December 2025 Insights
Aspirations Wealth constantly monitors the investment markets and aims to keep our valued clients regularly informed and updated. We aim to help investors cut through all the media noise and hype and understand what is really driving investment markets and portfolio returns.
In this edition we cover:
Looking Back At 2025
Our 2026 Outlook
Looking Back At 2025
2025 was a year with a lot of uncertainty. However, it turned out okay from an investment perspective.
Key themes for investors were:
US Tariff Turmoil: Trump's tariffs were the big one this year. At one stage, just after “Liberation Day”, the average US tariffs looked like they would rise over 30%, up from 2.5% from the start of the year. Thankfully, Trump backed down fearing financial chaos. As a result, deals were cut and a trade war was averted.
Artificial Intelligence (AI) Enthusiasm: AI investments continued to surge.
Global Resilience. Despite Trump’s tariffs, the global economy did not collapse as a trade war was averted and AI enthusiasm, interest rate cuts and fiscal stimulus provided an offset. Therefore, global growth remained just above 3%.
Sticky Inflation: Inflation is down from peaks of 11% in 2022, however, underlying inflation still bounced around 3%.
Lower Interest Rates: Central banks continued to cut interest rates, including the US. In Australia, interest rates were cut 3 times.
Lots of Geopolitical Noise: War continued in Ukraine, but despite a flare up in the Israel war that saw the US bomb Iran, the fallout was minimal.
...Resulting in lower but still okay investment returns for 2025.
What About Our Outlook For 2026?
Global and Australian share returns are expected to slow in the year ahead to around 7-8%. However, another 10-15% correction in share markets is likely along the way.
Bonds are likely to provide returns around 4-5%.
After 8.5% returns on Australian property in 2025, Australian home price growth is likely to slow to around 5% in 2026 due to poor affordability, interest rates on hold (with talk of rate hikes) and APRA’s move to ramp up macro prudential controls.
Cash and bank deposits are expected to provide returns around 3.6%.
The Australian Dollar ($A) is likely to rise as the interest rate differential in favour of Australia widens as the Fed cuts and the RBA holds and possibly hikes. Fair value for the Australian Dollar is around $US 0.73.
As well as this, geopolitical risk remains:
The Ukraine war is yet to be resolved with a risk it could expand.
Problems in the Middle East could flare up again.
US tensions with China could escalate again.
Political uncertainty will likely be high in Europe with issues around the French budget and the rise of the far right.
The midterm elections in the US are often associated with share market volatility with an average 17% top to bottom drawdown in US shares in midterm election years since 1950.
Investing is not about short-term results. Over time, the right quality assets, held in the appropriate structures, will yield good outcomes. As professional advisers, our role is to guide our clients through these uncertain times, helping to build quality investment portfolios and great strategies that meet your needs.
Any advice contained in this insight/update is general advice only and does not take into consideration the reader’s personal circumstances. To avoid making a decision not appropriate to you, the content should not be relied upon or act as a substitute for receiving financial advice suitable to your circumstances. When considering a financial product please consider the Product Disclosure Statement. Aspirations Wealth Group is a Corporate Authorised Representative of Aspirations Private Wealth Pty Limited. ABN 57 622 182 076 – AFSL 503889.