My 10 Best Financial Predictions for 2025

Let’s pretend for a second that my crystal ball is clear. And that I can read the tea leaves and make financial predictions that are worth more than the pretend paper I write them on. What would those guesses be?

Well, that’s the task that I put myself to in this post. I am making the 7 financial predictions that I am most confident in at this moment in time. Keep in mind that I’m writing this on January 29, 2025. I’ll also share a bit about why I think these guesses will come true.

My plan is to then come back to these guesses next year to see how I did.

financial predictions

My 10 best financial predictions for 2025

Let the games begin!

1. The S&P 500 will end with positive returns, but less than it has been the past 2 years

Over the past two years, the S&P 500 returned 24.23% and 23.31%. These are amazing returns. But keep in mind that in 2021, the year before these 2 years of bliss, returns for the S&P 500 was -19.44%.

I’ve seen a lot of people predict that the S&P 500 will return negative in 2025. Given the recent cache of economic markers than have returned more positive than expected, I think the overall market will stay in the positive in 2025.

Plus, if you look historically, there is generally a dip in the positive return of this index before a slip into the negative returns.

My best guess is that returns will be in the 5% range.

2. Interest rates will dip, but only a bit

As of this writing, the 30 year home mortgage rate is right around 7%. And the Fed rate is at 4.25-2.5%.

Money has been tight for a while now. And the Fed is expected in the short term to keep rates stable as they ride out the beginning of the new Trump administration. However, inflation has eased. And Americans are tired of money being locked up.

My prediction is that rates will drop a bit in 2025. I think we will see mortgage rates get steady in the 6% range.

But we won’t see things drop into 5% and certainly not into the sub-4% like in 2020.

3. Bitcoin’s value will finish below $90,000

Bitcoin is currently trading above $100k. And so far in the first month of 2025, it’s value has been pretty stable.

But I think its value sees a dip of 10% or more in 2025.

Why?

Because I still don’t know what it is. It bills itself as currency. But it trades like a commodity. And it’s really neither.

My best guess is that the tulip craze surrounding crypto in general and in Bitcoin will calm a bit, dropping its value.

4. Public Service Loan Forgiveness will survive, but will be altered

There is great concern that the PSLF program, in which 10 years of payments while working in a non-profit medical institution, results in forgiveness of the rest of the loan amount, will end in the Trump administration.

I believe that the PSLF program will survive in 2025. And that individuals already in the program will be grandfathered in. I have a personal stake in that. But I do believe that unwinding it completely won’t be possible or popular.

But I do think that the program will change in significant ways. First, I think there will be additional restrictions and requirement for successful employment certification for doctors entering into PSLF. Further, I wouldn’t be surprised if a cap was put on the amount of forgiveness achievable.

5. Rent prices will not increase

The average rent in the US currently is around $1,500. Now, there is a huge variability obviously. Rent in Buffalo, NY is less than this amount. Rent in NYC is much, much more than this.

However, rent prices are something of great interest for investors in real estate. For active investors like me, the impact is direct. Higher rents means greater returns. Lower rents means lower returns. Now, for a passive real estate investor, the impact is a bit more indirect but just as important.

A few years ago, as inflation skyrocketed with an influx of stimulus payments, rent skyrocketed as well. I have seen rents stabilize over time. However, they have still increased at a reduced pace.

In 2025, I predict we will see rents essentially stay the same or decrease. The economy is rough and people are having a hard time. What’s worse for real estate investors than lower rents? Evictions and vacancies. The alternative is to lower rents.

That is what I believe we will see happen.

6. Bonus depreciation will make its comeback

By hiring a cost segregation company to ā€œcost segregateā€ an investment property, you can divide items and parts pf your property that actual depreciate to $0 in much less time than the standard 27.5 years.

After doing the cost segregation, bonus depreciation allows you to claim much more depreciation of value for your property. You can use these massive passive losses to offset more passive gains or carry them forward to future tax years. The TJCA of 2017 introduced 100% bonus depreciation which began to decrease and phase out in 2023.

You can learn more about cost segregation, bonus depreciation, and Real Estate Professional status here.

I believe that 100% bonus depreciation will come back. Before the 2024 election, there was bipartisan legislature to bring this back. As a housing crisis remains prevalent in the US, I expect the government to incentivize the creation of housing. 100% bonus depreciation is a powerful incentive.

I think we will see it come back in 2025.

Now for some quick hitters…

7. US stocks will outperform international stocks

The US seems pretty unstable or at least less unified than ever at the moment. But the rest of the world is maybe even less stable in a geopolitical sense. I think this will impact world economies and we will see higher returns here than abroad.

8. Small value stocks will continue to outpace the market

Small value stocks have historically outperformed the overall market returns. The reason is that they incur greater risk. And greater risk should be compensated with greater potential return.

And while potential return does not mean real return, I expect this relationship to persist in 2025.

9. Cathie Wood’s ARK fund will trail the S&P 500…again

Her ARK fund was the hot fund in the early 2020 and Wood was hailed as the next investing guru.

Ah, but yet again, she ended up just being in the 20% that outperformed the market average by sheer luck. And that luck eventually ran out. While her fund returned near 11% in 2024, it trailed the S&P 500 which returned near 24%.

That means everyone who invested in ARK received half of the returns they could have by investing passively like I talk about here. Yikes.

So, for the one I am going purely by the odds. There’s an 80% chance that the market does better than Cathie. I’ll roll those dice.

And now for my final guess…

10. The New York Jets will win the Super Bowl

As of this writing, my team, the New York Jets, have 10,000:1 odds of winning the Super Bowl next year.

And like Kevin from The Office says, “if anyone ever gives you 10,000 to 1 odds, you take it!”

What am I doing about these 10 sure fire financial predictions?

Nothing!

Hopefully I got a little chuckle out of some of you for my last prediction. It seems ridiculous right? Of course the Jets won’t win the Super Bowl. But, imagine that by some miracle they actually did? We could make a killing by betting on them!

Thankfully, most of us are sensible enough to not wager anything financially significant on that however.

But conversely, many of us are willing to gamble our financial future based on either our own predictions or those of our financial advisors, friends, or even colleagues in the physician lounge.

That is not a recipe for optimizing your path to financial freedom.

So what should we do?

It’s natural to make predictions and forecast everything in our lives. No matter how rational we think we are, we doit anyway. And we all fall into the fallacy of believing that we really “get it” and can make accurate predictions.

But the reality of it is that we can’t. And we don’t. And no one is an exception. Especially when it comes to financial predictions. The data proves it.

This dichotomy between our rational and irrational selves presents a conundrum. No matter how much we say in the moment that we will be rational, when push comes to shove, we can’t trust ourselves to actually do it.

How can we combat this in our personal finances so that we stay on the path to financial freedom?

The answer is simple, it’s your written personal financial plan

Your written personal financial plan is your guide to your financial goals as well as how you will achieve them.

And the beauty is that you can write it when you are rational and not tempted by any of your “can’t miss” financial predictions.

Then, when your irrational mind takes over, you can just review your plan and remind yourself that you are already pretty much guaranteed to reach financial freedom as long as you keep following it. There’s no need to chase waterfalls. Just stick to the plan.

Problem solved!

And that is exactly what Selenid and I am doing. Despite feeling confident in my financial predictions, we are not adjusting any aspect of our financial plan to reflect them. (And you can find our actual written financial plan right here!)

Instead we just keep calm and invest on. And then let’s revisit my guesses in a year to see how I did!

In the meantime, here are some other posts to help you create your own written financial plan:

What do you think? What financial predictions do you have for 2025? How confident are you in them? Would you alter your financial plan based on them? Why or why not? Let me know in the comments below!

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Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year Ā and how you can do the same! Feel free to send Jordan a message at [email protected].

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