Long-term investments can be the most fruitful if you’re looking to make the most out of your money, here are some smart ideas for investing in 2024 via Afrokonnect. The difference a year makes in the world of investing seems to be very considerable.
It was seen towards the start of 2022 that prices had hiked higher than ever before due to the pandemic supply chain breakdowns and consumer bank accounts being stocked up with lots of cash.
Remote work seems to be one of the new realities we see from businesses, and unemployment has reached all-time lows. For a long time, there was an advanced sense of the pandemic crisis being firmly behind us.
Not every observer has been so confident, and it hasn’t taken long for mass inflation to become a hurdle for many markets and Americans. Eventually, it has been pledged by the Federal Reserve that rising interests are to be stopped, which in turn has caused the stock market to plummet and overall make it a miserable place for investors.
With 2024 well and truly underway, many markets look to be making a recovery, such as S&P 500, forex, and crypto. As we look to the future, here are five of the investing trends we are seeing that are looking to create new opportunities for investors.
Cryptocurrency
Given the multiple stablecoin slips in 2022, such as TerraUSD and Tether, which fueled a midyear crypto crash leading to a loss of hundreds of billions in value, it’s not difficult to argue that 2024 should be a better year for cryptocurrency, as it’s hard to imagine it being worse.
Additionally, the growing pains and layoffs experienced by crypto exchanges, including Coinbase, coupled with the sudden implosions of FTX, further dampened the industry’s performance last year. However, in 2024, cryptocurrency businesses will likely focus on wooing investors with cash reserves rather than trendy coins and celebrity endorsements,
While big advancements in cryptocurrency regulation from Washington, D.C., are expected. The Fed has already launched its 12-week central bank digital currency (CBDC) proof-of-concept project in mid-November, and lawmakers are eager to move forward with crypto regulation legislation. Unfortunately, the FTX debacle will likely color many blockchain discussions, overshadowing the technology’s untapped potential for the long term.
Savings Bonds
The current inflationary environment has brought about a silver lining in the form of the rising popularity of Series I savings bonds. In April 2022, the I bond rate soared to a historic high of 9.62%, in stark contrast to the S&P’s 15% decline for the year.
This outstanding rate prompted investors to snap up $979 million worth of I bonds on the last purchase day before the semiannual rate reset, causing the Treasury Direct website to crash. For those seeking to invest their surplus cash for an alpha, I bonds, at a still impressive rate of 6.89% are available until April 30.
While they are illiquid for one year after purchase, the guaranteed rate of return backed by the full faith of the Federal Government makes them an appealing investment option.
Inflation
Inflation has been the persuasive economic force of 2022, affecting areas like grocery stores and gas pumps to investors’ 401(k)s. This has resulted in increased costs and dollars reducing in value for any future investments.
The pressing question for 2024 is if inflation will see a fall relating to the Federal Reserve’s 2% predictions. While many experts believe that this is unlikely, it is important to note that the six rate hikes implemented by the Fed in 2022 will take time to fully impact the economy.
It has been predicted by Morningstar that the Fed will relax monetary policy and reduce interest rates to roughly 3% by the end of the year. However, this is unlikely to alleviate the fight against inflation.
Consequently, investments such as Treasury Inflation-Protected Securities (TIPS) and I bonds are expected to remain popular options for those seeking to mitigate the impact of inflation.
Bear Markets
The stock market around the peak Covid-19 surge came to an abrupt end, with June 2022 marking a new bear market since 2020 and leaving investors searching for new answers. Despite stocks officially emerging from the bear market towards the end of 2022, markets are still down by double figures.
Normally, bonds would provide some relief during a bear market. Yet, fierce interest rates have resulted in falling bond yields and stock valuations. Towards the end of 2022, the time-honored 60/40 portfolio experienced significant declines compared to stock-only versions, raising questions about the efficacy of this traditional portfolio.
The improvement of investor sentiment is likely to be linked to a reduction in inflation, meaning that the year commencing could pose challenges for conventional models of asset allocation.
Alternative Investments
Looking at a more diversified approach, it appears that 2024 may be the year when investment alternatives are finally making their way into mainstream investor portfolios. Regardless of your risk tolerance, net worth, or investment horizon, it is advisable to increase the allocation of alternatives in your 2024 portfolio.
As they are not closely correlated to conventional asset classes such as bonds and stocks, options can mitigate the impact of inflation and the volatility that is causing the recession, potentially leading to higher returns than what can be achieved through investing solely in dividend stocks.
In the past, alternative asset strategies such as commodities and managed futures were limited to experienced traders. However, everyday investors now have access to these through a wide range of low-cost funds such as ETFs and mutual funds. Although the expense ratios of alternative assets tend to be higher than those of other funds, their performance may well make up for the additional costs.
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