3 investing lessons from the first quarter of 2025

Not only is it the final day of March 2025 as I write this, but it is also the last day of the first quarter of 2025. Putting aside the usual pontification about 'where is the year going?', I thought it might be a good chance to look back on the quarter almost passed and glean some investing lessons.

Three investing lessons from 2025's first quarter

The investing weather changes quickly

Three months ago, the inauguration of Donald Trump as America's 47th President was imminent. At the time, markets were soaring on Trump's supposedly pro-business policies and promises of a new 'golden age' for America.

Well, the markets aren't soaring anymore. As recently covered, Trump's tariff policies have royally spooked investors, with the S&P 500 Index now down more than 9% from its February peak. Similarly, the S&P/ASX 200 Index (ASX: XJO) has lost more than 8% since Valentine's Day.

This experience just goes to show that we should never take a supposed status quo for granted. Investors who actively changed their portfolios to benefit from a 'Trump tailwind' are probably scrambling right about now. A better approach would have been to keep an eye on the long-term.

Diversification pays off

Another investing lesson from the first quarter of 2025 is the ongoing benefits of adequate diversification. The market sell-off that we've seen take place over the past few weeks has hit some sectors harder than others. ASX banks, miners and tech stocks have been punished. However, consumer staples stocks and gold stocks, in particular, have proven very resilient.

Gold itself has vaulted significantly higher, while that other alleged 'store of value', Bitcoin (CRYPTO: BTC), has plunged. I believe that having a well-rounded and balanced portfolio of quality ASX shares would have served investors far greater over the quarter than a portfolio that was over-concentrated in one or two sectors.

Dividends are king

Investors' attention has probably been fixated on the falling stock market, and the (hopefully) paper portfolio losses induced. However, share prices are only one source of investing returns. The other, dividends, have held up admirably this quarter.

The past three months have seen ASX shares ranging from Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES) to JB Hi-Fi Ltd (ASX: JBH), Coles Group Ltd (ASX: COL) and Washington H. Soul Pattinson and Co Ltd (ASX: SOL) all pay out increased dividends compared to what Q1 of 2024 saw.

This would have provided a much-needed cushion against falling share prices for many ASX investors in recent weeks. The most astute investors would have been able to redeploy this cash into shares at cheaper prices, too.

Over the last few decades, ASX shares have, on average, delivered more returns from dividends than from capital growth. The first quarter of 2025 has proven just how valuable those returns are in times like these.

The post 3 investing lessons from the first quarter of 2025 appeared first on The Motley Fool Australia.

Motley Fool contributor Sebastian Bowen has positions in Bitcoin, Telstra Group, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin, Washington H. Soul Pattinson and Company Limited, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Coles Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Jb Hi-Fi and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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