Start Strong: Our Top 10 Tips for Financial Success in 2025

Ensure you have enough cash on hand to cover living expenses for one to five years, fund large capital expenditures and take advantage of opportunistic investments. With the possibility of interest rate reductions in 2025, you may want to lock in yields that match your time horizon and liquidity needs. Excess funds can then be invested to help you achieve your longer-term goals.

Consider establishing a portfolio line of credit to give you ready access to cash, so you don’t have to sell investments at an inopportune time or realize capital gains unnecessarily. If you can deduct the interest paid on a loan, borrowing may even enhance your balance sheet’s tax efficiency.

To safeguard any gains from the past year and defend against increased macroeconomic volatility, prepare to increase the resilience of your portfolio. While you strategically reassess your positioning, we suggest you focus on:

• Producing more income – Increase the share of your income-driven total return by generating additional yield. Core fixed income is a good place to look, and investment-grade corporate bonds still yield more than 5%. ^{Credit spreads are tight but supported by low downgrade risk and high credit quality. Also consider preferred stock or equities that pay relatively robust dividends.}
• Defending against inflation – Real estate, commodities and infrastructure have historically risen and fallen differently from stocks and bonds (exhibiting low correlations), thereby providing even more portfolio diversification. Hedge funds can also be useful: Depending on the strategy chosen, they can capture more than 80% of the upside of a traditional 60/40 stock-bond portfolio with about half the volatility.
• Considering other investment choices – Options can provide some downside protection while preserving some upside potential. Also, some ETFs use active option strategies to generate extra income or reduce volatility compared to outright equity exposure. Structured notes ^{may also achieve similar outcomes with greater specificity.}

While tax law changes are possible in 2025, any legislation could take months to pass and may not become effective until 2026. As you await news about future proposals, take action now to maximize your portfolio’s tax efficiency:

• First, make sure you have assets in the right types of accounts. Generally, asset classes that generate ordinary income, have high turnover and offer high returns are best held in tax-advantaged accounts, such as IRAs.
• Next, for taxable accounts, consider implementing an investment strategy that either harvests tax losses throughout the year or focuses on generating returns (such as long-term capital gains and qualified dividends) that can be taxed at preferential rates.
• Finally, if you plan to withdraw cash from your portfolio, determine the most advantageous order for taking funds from your accounts. Generally, if you’re in the top tax bracket, you should pull first from taxable accounts, then from tax-deferred accounts and finally from those that are tax free.

If you are an executive, consider how to optimize your stock options, restricted stock units (RSUs) and deferred compensation. Stay informed about any new awards granted, those that have vested and any nearing expiration to plan for tax implications and how your concentration fits into your overall balance sheet.

With the lifetime gift tax exclusion set to decrease significantly in 2026, now is a good time to consider making substantial gifts to family members. While tax laws could change – and today’s historically elevated amount could remain in force – we still suggest assessing your capacity and gifting now, if you wish to do so.

For 2025, individuals can give up to $13.99 million free of transfer taxes (or $27.98 million for a married couple). If your lifetime exclusion was exhausted as of 2024, you can gift an additional $380,000 tax free this year (or $760,000 for married couples).

Use the new year to reflect on your philanthropic goals and plan your charitable contributions thoughtfully. Donor-advised funds (DAFs) offer a strategic way to pre-fund years of giving, providing an immediate tax deduction while allowing you time to select the organizations to support. Consider donating long-term appreciated securities directly to a DAF – by doing so, you can eliminate capital gains taxes and maximize the impact of your contributions.

If you are required to take IRA distributions in 2025, you can donate $108,000 directly to a charity from your IRA, up from $105,000 in 2024. But keep in mind: DAFs and private foundations are not permissible beneficiaries of these qualified charitable distributions, and this may not be the most tax-efficient way to give.

Family meetings are an effective way to build family cohesiveness, share individual and family values, and learn from each other. Meeting with intentionality is key. These gatherings provide an opportunity to deepen relationships across generations and build the skills and knowledge needed for your family to manage wealth responsibly and collaboratively. Regular discussions can help align individual members’ visions with the family’s overarching objectives, fostering a sense of unity and purpose.

As you start to use artificial intelligence (AI) apps and tools, it’s important to understand how your data and privacy might be at risk. Avoid entering specific details or private information into AI tools to prevent your data from being used to train large-language models. Use a dedicated email account for your AI tool subscriptions and send messages via a virtual private network (VPN).

On all accounts, adopt strong, unique, complex passwords and enable two-factor authentication. Remain vigilant against phishing attempts and other scams, verify the identity of anyone who contacts you, avoid clicking on suspicious links in emails or texts and don’t use your phone to scan unknown QR codes.

Your J.P. Morgan advisor is here to help you and your family prepare for the future. Together, we can help you navigate 2025’s potential opportunities and changes, ensuring that your current financial strategies align with your long-term goals.