From Meme Stocks to Index Funds: A 2025 Investing Guide
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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?
I would be a very rich man if I could do that. But unfortunately, I can't. Bummer. What we can do here is prepare for both the best and the worst and make it so that the daily stock market gyrations don't factor that much into our overall well-being. Our goal today is to make that possible for you. Fair enough.
We want to hear what you think too, listeners. What are you working on in your financial life as we start the new year? Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That's 901-730-NERD. Or email a voice memo to podcast at nerdwallet.com. Sam, last week we talked with fellow nerd and chief economist Elizabeth Renter about financial regrets. Let me ask you to gaze back on last year and talk about what the investing year was like and maybe some regrets or at least lessons we might be able to take away from it.
It was a rip roaring year for a lot of different kinds of investments. The S&P 500 was up over 25% year to date by early December, which is when we're recording this. That's an exceptionally good return compared to the long term average of 10% per year. It was also a really big year for crypto. Bitcoin more than doubled in price last year, and certain tech stocks did even better than that. Nvidia shareholders, for example, almost tripled their money last year. If you spend enough time on social media, you find stories of people who have gotten very rich very quickly from big bets on these things over the last year. If you weren't one of those people, it's easy to get kind of retroactive FOMO about it. Yeah, I feel that.
In truth, if you diversify your investments enough, you're not really missing out. As a personal example, I did not own individual shares of Nvidia at any point last year, but I did indirectly profit from Nvidia's gains because I own S&P 500 index funds, which contain Nvidia. My returns for the year were probably lower than someone who went all in on that single stock.
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