9 Money Moves to Make in 2025
So many investment options are available at our fingertips nowadays, making it difficult to decide what to choose. This can create an environment where people succumb to decision paralysis. In this post, I will share some of my top investment ideas to help you decide which might work for your situation. Let’s jump right in!
Stocks
1. Traditional 401(k)
A traditional 401(k) is a benefit that employers offer to employees. Employees decide how much they contribute by allocating a specific dollar amount or percentage of income on a pre-tax basis. This means that for every pre-tax dollar you contribute, you will not pay income taxes on that amount for the year. Plus, employers often offer a 401(k) match program, where they may supplement your contributions with the company’s dollars, up to a specific % of your income. For example, a 3% employer match on a $100K income would look as follows:
Employee contribution: $10,000
Employer match: $3,000 (i.e., $100K x 3%)
Total 401(k) contributions: $13,000
Essentially, it almost always makes sense to at least contribute a minimum of the employer match amount. Otherwise, you’re leaving thousands of dollars on the table.
2. Roth 401(k)
A Roth 401(k) is the same as a traditional 401(k), with the one significant difference that employees contribute post-tax dollars instead of pre-tax dollars. This means that you don’t reduce your taxable income like you do with the traditional 401(k). However, your investments will grow tax-free whenever you have a Roth account. On the other hand, the traditional 401(k) does not grow tax-free; conversely, it grows tax-deferred, which means you pay taxes on it once you withdraw from the account (far) in the future.
Just keep in mind that the employee contribution limit for 2025 is $23,500. Between your traditional and Roth 401(k) contributions, the max you can contribute is $23,500. The employer match does not count towards that maximum.
3. Mega Backdoor Roth Conversion
Since I've posted about this before, I won’t go into detail on how a Mega Backdoor Roth conversion works. But this is one of my all-time favorite retirement investment choices! Please read more on the Mega Backdoor Roth and my guide on how to set it up.
4. Roth IRA
For those under 50, you can contribute up to $7,000 into a Roth IRA. As mentioned earlier, whenever an account has the word Roth in it, it means the account will grow tax-free. This is a no-brainer for those planning to invest in a regular, taxable brokerage account. This way, at least the first $7,000 of your investments will grow tax-free!
However, if you make more than $150K (single) or $236K (married), you won’t be able to contribute the full $7K. If that’s the case, you may be interested in doing a Backdoor Roth conversion to contribute the full amount.
5. Taxable Brokerage Account
After maxing out retirement accounts, my preferred investment choice is automatic investments straight into ETFs. This is exactly what it sounds like: on a recurring basis, automatically transfer funds from your bank account into your favorite ETFs!
Some of the biggest barriers to investing have nothing to do with intelligence; usually, they have to do with inaction, decision paralysis, or the belief that they lack funds. If you’ve ever been guilty of any of those things, like I have, automatic investing may be an investment strategy for you. It takes planning and emotion out of the equation and forces you to set aside investment funds. All you have to do is click a few buttons to get started and decide on a reasonable amount to transfer. I’ve already chosen a few of my favorite ETFs for you in a previous post!
Investments for Kids
6. Custodial Roth IRA
There is no age requirement to open a Roth IRA. Whenever your child earns income, you can contribute that into a Roth IRA on their behalf as a custodian of their account. The annual contribution limit is their total income or $7,000, whichever is less. Imagine the extra tax-free growth on a retirement account that started decades before the age most of us started!
7. 529 College Savings Plan
One of the greatest gifts you can give your children is to remove the burden of student loans. My preferred method is to invest in a 529 plan on their behalf. Much like a Roth, all earnings grow tax-free, and education-related withdrawals are also tax-free. Clearly, this is a much preferred method of paying for education expenses if you plan to pay for them out-of-pocket anyway.
If you’re worried about overfunding a 529 plan, a rule has been passed recently that allows unused 529 funds to be rolled into a beneficiary’s Roth IRA. Since the law is fairly new, it is still not clear how to use the rule exactly. Thus, I still err on the side of underfunding instead of overfunding on purpose.
8. Custodial Taxable Brokerage Account
Lastly, if you or any of your loved ones plan to gift money to your children, don’t let those funds crumble under the weight of inflation in a bank account. Instead, one way to utilize those funds is to invest them in a custodial brokerage account like a UTMA. Funds within these accounts technically belong to the minor but are controlled by a custodian until they come of age.
Real Estate Investments
9. Rental Properties
I am a big fan of owning rental properties for many reasons, including their tax advantages, use of leverage, and diversification. It has been incredibly difficult to find cash-flowing properties in the past several years, with prices and interest rates so high. Honestly, the environment hasn’t changed much. However, if you are willing to put the time and effort into finding distressed homes and rehabbing them, it is almost always possible to create ROI-positive rental properties. The downside is obviously how much time you end up putting into it.
Conclusion
Hopefully, some of my investment ideas have piqued your interest or, perhaps, are already part of your growing investment arsenal. Just like exercising, no matter how young or old you are, starting today will only improve your situation. You don’t have to do all of these things to succeed. I know plenty of extremely successful people who only invest in 1 or 2 of the aforementioned investment ideas. Only you can decide which of these is best for your financial goals. But no matter which you choose, you have to start somewhere, so why not now?
