally build a safe and boring portfolio of index funds first, and then they can speculate with whatever money they've got left over. And I'm practicing what I preach there.
Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Sam Taub. It's 2025. Do you know how your stocks are doing? Are you doing that classic New Year exercise of checking the batteries in your fire detector and rebalancing your portfolio? Will you be investing some time in your investing strategy? It's a great time of year to do that.
And Sam, today we've got a whole slew of tips for getting started. Yes, we do.
And let's say upfront what we always say at the end of the show, which is that we are not investment advisors. And this nerdy investment info is for general educational purposes only. It may not apply to your specific circumstances. That said, a lot of us touch the investing world in some way, whether it's through retirement accounts or college savings plans or maybe a health savings account.
The latest Federal Reserve Survey of Consumer Finances showed that some 58% of U.S. households had some sort of stock ownership as part of their finances. That was the highest number on record. The survey measured the years 2019 to 2022, so included the COVID era and the meme stock era for whatever that's worth.
For some people, that era was worth a lot. For others, not so much. That Fed survey is also borne out by another survey, this time the Economy and Personal Finance Survey from Gallup. That one found that around 62% of American adults invest in stocks. That's everything from what we already mentioned, so savings for retirement or college to people holding individual stock portfolios.
If you're interested in investing, well, you have a lot of company.
Sam, how about you tell us exactly what's going to happen in the stock market this year so we can all make a lot of money?
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Chapter 2: What are the benefits of a safe and boring portfolio?
A lot of the big banks like Goldman Sachs and Bank of America also outperformed the market by quite a bit. And then, as we mentioned, crypto had a really great year.
That's right. My Dogecoin shot up quite a bit after the election. As of this recording, it's at a whopping 38 cents. And it was often much, much lower, maybe closer to one cent at different points in the year. I'm really proud of the performance of my joke cryptocurrency. Congrats. So Sam, how about some loser industries in 2024?
The energy sector was kind of a laggard last year. It had a positive return, but less than the S&P 500. The performance of oil and gas stocks, generally speaking, is very dependent on the market price of oil. And that has actually decreased slightly over the course of 2024.
You might think that poor performance in the fossil fuel industry would mean that clean energy has done well, but that has not been the case. Clean energy, particularly solar, has actually had a really rough year. The Invesco Solar ETF, which is sometimes used as a benchmark for the solar industry, was down almost 30% last year, despite the strong performance of so many other stocks.
What, if anything, do these poor performers tell us about what might be coming for the markets in 2025?
A lot of these trends, both the winners and some of the losers, are likely related to the election. There's a theory that the stock market was kind of anticipating that President-elect Donald Trump would win. Many of these trends may reflect expected changes in government policy or regulations that have kind of been priced into the market over the last year.
For example, the Biden administration has made some moves toward trying to break up some of the big monopolistic tech companies. Shareholders in that industry may be betting that those antitrust actions are just going to go away under Trump.
Another thing that's really important for the tech industry is there's a perception that we may be getting a looser regulatory approach to AI under Trump than we might have gotten under Vice President Kamala Harris. Bank shareholders may also be anticipating looser regulations.
In his first term, Trump loosened some of the banking regulations that were put in place after the 2008 financial crisis, and there's a chance he may do more of that in his second term. It's a similar deal with crypto. Markets may be just betting on less regulation in that space.
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