Dyer & Co Newsletter - January 2025

Image generated by Microsoft Co-Pilot. And it was just too goofy not to use. Is that broccoli?

Happy New Year! I hope you've adjusted to whatever resolutions you may have made (or already broken). While you're on that exercise bike for some light cardio (or searching for the gym's cancellation terms), let me share some thoughts as we kick off 2025.

Speaking of 2025, it's the Year of the Snake in the Chinese zodiac. If you were born in 1941, 1953, 1965, 1977, 1989, or 2001, you're in impressive company: Bob Dylan, Taylor Swift, and Pierce Brosnan are all Snake-year babies. The Snake is associated with wisdom and good business sense – something we could all use a bit more of as we tackle our financial goals for the year ahead.

The Year That Was, The Year That Will Be

In 2024 the U.S. economy showed resilience with solid growth supported by consumer spending and business investment. U.S. GDP grew 2.5% for the year. After dramatically raising rates to attack inflation, the Federal Reserve was able to cut rates by 1% as hopes for a soft landing continue. The U.S. was a net petroleum exporter as oil production neared record highs. Housing affordability continued to be constrained by high real estate prices and stubbornly high mortgage rates.

The S&P was up a whopping 25% for the year--with five companies (Apple, NVIDIA, Microsoft, Amazon and Meta) contributing over 25% of that performance.

Market timers take note: The S&P 500's annualized return from 2005-2024 was 10.4%. An investor who missed the 10 strongest days over that period experienced a 6.1% return.

January has offered mixed economic results. The manufacturing and services sector activity has slowed globally. Domestically the labor market remains strong with businesses hiring at the fastest pace in two in a half years, which projects optimism about future economic conditions with the prospect of deregulation under the new administration.

The S&P 500 is up 2.75% on the month in spite of China's DeepSeek AI shockwave that sent stocks like NVIDIA tumbling this week.

Sources: Schwab Q1 2025 Quarterly Chartbook, Wall Street Journal

Tax Season Cometh (Ready or Not)

According to the IRS, the average American spends 13 hours and $290 to file taxes. That's roughly the equivalent of watching the entire Lord of the Rings trilogy (extended editions) while burning through a fancy dinner for two. At least LOTR provides a resolution to the epic journey. With taxes... well, there's always next year.

Here's your January tax prep checklist:

Create a dedicated folder (physical or digital) for incoming tax documents
Watch for 1099s from your investment accounts (they have until February 15th to arrive)
Round up those charitable giving receipts (including Qualified Charitable Distributions if you gave from your IRA)
Collect documentation for any major life events in 2024 (home purchase, marriage, new child)
Start gathering business expenses if you're self-employed
Check if you need to document any work-from-home expenses
Look for your property tax statements and mortgage interest forms
Pro tip: Take photos of paper documents as they arrive. Between hungry dogs, coffee spills, and the mysterious black hole in your desk drawer, a backup never hurts.

New Year, New Financial You

January isn't just about diet resets and gym memberships. It's an ideal time to review your financial foundation. Here's what deserves a fresh look:

Retirement Contributions: The new year means new limits. Are you set up to max out your 401(k), 403(b) or IRA? Remember those catch-up provisions if you're over 50.
Health Savings Account (HSA): If you have a high-deductible health plan, are you taking full advantage of this triple-tax-advantaged account?
Estate Planning: When was the last time you reviewed your beneficiary designations? Are your important documents and passwords accessible to your loved ones? (And do you still know what that weird key goes to?)
Insurance Coverage: Has anything changed that might affect your life, disability, or property insurance needs?
Emergency Fund: How did your safety net fare in 2024? Maybe it's time to rebuild or expand it.

Current Read: What's Our Problem?

I've been making my way through Tim Urban's "What's Our Problem?" His familiar stick figures and humor (if you know his Wait But Why blog) explore how we oscillate between our primitive mind's knee-jerk reactions and our higher mind's capacity for reason and nuance. The parallels to financial behavior are striking: our primitive mind often drives us to react to market swings with fear or greed, while our higher mind knows the value of patience and long-term thinking. Urban's framework helps explain why it's so hard (yet so important) to stay focused on our bigger goals – like leaving a legacy or helping others – rather than getting caught up in the market's daily drama. He does a masterful job explaining this peculiar and unsettling moment of division in our country along with ideas for a path forward.

Sixty Seconds of Fame

Super Bowl spots are going for $8 million this year. That's about $133,333 per second of airtime. Quick - name your favorite Super Bowl ad from last year! Drawing a blank? Don't worry, you're not alone. While companies spend millions for these fleeting (and often forgettable) moments of glory, let's play a quick game of "What Else Could That Buy?"

For the cost of one minute of Super Bowl fame, you could:

Fund a complete college education for 80 students
Purchase 20 median-priced homes in Charlotte
Provide 160 years of $50,000 annual retirement income
Help 800 young professionals max out their Roth IRAs
Make 1.3 million pounds of guacamole. (But then you'd probably need to buy about 660,000 pounds of tortilla chips, so be sure set aside another $3MM)

But seriously: Invest that $8 million at a modest 6% return? In 25 years you'd have about $34 million. That's a lot of future Super Bowl ads! Or, you know, something more meaningful – like funding education for multiple generations or supporting your favorite causes for decades to come.

Anyway, I hope your team wins. May your guac be just a little spicy. And may the ads be kind of funny.

We hope you enjoyed the January edition of the Dyer & Co. newsletter! We are here to support your journey towards financial wellness and achieving your goals in 2025 and beyond. Don't hesitate to reach out with any questions or concerns.

Thank you for reading. If you liked this content, please share with a friend. You can always reach us by replying to this email or at 704-323-6872.

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