Originally published at: How to set financial New Year’s resolutions for 2024 – InvestEngine Insights
2023 was turbulent but was, in many ways, a salve for the difficulties of 2022. Markets bounced back and (generally) finished the year higher than they started it, while investors took advantage of high interest rates with assets like money market funds.
As 2024 gets underway, we’re encouraging investors to use January as a time for organisation, reflection and maintenance of their portfolios. With most of us considering what changes we’d like to make in the new year, financial New Year’s resolutions should be on your list.
The biggest change you can make to your finances is to start investing your cash. You could be missing out on growth by letting your cash sit in low-interest bank accounts. Start investing today.
Put your cash to work
Inflation was one of the top stories of 2023 from an economic perspective. Global geo-political issues caused turbulence and pushed prices up both in the UK and abroad. Inflation has come down, but it’s still far higher than the Bank of England’s 2% target.
Investors need to find ways to grow their cash so it doesn’t have its value eroded away. Naturally, we recommend investing as a tool to grow your wealth and fight the effects of high inflation. Whether it’s money market ETFs or a broader ETF portfolio, there are opportunities out there to maximise your cash.
Keep looking to the long term
If 2023 taught us anything, it’s that short-term turbulence can always pop up. We started last year with deadly earthquakes in Turkey and Syria, followed quickly by a US regional banking crisis, an economy-boosting tour from Taylor Swift, the King’s coronation, and panic over the US debt ceiling. And that was all in the first six months.
As we ended the year, with higher interest rates and slowing inflation, we began to look ahead to what 2024 has in store. One lesson to take is that planning for the short-term is difficult and that maintaining a long-term view of investing is an important part of your financial planning.
We’ve written before about the importance of thinking long-term and remaining invested during turbulence. Particularly with ETFs and well-diversified investment portfolios, selling when you’re in a dip is a surefire way to crystallise any losses and miss out on any recovery.
Market turbulence is normal – if we see any in 2024 (and it’s likely that we will), remember to stick to your guns.
Probably the most important resolution you can make is to start investing regularly. Markets may rise and fall but consistently topping up your portfolio is an easy way to keep it growing over time.
Pound cost averaging is a tried and tested investment strategy and our Savings Plans make it easier than it’s ever been to take advantage of it. You simply set the amount you want to invest and how often and we’ll handle the rest.
Savings Plans make use of our AutoInvest feature, which takes any cash you’ve accumulated in your portfolio and invests it automatically in your chosen portfolio. This means you don’t have to worry about unused cash building up in your account and missing out on any potential returns. If there’s one change you make in 2024 to your financial habits, regular investing should be it.
Review your investments
Part of investing is periodically ensuring that your portfolio is up to scratch. It’s fine to practise set-and-forget investing, but this doesn’t mean never checking in and making adjustments.
Circumstances change – inflationary pressures, global socioeconomics, your personal financial situation or long-term goals – these are all factors to consider and weave into your investments. A portfolio that made sense in 2018 could look very different to one that fits 2024.
Take the time this January to review your investments and ensure that your money couldn’t be put to better use elsewhere. Whether it’s changing the ETFs in your portfolio to better reflect the current landscape, moving to a provider that doesn’t charge platform or trading fees (like InvestEngine), or opening a Managed portfolio, now’s a great time to have a tune up.
Healthy financial habits can have a serious material impact on your life. In 2024, let’s set some positive financial New Year’s resolutions (and actually stick to them)!
Capital at risk. The value of your portfolio with InvestEngine can go down as well as up and you may get back less than you invest. ETF costs also apply.
This communication is provided for general information only and should not be construed as advice. If in doubt you may wish to consult a professional adviser for guidance.
Tax treatment depends on personal circumstances and is subject to change, and past performance is not a reliable indicator of future returns.