Despite initial expectations, last year proved to be a good one for stocks as the market saw significant growth despite the challenges of increasing interest rates and the looming threat of a recession.
The current year may also present uncertainties. Regardless of what happens however, there are still potential investment options where to invest money, particularly for those with a long-term perspective.
If you are looking to invest as an expat or high-net-worth individual, which is what I specialize in, you can email me (advice@adamfayed.com) or WhatsApp (+44-7393-450-837).
The following list of the best investments for 2024 begins with some more secure options and progresses to those that offer potential for higher profits but come with higher risk. This provides a balanced combination of stability and growth in a challenging market climate.
- High yield savings accounts
- Long-term certificates of deposit
- Long-term corporate bond funds
- Dividend stock funds
- Value stock funds
- REIT index funds
- Rental property
High yield savings accounts
A high-yield online savings account is a type of account that earns interest on the amount of money you have deposited. Similar to a traditional savings account, this digital account provides a convenient way to store your cash.
A savings account is an ideal option as one of the best investments for 2024 for individuals who require immediate access to their funds. Additionally, a high-yield savings account is suitable for cautious investors who want to mitigate the possibility of not receiving their investment back.
There are several banks that provide these types of accounts, which are protected by the Federal Deposit Insurance Corporation (FDIC). Therefore, as long as you adhere to the federal insurance limits, there is no need to be concerned about losing your deposits.
Although high-yield savings accounts are considered to be secure investments similar to CDs, there is still a potential risk of losing the value of your money over time due to inflation if the interest rates are too low.
Online banks often offer significantly higher interest rates compared to traditional brick and mortar banks due to lower overhead costs. Additionally, transferring money to your primary bank or accessing it through an ATM is usually quick and convenient.
Throughout a significant portion of the year, rates may exceed the inflation rate, potentially resulting in an increase in your purchasing power.
Long-term certificates of deposit
Certificates of deposit, also known as CDs, are typically provided by banks and tend to have a higher interest rate compared to savings accounts. They are one of the best investments for 2024 for low-risk investors.
In situations where you anticipate a decrease in interest rates, long-term CDs can be a more advantageous choice as they allow you to maintain a higher rate of return on your money for an extended period of time.
Due to their secure nature and better returns, certificates of deposit can be a suitable option for older individuals who do not require immediate cash and are able to invest their funds for a short period of time.
Investors who are risk-averse and have a specific time frame for needing their money may benefit from using a CD. By locking in their cash, they can potentially earn a higher yield compared to a savings account.
While CDs are generally perceived as low-risk investments, they do present a potential reinvestment hazard. This means that in the event of a decrease in interest rates, investors may receive lower returns when they reinvest their principal and interest in new CDs with lower rates, as demonstrated in 2020 and 2021.
One potential concern is that interest rates may increase and individuals may be unable to capitalize on this opportunity if they have already committed their funds to a certificate of deposit (CD).
However, considering the projected decline in rates in 2024, it may be advantageous to secure a long-term CD in order to secure a greater yield over the duration of the CD.
Take note that your investment’s purchasing power could be greatly diminished by inflation and taxes.
Additionally, when you have a CD, the financial institution will provide you with interest payments at frequent intervals. Upon reaching maturity, you will receive the initial amount you invested along with any accumulated interest.
Long-term corporate bond funds
Companies have the option to generate funds through issuing corporate bonds to investors, which can then be consolidated into bond funds that hold bonds issued by numerous corporations.
Bonds with a long-term maturity of 10 years or more are a more suitable option during periods of declining interest rates, which is projected to occur this year, as such they are one of the best investments for 2024.
Corporate bond funds are suitable for investors who desire a steady stream of income, such as retirees, or for those seeking to decrease their portfolio’s risk while still earning a profit. For risk-averse investors looking for higher yields than government bond funds, long-term corporate bond funds can be a viable option.
Similar to other types of bond funds, long-term corporate bond funds do not have FDIC insurance coverage.
It is possible that businesses may experience a decrease in their credit score or encounter financial difficulties, leading to the default of their bonds.
To mitigate this risk, it is important to ensure that your portfolio consists of high-quality corporate bonds. Additionally, bond funds typically hold bonds from multiple companies, thus decreasing the likelihood of one bond significantly impacting your portfolio.
Typically, long-term bond funds with an investment-grade rating offer more attractive returns to investors compared to government and municipal bond funds. However, these higher rewards also come with an increased level of risk.
Corporate bond funds are available for purchase and sale through brokers who offer ETF and mutual fund trading.
ETF trading is typically commission-free with most brokers, while purchasing a mutual fund may require a commission or minimum investment with certain brokers.
Dividend stock funds
Dividends refer to a company’s profits that are distributed among its shareholders, typically on a quarterly schedule. Therefore, dividend stocks are stocks that provide a monetary distribution, which is not the case for all stocks. In contrast, a fund combines only dividend stocks into a single unit for convenient purchase.
Purchasing individual stocks, regardless of whether they provide dividends or not, is more suitable for experienced and advanced investors. However, you can mitigate risk by investing in a stock fund that includes a variety of stocks.
Dividend stock funds are a wise choice for almost any type of stock investor, particularly for those seeking a source of income and are looking for the best investments for 2024. These can be especially beneficial for individuals who require steady income and are able to maintain their investments for extended periods of time.
Just like with any type of stock investment, there are risks associated with dividend stocks. While they are generally considered to be less risky than growth stocks or other stocks that do not pay dividends, it is important to carefully select which dividend stocks you include in your portfolio.
It is important to choose companies that have a strong track record of increasing dividends rather than solely focusing on those with the highest current yield. This could potentially indicate potential issues in the future.
However, it should also be noted that even highly-regarded companies can face unexpected crises, making a good reputation not always enough to prevent a decrease or elimination of dividends.
One way to mitigate these risks is by investing in a dividend stock fund that offers a diverse range of assets, reducing your dependence on a single company. This can be achieved by purchasing a dividend ETF.
You can potentially increase the safety of your stock market investments by choosing stocks that offer dividends.
Investing in a dividend stock allows for potential gains through long-term market growth, while also providing immediate cash returns.
Dividend stock funds can be obtained in the form of ETFs or mutual funds at any brokerage that offers them.
Value stock funds
These investments focus on value stocks which are priced lower compared to other options in the market. When stock prices increase, as they often do, investors often question where they should invest their money. One potential option for investors is value stock funds.
These funds are some of the best investments for 2024 for individuals who are willing to accept the fluctuations that come with investing in stocks. Additionally, investors in stock funds should have a longer-term investment plan, typically lasting three to five years, in order to navigate any market turbulence.
While value stock funds may offer a safer option compared to other types of stock funds due to their lower cost, they are still composed of stocks and will therefore experience greater fluctuations compared to more secure investments like short-term bonds.
Take note that governments typically do not provide insurance coverage for value stock funds.
As interest rates increase, value stocks typically outperform growth stocks, which become less appealing in comparison.
A number of stock funds that prioritize value also offer a dividend, making it an added incentive for numerous investors.
REIT index funds
A REIT, or real estate investment trust, is a highly attractive option for investing in real estate. By paying out dividends and avoiding corporate taxes, REITs offer a unique opportunity for investors. REIT index funds distribute these dividends to shareholders, making them a popular choice.
These publicly traded REIT funds often include a diverse range of stocks, providing access to various sub-sectors such as lodging, apartments, and offices. This allows investors to easily diversify their real estate portfolio without the hassle of property management.
After facing difficulties due to increasing interest rates, 2024 may be the year for REITs to shine once again. They make our list of the best investments for 2024.
REIT index funds offer significant dividend payouts, making them an appealing option for investors who prioritize generating income, such as retirees. Additionally, REITs have the potential to increase in value over time, providing opportunities for capital appreciation.
However, as the prices of publicly traded REITs can experience significant fluctuations, investors should maintain a long-term perspective and be prepared to handle any volatility.
Investing in a REIT index fund can mitigate the risks associated with owning individual REITs, as the fund provides diversification by holding multiple REITs within one fund.
However, the value of the fund may still fluctuate, particularly when interest rates increase. It is important to be cautious of non-publicly traded REITs or REIT funds.
There are two potential benefits for investors in a REIT fund – an increasing flow of dividends and an increase in capital value. Over the long term, a well-performing REIT fund has the potential to generate annual returns of 10 to 12 percent, with a portion of that being distributed as dividends.
Rental property
Buying rental properties can be a profitable venture if you are willing to manage them yourself. This path requires selecting the appropriate property, securing financing or buying it outright, maintaining the property, and handling tenants.
As housing prices have recently stabilized, a carefully planned real estate purchase could yield positive results in the future, particularly since interest rates have reached their peak in 2023.
Owning rental properties is a profitable choice for investors who are looking for a sustainable way to oversee their properties and earn consistent income Particularly, they can be one of the best investments for 2024.
The convenience of digitally buying and selling assets in the stock market may not be available with just a simple click or tap on your internet-connected device.
In addition, you may potentially face the inconvenience of receiving a 3 a.m. notification about a burst pipe.
As interest rates reached their peak last year, the current market conditions may present a favorable opportunity to secure financing for a new property in 2024, with the anticipation of lower rates.
However, the uncertain state of the economy may pose challenges when it comes to managing the property effectively.
Holding onto your assets, paying off debt gradually, and increasing rental income can result in a strong cash flow for retirement.
It is advisable to collaborate with a real estate agent in order to locate rental accommodations. Alternatively, you can focus on establishing a network that could potentially provide you with advantageous deals before they become available on the market.
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.