It’s the first Monday of 2025 and I don’t know about you, but I am raring to go!
I don’t know how your 2024 went, but for me, it was a bit hard. Not really tough, but not plain sailing either. But, it finished sparklingly well! I thought, I would go through my year, not out of some kind of self-obsession, I mean, I am not one that likes to dwell on things, but it may resonate with some of you and maybe help.
Also, it may not and for those that will be thinking ‘shut up you whimpering wreck’ I will finish on some exciting things and some investment stats for the finance nerds!
The beginning of 2024 was quite exciting! We had planned to take on a load of extra people in order to serve our lovely clients better, many had just joined or were due to. Who doesn’t love a new person in their office? So much hope, new stories, new jokes and excitement! It really is great. By March, we had got much of the end of tax year work out of the way, and I was off to France skiing. For those that know me, I am not built for skiing. I am built for blocking out sunlight and getting things from high shelves. They’re the key skills. But I’d always wanted to go skiing and so had spent a year learning at the snow dome. Not a whole year, probably 5-6 sessions. So, we went and the first day or two I loved it. The Mountains are great, aren’t they? So beautiful, crisp and clear and I had a lovely time. But then the aches start to build up, my left side was ruined, ankle, knee, hip, shoulder all took a big bashing. When I fall, I fall! So that was good, although not sure I want to do it again. My knee has just about recovered…
Everything was going swimmingly until Summer then family illness comes along, and everything gets a bit stressful. It’s hard that isn’t it? Hospital visits, care homes, tears… constant underlying stress, all the time for months with no let up. I remember that from when I was ill 5 years ago, but as I was the one ill, it’s a bit easier as you feel so rough! But when it’s others and you’re watching it happen in front of you and are fairly helpless to do anything it’s hard!
Also, work was getting difficult with some new things we were trying to implement. And so there was a pincer movement of stress – home and work. Normally one is ok! You then have a place you can go to feel normal and for solace for a while. But when it’s from all angles, it’s a lot tougher!
A lot of this was brought about by me working to hard and juggling too many things and then some home life stuff started going wrong and before you knew it, you’re absolutely knackered.
I needed a break… and in November I went to see my friends, that were experienced in life.
The one on the right, Bob, is 139 years old! And Sid is 12.
I‘d like to say they’d been around the block a few times but he’s so slow he probably hasn’t. But he is wizened. And he told me this:
You are going to have good times when the leaves are juicy but you’re also going to have to eat twigs sometimes.
You are going to feel rough and be ill. Your family and friends are going to go through that too, and you will watch and feel it with them.
You are going to lose people and eventually they will lose you. You need to enjoy them whilst you can.
You need to keep plodding on through the hard rough times to get to the good ones again. Enjoy people whilst you can and remember them with love.
This will happen year after year. Enjoy the juicy leaves!
Then Bob said, “now, Steve, please stop moaning, what about me? I can’t move house as it is attached to my back, I have a terrible scaly skin condition, people flip me over on my back for fun and I can’t get up again. Also, Sid is really annoying. I have spent 120 years with him, and he only has got two mildly interesting anecdotes, but they’ve not been delighting me since October 1921. And I can’t get away as it’s so tiring moving this soddin’ shell…”.
Bob went on a bit actually. So I left, but took his words of wisdom with me. That’s another important point, get the mood hoovers out of your life!
For me, for 2025, I am listening to Bob’s predictions of what will happen, and you should too. I am going to take more free time, see the people that lift me up and avoid the Sid’s!
Predictions
Most successful pundits are selected for being opinionated, because it's interesting, and the penalties for incorrect predictions are negligible. You can make predictions, and a year later people won't remember them.
Daniel Kahneman
Unfortunately, Daniel Kahneman died in 2024. He was a world-renowned psychologist on human behaviour and the biases we all carry. He seems to have been very popular with the people that worked with him and left a fine body of work that have changed the lives of many and maybe the world? That’s a life well lived.
Anyway, if you’re not picked to make predictions due to centuries of experience like Bob the Tortoise, then it’s because you’re opinionated and vocal. These are the most annoying people aren’t they? Gobbing off all the time. We avoid them in life but not in print or video! I vote, ignore them all the time.
The majority of financial newsletters will be looking at predictions of what will happen in the future in a January newsletter. It’s fun isn’t it! But no one knows on account that it is the future! They are making guesses on what they ‘think’ might happen. It’s a guess!
Let’s take a look at some predictions that were in the ‘Business Insider’ for 2024 as published on 18th December 2023.
The S&P 500 (US stock market) started 2024 at about 4700.
Investment Company / Researcher | S&P 500 end 2024 prediction |
|---|---|
BCA Research | 3300 |
JPMorgan | 4200 |
Morgan Stanley | 4500 |
Stifel | 4650 |
BMO | 5100 |
Bank of America | 5000 |
Royal Bank of Canada | 5000 |
Goldman Sachs | 5100 |
Deutsche Bank | 5100 |
The S&P 500 finished around 5900!!
That’s 15% higher than the best ‘prediction’ and 78% higher than the worst. It finished with a 23% rise excluding any dividend payments.
The S&P 500 has average annual returns of 10% a year, but you need to be invested all the time to get those. We espouse a global diversification of investments, we are only using S&P 500 as an example of one stock market.
Never make predictions, especially about the future.
Casey Stengel
Plenty of clients mentioned the ‘impending recession’ to us, especially in the first 3-6 months of 2023. They held their position though, with our guidance. And they are better off for it and even more so after 2024. We are ‘planning’ for recessions and stock market downturns. They happen! They are part of your plan. We are not afraid of them as we know there will be an uptick. I just don’t know when. It’s not skill… it’s discipline. We care about getting the average return of the markets and to do this we need to be invested all the time.
This is one of the ‘hidden’ benefits, and probably one of the most important, of having a great financial planner by your side. We stick ear plugs in one ear’ole, and whisper sweet nothings of being sensible and following the evidence in the other. We, stop you making MASSIVE mistakes. Mistakes you can never recover from. Plus, sweet nothings make you feel kinda frisky…
Just as Kahneman states about pundits, when they give a prediction, they just care about being interesting to get on the telly/podcast or in an article. They care little about the consequences of anyone following that prediction and taking action because of it.
I care.
I am responsible for your money and therefore your life’s happiness. I’ll stand by my decisions and they will be based on evidence. They will most likely bring better outcomes and make you wealthier. The fortunes of everyone at Lucent financial planning are also linked to it. We also invest our money in the same strategies as we advise you to.
This is massive responsibility which means our decisions are well thought through and not throw away lines to seem interesting.
If you follow the pundits’ predictions, you’ll most likely end up poorer. But, you’ll forgive yourself. Or overly justify why it was the right decision even though you are considerably poorer, when it goes wrong.
You will be worse off.
I will be worse off.
We all will.
All due to following predictions from people with no skin in your game. Our good fortunes lie in yours, there is no conflict of interest. You do better, we do better. We have skin in the game. But more than that, we don’t want you to be in a position where our advice caused you to end up on the game! Imagine the guilt…
Performance of our investment portfolios
Power Factor
Amount in Equity | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
60% | 11.61% | -8.07% | 8.59% | 9.22% |
80% | 15.11% | -7.17% | 9.50% | 11.93% |
100% | 17.98% | -6.48% | 10.47% | 14.21% |
Tracker Portfolio
Amount in Equity | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
60% | 11.98% | -10.00% | 11.79% | 12.57% |
80% | 17.43% | -9.10% | 13.79% | 16% |
100% | 20.67% | -7.90% | 15.55% | 19.02% |
Green Portfolio
Amount in Equity | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
60% | 11.00% | -11.08% | 9.95% | 9.28% |
80% | 14.69% | -10.93% | 11.42% | 11.80% |
100% | 18.63% | -10.73% | 12.75% | 14.10% |
The above represent quite a good snapshot that on average, stock markets increase 75% of the time. 3 out of 4. They go down in one – 25% of the time. As in the above. People worry about the 1 in 4 chance of a decline and miss the 3 in 4 chance of an increase. It doesn’t make sense! Look!
Tracker portfolios have done better due to higher allocation to globally massive companies, eg Apple, Google, Nvidia etc which have seen boosts in valuation due to potential effects of AI technology.
Power factor portfolios – these have a higher allocation to small companies and emerging markets which has meant not performed as well as tracker portfolios. These ‘factors’ both give better returns in the long term, hence why these portfolios are our preferred ones.
What is most important?
The returns are irrelevant! However, I have shown them as I am always asked. But why are they irrelevant, Steve, that’s my money?!
Because you are invested in a globally diversified portfolio that reflects the world economy at a super low cost. All the evidence shows this has been a persistent and consistent winning formula if you stay in it. In such a portfolio, permanent loss is impossible if you stay in it and don’t sell out on a whim. People go to work to improve their lives, no matter what is going on. They go to work for companies. If you own the companies, which as a shareholder you will, you will benefit from their productivity.
Prediction for 2025 stock markets
Despite everything I said, you’re still clamouring for a prediction! I predict that in 3-5 years times the performance of 2025 will have melted away into the ‘average’ which will continue to be way better than bank accounts!
But if there is a crash along the way, all the brainy 🧠 people that read this newsletter will realise it’s a great time to buy more shares and will invest more heavily.
About us
We have heavily invested in our team in 2024 and we now have 4 financial advisers and 10 supporters that are ready to look after you, whatever happens.
We have done this as we want to ensure you get the best and most timely service possible. Also, as you know, we want to do things with a flourish, so you have a great time!
We have had a massive uptick in the amount of referrals we are receiving from our lovely clients. It’s clear you are worried about friends and family and want them to receive the great advice you do. If we grow, we can help them and also continue to give peace of mind to our clients that are concerned about their loved ones.
What is our flourish?
It’s the help of our lovely psychologist, Jessica Schlupp Taylor of My Exceptional, whenever you need your head to be made healthy again.
It’s one of the 15+ separate in-person events we have put on. Whether that be walks, drinks, parties or educational events.
It’s Ubuntu! Our online community where you can interact, see information on Investments etc. talk about your hobbies, watch live steams or more recently holiday adventures from Lisa Savage.
What this means for you:
We are ready to help you more than ever!
This is your one life, what do you want to do? Let us help you do it!
To help your friends and family that may be:
Approaching retirement
Worried about money – have they got enough?
Going through a separation / impending divorce
Have suffered the loss of a loved one they were financial entwined with
Have an established business and want to understand how to make that work for them.
Want to know if they ‘have enough’, ‘how to get enough’, ‘have more than enough and want to look at helping others’.
End of tax year… it’s the final chance to:
Make the massive income tax savings that pension contributions allow.
Make ISA contributions so that your money can grow in a tax efficient environment.
Benefit from 30% income tax refunds in VCTs.
Sell assets with capital gains tax and invest tax efficiently, and use your £3,000 capital gains tax exemption.
New Podcast – Released on 2nd January 2025
After much fanfare over 2024, we have finally launched! Please look us up on Spotify, Apple Podcasts of where ever you get them and have a listen!
We would be really grateful if you left us a 5 Start review but more importantly, if you can write something too, that would be great! This is important as it brings more people to discover the podcast and give it a listen!
Here is our first written review, by J94H@
"Loved this podcast, great blend of humour, financial planning wisdom and psychology that aims to make you worry less and feel more in balance with your finances. Full if little anecdotes and humour that make it super easy to listen to, the hosts are engaging and genuine and clearly passionate about making the world a more mindful happier place."
We want you! Call for guests to interview
People that have seen Jess…
We would love to hear from you and for you to tell your story on the show. Not what caused your distress - that is personal to you - but how Jess went about helping you, your experience during and after, and the positive effects this has.
If you’re a happy soul and super chipper…
We still want to hear from you! Telling stories of happiness spreads it, I think, so we would also like to hear from you if you have a great story to tell. This might be about overcoming your fears and being successful, or how you retain a positive outlook.
This article does not constitute financial advice. We recommend that you speak to a qualified financial adviser for advice tailored to your individual circumstances and goals. Financial markets may go up or down, and you are not guaranteed a return on your investment. Past performance is not necessarily a guide to future performance.
About the author
Steve Rowe is the CEO and Founder of Lucent Financial Planning, an award-winning provider of financial services to individuals and business owners in the Midlands region. We want to be the Financial Advisers that change your life, not just the financial adviser that changes your ISA.
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