5 financial topics to keep an eye on this year

Enjoyed the sun and snow in the mountains or have you been traveling? Did you go well? However you spent the holidays, I hope you had a great time and started 2024 full of positive energy.

Fresh year, fresh energy. What resolutions have you made for 2024? According to surveys, New Year’s resolutions are popular here in Switzerland, with almost 6 in 10 people saying they have made New Year’s resolutions for 2024 (although in the survey of Watson readers that was only a third 😉). The The three most frequently mentioned categories are nutrition, exercise and financesbut time with family and friends also plays an increasingly important role.

Whether the resolutions actually work is another matter entirely. This is evident from research from abroad 80% of people who make New Year’s resolutions give up in February. Personally, I was one of them and at some point I just gave up and replaced resolutions with a personal vision board with long-term goals. Whatever your thoughts on New Year’s resolutions, there are some developments that will affect our money in 2024 that are worth keeping an eye on.

Trends and reports about the future of the financial world abound. Here you will find a (non-exhaustive) list of developments to keep an eye on for inspiration.

Is the recession coming? The forecasts for economic growth are cautious, but there is no recession yet. A slowdown in the US, moderate growth in Europe and better quality but weaker growth in China are expected. For Switzerland, the forecast for 2024 is 1.1%. Companies dependent on exports are particularly challenged by the continued strong franc.

There is more optimism about inflation Switzerland Inflation will be from 2024 1.9% expected, for Europe of 2.7%. As inflation continues to stabilize, so do expectations possible interest rate cuts soon on the part of central banks, which would have a positive effect on economic development. However, economists also warn that this should not happen too early; there is still great uncertainty about the continued existence of inflation.

Why should you care? As the The interest rate dropsthen not only economic development benefits, but also the Investments in securities, for example bonds and shares, due to increases in value, and long-term return expectations for shares increase. Borrowing money is also becoming cheaper. However, if interest rates fall, the already meager interest on savings accounts will also fall again.

Even though inflation may stabilize, your 2024 budget will come under fire several factors at the same time arrive:

In addition to these increases, there are factors such as: Shrinkflation (you get a smaller quantity of a product for the same or a higher price), things become more expensive under the guise of price increases. The combination of factors in fixed costs is causing problems for more and more people in Switzerland. Caritas Switzerland estimates that approx. 20% of households At the bottom of the income scale, they have to spend almost all their money on fixed costs on which they can hardly save.

What you can do? Variable costs can be influenced relatively easily by doing without them. With fixed costs it is more difficult and worth it to take advantage of all options, from discounts to support. The tighter money is, the more important it is to have a well-maintained budget and schedule, as pre-planned purchases are often cheaper.

Borrowing money is (still) expensive. Due to the current persistently higher interest rates, short-term loans and mortgages remain more expensive. Although the prices for longer mortgages of, for example, 10 years are currently lower than if you have a flexible option (SARON mortgage), you are bound to these conditions for a longer period of time.

With current interest rates, it’s definitely worth paying off short-term debt and loans if possible, and if you have the option to maintain some flexibility on long-term mortgages.

The Conflicts in the Middle East and Ukraine continue, as do the dispute between Venezuela and Guyana and the Chinese saber-rattling towards Taiwan. Moreover, in countries where stock markets account for 68% of global market capitalization, To elect with the majority (62%) of the market capitalization coming from the US.

This is evident from data from the Citibank Global Economic Outlook 90% of geopolitical events mainly cause short-term fluctuations but do not change the long-term direction of the global economy. As for the upcoming US elections, the analysis shows that returns in the Election of a Democratic President increase more strongly (9.6%) than for a Republican (5.5%) However, the election of the president in itself does not have a major impact on returns: “It is the recovery in the economic cycle that matters most for returns and growth indicators during a presidential term – not who happens to become president.”

How should you invest? The uncertainty that conflicts and elections entail mainly leads to short-term fluctuations. The most effective strategy is still to invest long-term, diversified and spread out to absorb fluctuations and benefit from the average price effect.

Technology such as AI continues to drive innovation. Exciting topics for 2024 are similar to 2023: technological infrastructure such as semiconductors, chip manufacturers, robotics, cybersecurity. Using technology to solve sustainability challenges, not only in climate, but also in the production of plant-based meat substitutes, health, etc., is certainly exciting.

Also the whole world digital currency will continue to gain momentum in 2024, reports say Central banks of 130 countries the possibility of digital versions of their currencies, so-called CBDCs (Central Bank Digital Currencies). The so-called stands for Bitcoin Bitcoin halving which takes place approximately every four years. The goal is to reduce the number of new coins in the network. If demand increases or remains the same at the same time, this can lead to significant price increases. An upgrade is expected for Ethereum. Regardless of whether you have already invested or are still considering it, staying abreast of technical developments and forming an opinion about digital currencies can give your investments a new boost.

The concentration of price increases in particular has a direct effect on our daily finances. This makes it all the more important to organize your finances on a budget, eliminate unnecessary cost wasters (including bank fees!) and, where possible, not neglect your long-term wealth creation and provision. The way we invest in the long term will not change: diversified, long-term and diversified as in living memory valid for 2024. For those interested: there are also short-term opportunities, especially in the technology sector and digital currencies .

What things will impact your finances in 2024? Where do you see opportunities? I look forward to your ideas, input and comments😉