What will happen to the U.S. economy after the election? Is now a good time to buy or sell a house? What's the latest with inflation and the world economy? And the lack of rainfall -- what will that mean?

These questions are among the many that investors are asking as 2024 winds down and 2025 approaches. With so much to consider, what are new investors, those in the heyday of their careers, and retirees to do with their hard-earned dollars? Narrowing down the immense ocean of topics to five essential factors to consider might help investors prepare for the coming year, and both private and public sector experts are weighing in on what might happen.

The Impact of the Election:

The outcome of the presidential election could significantly influence tax policies, healthcare, energy, and regulatory measures. Investors are advised to monitor how proposed policies might affect key industries, as these could impact investment strategies moving into the new year. In fact, Oxford Economics offers the following: "With many current tax policies set to expire at the end of 2025, this leaves a clear opportunity for lawmakers to make meaningful changes to tax, spending, and industrial policies."

Mortgage Rates:

With mortgage rates remaining volatile, Madison Avenue Securities notes that potential rate increases could affect housing demand and affordability. Investors in real estate or related markets should assess how future rate adjustments might impact both residential and commercial investments. Meanwhile, mortgage powerhouse Freddie Mac reveals that "although uncertainty will remain, it does appear mortgage rates are cresting, and are not expected to reach the highs seen earlier this year." As of Nov. 4, the 30-year rate was 6.72%, down .80 of a point when compared with October 2023.

Unemployment Rates:

While the U.S. Bureau of Labor Statistics reports that the current unemployment rate is 4.1%, shifts in economic policy or slowing economic growth and could impact job markets. Monitoring employment trends can help investors anticipate shifts in consumer spending, which may affect sectors like retail and hospitality. Still, 7 million Americans are out of work, an increase from 6.4 million when the unemployment rate was 3.8% in October 2023.

The Global Economy:

As the global economy continues to navigate challenges from inflation, energy prices, and geopolitical tensions, investors might consider international exposure and currency fluctuations in their portfolios. Diversification strategies may help in mitigating global risks. The United Nations revealed an interesting and somewhat perplexing prediction when it said on Sept. 3 in its report "World Economic Situation and Prospects September 2024 Update, "In 2025, an anticipated slowdown in the United States and China is expected to be offset by a pickup in growth in Canada, Japan and Europe and several large developing economies including Argentina, Brazil and South Africa."

The Drought:

Drought conditions across various regions are impacting agriculture and water-intensive industries, with some 318.6 million acres considered to be drought-impacted. Investors should consider the impact on supply chains and resource-dependent investments. "The primary direct economic impact of drought in the agricultural sector is crop failure and pasture losses. These costs are often passed on to consumers through increased prices and/or they may be offset through government disaster assistance programs," reported the National Integrated Drought Information System on Oct. 29.

But this likely doesn't spell complete doom and gloom for the American economy.

Forbes said three specific business sectors -- technology, healthcare, and energy -- could hold the keys to the dollar earning strength in the coming year. From meteoric usage of AI to expected increases in medical reimbursements to surging energy demands across the tech sector, American businesses and the government have expressed cautious optimism. This comes from the increased reliability on chatbots, emphasis on medical analytics, and laser-focused utilization of renewable energy resources. 

In summary, investors are encouraged to stay proactive by consulting their financial advisors before the end of 2024. Strategic planning now can help ensure portfolios are well-positioned for both anticipated and unforeseen changes in 2025.