What 2025 taught us about money and the steps to take in 2026
If you’ve only got a minute:
- There was significant market volatility in 2025 due to Donald Trump's Liberation Day tariffs, as well as interest rate cuts by the US central bank, impacting borrowing costs and investment returns
- With interest rates likely to head south, it is an opportune time for us to review our personal finances to take advantage of cheaper borrowing costs, while shifting investment strategies towards riskier assets, in line with our risk profile.
2025 has been a year of significant market volatility, no thanks to Donald Trump’s Liberation Day tariffs announced in April. And in the second half of the year, US central bank started to cut interest rates which led to rates also heading south in Singapore.
Falling interest rates translate to cheaper borrowing costs, impacting mortgage rates and the returns of investment instruments. It is an opportune time to review our financial situation and time horizon, particularly investment holdings, in the light of the economic landscape.
Artificial Intelligence (AI) continues to feature significantly, with huge advancements and deeper penetration into our daily lives. S&P500 has performed exceptionally well, thanks to US technology stocks, due to the excitement over increased spending on AI and improved profit forecasts for these companies. Predicted earnings for AI-related stocks (Bloomberg Artificial Intelligence index) surged by 34% this year, significantly outperforming the broader market's 12% rise. DBS Chief Investment Office (CIO) anticipates this positive trend to persist with wider AI adoption, suggesting potential investment opportunities in US technology companies.
Finally, gold emerged as a strong alternative asset, rallying over 35% since early 2025. This highlights the importance of incorporating diverse asset classes and strategic asset allocation within portfolios. Given these significant financial and economic developments, how have they influenced the DBS Financial Planning Literacy team's resolutions made in 2025? Continue reading for our key financial takeaways and plans for 2026.
Lynette
As I reflect on my financial journey, I am pleased to share that I have successfully achieved 2 key financial goals this year - consistently allocating $1,000 per month to investments and increasing my holiday spending.
These achievements felt attainable, especially with established systems in place. My dollar cost averaging strategy began in 2024, with an initial commitment of $500 monthly into a diversified fund. This year, I increased that automated transfer to $1,000 each month, setting it up to occur at the beginning of the month, effectively allowing me to "set it and forget it."
An opportunity arose from Trump’s Liberation Day in April, when I was able to capitalise on a market reaction and made additional investments. Specifically, I allocated more funds to a US-focused fund through initiated dollar-cost averaging into the DBS Retirement digiPortfolio. The latter has yielded over a 10% return, and I made my initial venture into retail bonds.
In the past, I used to be risk-averse and prioritised saving, a habit instilled in me from young. In 2025, I decided to take calculated risks in investing to make my money work harder. This is largely because I've observed a shift in the financial landscape that offers opportunities for those who recognise that not taking a risk is a risk, as inflation would eat into our savings. The past 2 years, characterised by higher interest rates, were particularly favourable for savers, offering attractive returns from low-risk instruments like Singapore Savings Bonds and SG Treasury Bills. However, with the notable decline in interest rates this year, the yield from these investments has fallen below 2%. Even high-interest savings accounts across local banks have adjusted their rates downwards, signalling the importance of adapting investment strategies to include risk assets.
For those new to investing, my advice is to embrace a gradual approach to build confidence. When exploring new financial products, I prefer to start with a modest sum, ensuring that the investment doesn't cause undue stress. Prior to investing, it is crucial to have an emergency fund of at least 3 to 6 months of expenses in place. This safeguards against the need to liquidate investments prematurely and potentially at the wrong price, due to unforeseen cash flow challenges.
I've observed 2 common tendencies among individuals hesitant to invest. S me dedicate extensive time to research but ultimately fail to act, while others seek maximum yield with minimal risk. What has helped me is to lean towards action, start with small amounts, and to temper the pursuit of the highest possible returns.
Our wealth serves various purposes, including preserving purchasing power against inflation, funding retirement, and supporting other family financial goals. Waiting indefinitely for an "ideal" investment can lead to missed opportunities, leaving capital idle in low-interest accounts or exposing one to disproportionate risk.
For the coming year, I will be taking a 3-month sabbatical from work. Financially, I will focus on cutting discretionary spending, continuing with my monthly investments, work on finding a side income and increasing passive income through dividend stocks.
Shawn
2025 was a year of transition for my family. With my 2 kids starting P1 and preschool respectively, and my wife returning to full-time work, we were excited about the prospect of accelerating our savings for retirement and the children's education fund.
Of course, life had other plans.
Our elder son's enrichment classes turned out to cost more than we budgeted for. Like many parents, we wanted to give him exposure to different activities, but classes these days are not as affordable as before. Still, we managed to adjust and continued setting aside a monthly sum towards our long-term goals.
Riding out the volatility
The investment markets? They were nothing short of dramatic.
April brought President Trump's "Liberation Day" tariff announcement, sending shockwaves through global markets. The S&P 500 tumbled 12.1% by April 8 as investors worried about a potential US recession.
Then there was the AI frenzy. Nvidia, Microsoft and Alphabet hit new highs repeatedly, even as market watchers debated whether we were witnessing a bubble in the making.
Through it all, I stuck to my strategy: stay globally diversified and invest regularly through dollar cost averaging (DCA).
This approach had worked for me during the Covid-19 pandemic, when the S&P 500 plunged 34%. Once again, it helped me navigate the whipsaw movements and benefit from the market's continued climb to new highs.
Looking ahead to 2026
My plan remains unchanged: continue investing consistently each month into a globally diversified portfolio.
But there's one adjustment I'm making. With my new BTO flat nearing completion in 3 years' time, I'll shift some assets into lower risk cash funds. This will ensure I have the renovation budget ready when the time comes, without having to sell investments during a potential market downturn.
After all, having a solid financial plan isn't just about growing wealth. It's also about being prepared for life's milestones.
Jermaine
2025 taught me that financial progress isn’t just about hitting goals and targets. It’s about understanding the patterns behind my decisions. This year was steady overall, but it also revealed small behaviours that, when added up, shaped how far I moved towards my goals.
One thing that stood out was how easily unplanned spending can slip during busier months. Nothing drastic, just the quiet, accumulated “extras” that don’t seem like a big deal at the time. This reminded me that financial discipline isn’t about restriction. It’s about clarity. When the structure is clear, everything else becomes easier to manage.
I also realised that momentum matters. Whenever I reviewed my accounts or updated my trackers, I felt more in control. When I didn’t, the months tend to blur. Simple check-ins made a noticeable difference in how intentional I felt.
Looking into 2026, I want to build on these lessons with more deliberate systems rather than big, dramatic changes. My goals remain the same (a home, steady investing and guilt-free travel) but they require sharper focus.
Here are what I am committing to:
- Cleaner spending boundaries - Not cutting back on expenses drastically but reducing unnecessary add-ons that distract from bigger priorities.
- A simple system to manage occasional splurges - Instead of letting them chip away at savings quietly, I’ll set a clearer monthly “flex amount”. This keeps room for enjoyment while preventing small unplanned buys or spends from piling up and derailing what I’m building.
- A slight lift in investments - I’ve been consistent but 2026 feels like a year to stretch a little more, even if it’s a slight percentage increase.
- More structured house-hunting - Clearer criteria, a defined budget range and a list of non-negotiables to help me stay focused when new listings appear.
- Continued travel planning with intention - Keeping a dedicated fund helps me enjoy trips without the pressure of rearranging my finances.
Understanding my habits made the year 2025 valuable. In 2026, I’m focusing on intention over grandeur by making consistent decisions that move me forward steadily, no matter how modest each goal looks on its own.
Gwen
For me, 2025 was a year of many firsts.
I clipped into my first via ferrata route (protected climbing route in the mountains), stood on a mountaintop at sunset with my best friend, and completed a missions course that stretched both my heart and my faith. Each experience reminded me that progress grows from intention, whether on a mountain wall or in the everyday rhythms of life.
It was also the year I reached one of my biggest milestones - becoming a homeowner. I’m grateful for the financial habits cultivated in earlier seasons, which gave me the stability and confidence to take this step. Without regular saving, adequate coverage for my needs, and investing to grow my savings, this could not have happened.
In 2025, I also committed to giving more regularly. While I did donate through the year, I didn’t do so consistently because I hadn’t planned ahead. This was a valuable lesson. Just like climbing or saving for a home, consistency is made easier when you make space for it intentionally.
So, in 2026, I have chosen a few specific causes and organisations upfront, making giving a planned part of my monthly budget. I’ll maintain my existing funds for urgent humanitarian needs, so I can respond quickly when crises arise.
This year will also be about stewarding my finances wisely as I settle into home ownership. With a mortgage, renovations, and new bills to manage (goodbye to the “parent-grant”), I will set aside dedicated funds for these priorities. As good practice, I intend to keep my emergency buffer comfortably at the 6-month mark.
Investing remains part of the plan, though I have to be more thoughtful with discretionary spending and may adjust the size of my regular contributions. Since I’m not one to track the markets closely, I’ll continue investing consistently through dollar cost averaging into diversified portfolios, such as the CIO Insights Funds curated by our DBS experts.
2025 taught me that meaningful progress, be it physical, emotional, or financial, happens when preparation meets purpose. As I enter 2026, I want to steward each new responsibility well – from my home to my finances to the opportunities placed in my hands – with both diligence and joy.
“All of life is grace, and therefore all of life is gratitude” – Timothy Keller
Lorna
With a solid financial plan in place, the market volatility in 2025 did not cause any sleepless nights for me. Instead, it presented investment possibilities.
As we embrace a low-interest rate environment, some of my investment returns would be impacted. In 2025, I looked out for more passive income streams to switch into and to grow my idle savings, and will continue to do so in 2026.
After all, I’m a pre-retiree and my priority is to build sustainable multiple passive income flows to fund my retirement lifestyle. And as I get closer to retirement, it is prudent to have a clearer idea of the minimum monthly income – or “must-have income floor (MIF)” - required to fund my golden years.
At all times, I would like to determine more accurately my MIF and have it funded via more stable, predictable and guaranteed income flows. These flows should ideally be unaffected by state of the economy and market performance.
Nevertheless, I still have a portion of my nest egg invested in equities and alternative investments to potentially generate higher returns to mitigate longevity and inflation risks.
If I choose to retire before 65, I will not be able to rely on my CPF LIFE payouts and private annuity payouts, both of which only commence from age 65 at the earliest. Meanwhile, I have been contributing to the Supplementary Retirement Scheme (SRS) and my penalty-free withdrawals over 10 years can start from age 62. Most of my SRS savings are invested in local stocks which performed well in 2025. I’ve started to liquidate some of these stocks that I do not plan to keep, in preparation for the penalty-free cash withdrawals that can commence in the coming years. Meanwhile, I can place the cash component in safer instruments under SRS. If I don’t, leaving the money idle only earns me a paltry 0.05% per annum!
To prepare for a meaningful retirement, I’m looking at how I can continue to engagethe community and contribute. This includes considering side hustles that leverage my financial literacy knowledge and help ease me into retirement.
To continue to stay relevant, I plan to explore and learn more about generative AI and how it can support my area of work to empower the masses with financial literacy.
