Quarterly Insights - Q4 2025

2025 reminded investors that markets rarely move in straight lines. Despite political noise, shifting tariff policies and uncertainty around interest rate changes, the year ultimately rewarded discipline and diversification. US markets ended the year in positive territory, with the S&P 500 delivering a 17.9% return. This is the third consecutive year of exceptional gains, driven largely by earnings growth in tech stocks like Nvidia, Microsoft and Alphabet, interest rate cuts by the Federal Reserve Bank and consumer spending. However, 2025 was not a U.S. only rally. Global diversification paid off with developed markets, such as the MSCI EAFE index, returning 31.2% and emerging markets, such as MSCI EM index, returning 33.6%.

As we enter 2026, the environment remains uncertain and dynamic but not unmanageable. The main theme this year is “Prepare, not predict.” While the initial shock of tariff policy is behind us, we prepare our clients to expect volatility as our mid-term elections, a new Fed Chair being nominated, geopolitics and continued technological disruptions will present itself in headlines this year. Volatility is not a new thing and in fact, it’s expected with risk assets. We caution our clients to avoid predicting the market and remain steadfast in their long-term investing goals.

From a longer-term perspective, we are still early in the AI adoption curve. Productivity gains, automation and new business models are reshaping industries at a pace not seen since the early internet era. AI and its impact will likely expand across other industries, such as healthcare, finance, manufacturing and consumer services. Investors should expect both opportunities and volatility as the technology matures. Asset allocation and diversification across countries, sectors and style factors (Growth vs Value) will reduce risk and portfolios should be reviewed regularly.

1. 401k and 403b contribution limits

   $24,500

   Catch-up Contribution (age 50+) - $8,000

   Super Catch-Up available in 2026 – Ages 60-63 can contribute the greater of $10,000 or 150% of the standard catch-up (check with your employer if this is available in your plan)

2. IRA/Roth IRA Contribution Limits

   $7,500

   Catch-up Contribution (age 50+) - $1,000

3. SECURE 2.0 – Roth-Only Catch Up for High Earners

   Applies to workers earning $150k+ in FICA wages

   All catch-up contributions must be Roth contribution rather than pre-tax.

   Higher-income employees may see an increased taxable income due to this change