The S&P 500 is in the middle of a roaring bull market right now. Over the last five years, the index has risen about 90%, helping long-term investors such as me build wealth.
Wondering what lies in store for the index in 2025? Here’s a look at some of the latest forecasts from Wall Street analysts.
Further gains on the horizon?
In the table below, I’ve put the 2025 S&P 500 forecasts from seven major financial institutions. Note that these are year-end targets:
| Firm | 2025 target |
| Morgan Stanley | 6,500 |
| Goldman Sachs | 6,500 |
| UBS | 6,500 |
| BMO Capital Markets | 6,700 |
| Deutsche Bank | 7,000 |
| JP Morgan | 6,500 |
| BofA | 6,666 |
Looking at the figures in the table, Deutsche Bank has the highest forecast at 7,000. The average of the seven firms however, is 6,624.
Given that the S&P 500’s trading at 6,047 today, it’s clear that the consensus view is that the bull market will continue. Looking ahead, it seems firms expect the index to rise another 10% or so over the next year and a bit.
I’m bullish
I think that’s reasonable. For a start, economic conditions in the US are likely to be healthy next year (Donald Trump’s economy-friendly).
Secondly, we’re in the midst of a powerful tech revolution, which is helping a lot of companies generate top and bottom-line growth. Additionally, there’s room for the market rally to broaden out.
Of course, there are no guarantees the bull market will continue. In the short term, the stock market’s very unpredictable. If we were to see an unexpected ‘black swan’ event, the index could fall.
How to gain exposure
But let’s say the US market does rise next year. What are the best ways to get exposure to it? Well, one option to consider is a S&P 500 index fund such as the Vanguard S&P 500 UCITS ETF (LSE: VUSA).
This product”s designed to track the index. So if the S&P 500 rises, it should rise too.
It’s worth noting that with this ETF, exchange rates can affect returns for UK investors due to the fact that it tracks a US index. For example, if the S&P 500 was to rise 10% in 2025 but the pound gained 3% against the US dollar, returns for UK investors would only be around 7% (ignoring trading and platform fees).
Overall though, there’s a lot to like about this product, in my view. Not only does it provide exposure to all the fantastic stocks in the S&P 500 (eg Apple, Microsoft, Nvidia, etc) but annual fees are very low at 0.07%.
Of course, another option to consider is investing in individual S&P 500 stocks. This approach is riskier, but there’s potential for larger gains.
I have no doubt that there will be plenty of stocks that outperform the S&P 500 by a wide margin next year and deliver gains of 20%, 30%, 50%, or more. Some US stocks I’m bullish on include Amazon, CrowdStrike, and Uber (if you’re looking for more US stock ideas you can find plenty here at The Motley Fool).
I’ll point out that there’s nothing to stop investing in a tracker fund and buying a few individual stocks in the hope of generating higher returns. This is what I do, and the strategy has worked well for me in recent years.
This post was originally published on Motley Fool
