Planning Your 2025 Finances During an Inflation Dip
Written by
Laura Beck
Edited by
Levi Leidy
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Inflation is cooling to 2.4%, and interest rates are shifting, too. Which means 2025’s financial landscape is going to look different from the past few years. Given these conditions, here’s what a financial expert says about how to use your money best.
The Uncertainty Factor
“One of the interesting – and dangerous — characteristics of the upcoming year is that it is more difficult than ever to make projections about inflation and rates,” Davide Accomazzo, finance professor at Pepperdine Graziadio Business School, warned. While many expect rates to drop, he noted that “the reality on Main Street is more foggy.”
The Political Impact
The economic picture is complicated by the transition to new leadership. “The program of the newly elected administration seems to be clearly inflationary,” Accomazzo pointed out, citing “pro-growth domestic policies and aggressive global trade confrontations.”
Investment Strategies
For cautious investors, Accomazzo suggested locking in current rates. “Intermediate bonds would probably be a good bet,” he noted. “For those with a shorter time horizon and a very low risk tolerance, one-year certificates of deposit are also attractive.”
Stock Market Opportunities
If you’re comfortable with more risk, you might want to think about dividend stocks. As Accomazzo explained, “From a valuation’s perspective, they are not as expensive as your typical tech large-cap and their dividend will appreciate relative to decreasing interest rates.”
Real Estate Considerations
The property market could have great opportunities, too. “Lower rates are usually favorable for real estate investments,” Accomazzo observed, noting this advantage comes from “the high leverage that is generally associated with these kinds of investments and the high distribution that is passed on to the investors.”
Before making any moves, Accomazzo suggests investors be careful, and first determine “their positioning on the inflation spectrum.” Your view on where inflation’s heading should help guide your strategy.
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