Whether you're a newbie or a seasoned investor, you're probably wondering what to expect from the stock market and other asset classes in 2024. Without ESP, it is impossible to predict what will happen in 2024. However, there are some trends that are already taking shape in the first two months of the new year. Here are five surprising investment trends to watch in 2024.
1. We are bullish on stocks again
Investors have become more bullish on the stock market since January 2022, according to a recent Bank of America survey. Case in point: The S&P 500 index, which compiles 500 of America's largest and most profitable companies, topped the $5,000 mark for the first time in its history on February 8th. This is a big problem because the S&P 500 accounts for about 80% of the value of the American stock market.
While much attention is focused on the short-term fluctuations of the S&P 500 index, if you're looking to invest for the long term, there's never a bad time to invest in its underlying stocks through an S&P 500 index fund. There are good years and bad years, but this index has an impressive track record of producing an average annual return of about 10%.
2. Short-term CD rate remains the highest
Long-term certificates of deposit (CDs) typically offer the best interest rates. This is because banks want to encourage customers to keep their funds for several years. However, the best CD rates you can find today are typically 12-month CDs, rather than longer-term CDs like 36 or 60 months.
That's because the CD rate is closely tied to the federal funds rate, and financial institutions believe the Fed is likely to cut rates at some point this year. Therefore, they don't want interest rates on long-term CDs to increase because they believe interest rates may fall before the end of the term.
3. AI cannot be stopped yet
Since the launch of ChatGPT in 2022, artificial intelligence (AI) has been all the rage. Investors have poured huge amounts of money into his AI stocks, and according to a McKinsey & Company report, his 40% of organizations plan to increase their investments in AI.
AI stocks accounted for much of the S&P 500's decline in 2023 and 2024. A recent analysis by Bespoke Investment Group found that 67 stocks related to AI in the S&P 500 index soared 45.3%, while the other 433 stocks rose only 9.2% over the same period.
In 2024 alone, the stock prices of these 67 AI stocks rose an average of 3.7%. By contrast, the remaining 433 stocks in the S&P 500 are up 1.1%.
4. Bitcoin is back
After a tough crypto winter that saw its price drop below $16,000 in late 2022, Bitcoin has made a major comeback. The price has risen by about 16% so far in 2024, once again exceeding $50,000.
There are two major factors driving up the price of Bitcoin. One is the approval of several spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission. This allows you to invest in cryptocurrencies in your brokerage or retirement account instead. Regarding the use of cryptocurrency exchanges.
The second is the Bitcoin halving scheduled for April. Bitcoin halvings occur approximately every four years and continue until all supply is exhausted. After a halving event, a miner will receive 50% less Bitcoin when validating a transaction. As a result, supply is limited and prices often rise the following month. Many investors are likely putting their money into Bitcoin in anticipation of the same thing happening this time.
5. Growing interest in socially responsible investing
There is growing evidence that sustainability efforts are associated with improved financial performance, and that ESG investing – investments that keep environmental, social and governance factors in mind – tends to protect against downside during downturns.
In 2024, more investors will be interested in sustainable investing. According to a study by Morgan Stanley, 54% of retail investors plan to increase their investments in sustainable portfolios, and more than 70% believe that focusing on ESG goals can deliver superior financial returns. I believe that.
The top two themes investors surveyed prioritized for 2024 were climate change and healthcare.
Should you invest in 2024?
You typically want to pay off high-interest debt and have a solid emergency fund before you start investing. However, it is important to start investing as soon as possible after that.
A good place to start is with an S&P 500 index fund or another fund that invests your money in most of the U.S. stock market, as it provides automatic diversification. However, be more cautious before investing in individual stocks or cryptocurrencies. Putting too many eggs in one basket is dangerous, especially when it comes to cryptocurrencies, which are notorious for their vulnerabilities.
Investing is the best way for ordinary people to build wealth and improve their personal finances. The sooner you start, the longer it will take for your money to grow.
Warning: Our top-rated cashback cards offer 0% introductory APR through 2025.
This credit card isn't just great; It's so good that our experts use it personally. It features a long introductory APR period of 0%, a cashback rate of up to 5%, and for some reason, all annual fees are waived.
Click here to read the full review for free and apply in just 2 minutes.
