Interest rates and inflation look set to remain high in 2025, which is why you need a robust wealth management strategy. With more unique challenges than ever, it’s important to understand how to navigate “The New Normal” with your wealth, and the strategies you can implement to reach your goals.
This guide will help you do just that, providing five ways to ride out the new financial landscape, protecting and growing your wealth in the process.
1. Manage investment portfolio risk
High-interest savings accounts may be a smart move if you want to grow and protect your cash during times of rising interest rates. These kinds of conditions look set to flourish in 2025 and beyond, with 5% returns becoming relatively normal for many savings accounts.
For those who have a higher risk appetite, North American companies could be a great investment opportunity, particularly after Trump was announced as President. The likes of Microsoft and Apple are always strong performers in the market and Tesla is another stock to get excited about given Elon Musk’s involvement in the election campaign.
It’s not just large businesses that have benefited from Trump becoming President, either, as The Russell 200, home to small American businesses, has seen substantial increases in stock prices alongside the S&P 500.
2. Mitigate IHT
Your pension funds will be subject to inheritance tax as of April 2027 so you’ll need to learn how to mitigate IHT creatively in the years to come. This can come in many forms, with gifts a great way to give thousands to your loved ones without paying IHT.
You can also pass money to a spouse or civil partner without paying IHT and also pass any unused nil-rate band to each other.
3. Consider sustainable investments
Clean energy is thriving at the moment, and experts predict significant sector growth in the next decade. Getting in at the ground up could be a prudent move for your investment portfolio and help you build your wealth as sustainably as your investments.
However, with more and more companies seeking greener deals, there’s an opportunity to invest in “dirty” assets like coal and nuclear energy, too. These may provide incredibly cheap valuations as a result of the emphasis on cleaner energy, but they’re a riskier proposition.
4. Diversify, diversify, diversify
Diversification of your investments is highly advised to mitigate the risks of a volatile, unpredictable world we now live in.
However, you should also consider diversification of the rest of your wealth and ensure that your pensions, savings, and investment types are sufficiently diverse.
This will help you reduce risk and achieve better returns than relying on one or a very small number of options to preserve or grow your wealth.
5. Consider buy-to-lets
Property is a strong investment in the UK as interest rates continue to rise and the borrowing power of buyers becomes stronger.
If you’re already invested in properties, ride the waves of higher rent increases in 2025 and keep hold of your assets for the long-run because house prices are only going in one direction – up.
Conclusion
The world is changing at a rapid pace and unpredictability is part and parcel of wealth management. However, by managing risk, mitigating tax liabilities, and diversifying your wealth generation capabilities, you can thrive in the new world we find ourselves living in.
For information regarding your wealth management, from retirement planning to investment advice, mortgage guidance, and more, email enquiries@cedarhfs.co.uk or call our team on 020 8366 4400.