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Market Commentary December 2025 – Summit Financial Consulting LLC

 

IRA to Roth IRA Conversions

Because of our staggering U.S. Government National Debt, we believe that tax brackets may go up in the future. In addition, if the Tax Cuts and Jobs Act (signed in 2017) is not extended, it is set to sunset on December 31st, 2025.

To help combat the potential for higher tax brackets in the future, we recommend that all clients with pre-tax IRA or pre-tax 401K money consider conversions to a Roth. It takes at least 2 weeks to process an IRA to Roth IRA conversion. If you are interested in this strategy, please discuss it with your tax preparer and give us a call right away.  

 

2025 – What Can We Expect?

On November 25th, President-elect Trump announced that on his first day in office, he would impose additional tariffs to help protect U.S. jobs and protect Americans.

He said a 10% additional tariff on Chinese goods above any existing tariffs and a 25% tariff on Mexico and Canadian-made goods will be implemented until the flow of illegal drugs, especially Fentanyl, and illegal immigrants is stopped.

In the long run, protecting US jobs and reducing illegal drugs is a noble goal, but in the short run, the most likely outcome of tariffs, in our opinion, is more inflation.   

 

Inflations’ Impact on Families

One of the top concerns for many families is inflation. When the cost of goods and services increases, many people will rely on debt, especially credit card debt. Since the beginning of 2021, credit card debt in the United States has increased from $770 Billion up to $1.14 Trillion, a 48% increase in debt.

At the same time, because of increasing interest rates, the average credit card interest rate has spiked to over 20%, near the all-time high. According to a recent survey, 57% of consumers rely on credit cards to make ends meet, and 36% said it is difficult to make payments on time.

 

Market Volatility in the First Year of a New Presidency

From 1928-2020, the stock market has typically gone up in the year after a Presidential election when an incumbent party loses. If the incumbent party won, the stock market is typically up 4.7%.

If the incumbent party lost, the stock market is typically up 8.6%. These numbers are below the historical averages, so the first year of a presidential term is positive on average but not as much as other years. Please remember that past performance cannot predict future performance, and this data is based upon averages, but in real life, the market can have big swings. 

If we could make one prediction for the next 12 months, it would be that we will likely have increased volatility in the stock market, both up and down. This is why we often recommend managed portfolios based upon independent research.

Within our managed portfolios, if we believe the market is going to drop, we will reduce risk automatically.  

 

Financial Planning and Review Meeting

If we haven’t spoken in a while, or you’ve had any changes to your beneficiaries, income, job status, marriage status, a new birth in the family, 401K options, address, risk tolerance, or any other financial changes, please contact us right away at (586) 226-2100 to schedule a review meeting.

Sincerely,

Kenneth Wink

with contributions from Robert Wink, James Wink, Zachary Bachner,  James Baldwin, and Daniel Ladzinski

Ken Wink is the Co-Founder and Chief Compliance Officer of Summit Financial Consulting, LLC. With over two decades of experience in the financial services industry, he is deeply knowledgeable and passionate about explaining complex financial concepts in understandable terms. Ken writes articles geared towards conveying financial topics in clear, straightforward language, making them accessible to everyday people.

 

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Notes & Disclaimer:  Investment advisory services are offered through Summit Financial Consulting LLC, an SEC registered investment advisory firm. Registration does not imply a certain level of skill or training. Summit Financial Consulting Investment Advisory Firm Representatives do not render tax, legal, or accounting advice. Life/Annuity Insurance products and services offered by the individual insurance agent. Health insurance is offered through Summit Health Services, LLC and Property/Casualty (P&C) Insurance is offered through Summit Insurance Services, LLC and our local P&C agency partners. Please update Summit Financial Consulting LLC, if your investment objectives have changed or if the personal or financial information previously provided has changed. The investment advisory disclosure document that describes Summit Financial Consulting investment advisory services account is provided to you annually, but additional copies are available upon request. Investing involves risk, including the risk of a total loss. Stock market indices, like the S&P 500 Index, are unmanaged groups of securities considered to be representative of the stock market in general or subsets of the market, and their performance is not reflective of the performance of any specific investment. Investments cannot be made directly into an index. Historical returns data are calculated using data provided by sources deemed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy, completeness or correctness. Dividends are not included in index returns. This information is provided “AS IS” without any warranty of any kind. Past performance is no guarantee of future results. This communication is only intended for recipients who reside in states where our agents are licensed to sell these products. All guarantees are subject to the claims paying ability of the issuing insurance company. Past performance cannot predict future performance.  It is not possible to invest directly in an index. Representatives of Summit Financial Consulting LLC offer tax preparation services through Summit Tax Services. Summit Tax Services is a DBA of Heemer Klein & Company and they are owned and operated independently.