Stocks Or Safety?

Looking out to 2024 we all have to make an important decision for our investments today

🚀 What’s happening: After years of savers getting hosed by low interest rates, 2023 finally gave us some low risk options to stash our cash and still earn a return above inflation.

For example, putting your money in simple U.S. Treasury Bills or certificates of deposit (CDs) can earn you a 4% or 5% return with inflation right now running at 3.2% based on the latest Consumer Price Index (we talk about low risk investment options in more depth here).

Investors in the stock market also are doing well this year with the S&P 500 up almost 20% year to date (although it’s worth pointing out here we are still below the market’s peak hit on January 3rd 2022).

Whatever you invested in, most families’ 401(k)s or brokerage accounts were positive, which is a relief after a tougher 2022 for most people.

But now we all have to make an important decision with our investment accounts as we look to 2024.

Explain.

If the market is right and we start to see interest rates move lower in 2024, this will also lower the interest we will receive on low risk investments (Treasury Bills, bonds, CDs, etc), possibly to a point below inflation again.

On the flip side, after the run the market has had this year, it’s hard for anyone to confidently say how it will do in 2024. After all, it’s not hard to look around and see risks (economic slowdown, geopolitical risks, global elections, etc). Leaving money mostly in the market then would mean another role of the dice.

So the question for all of us today to consider is what do we do with our investment mix?

Do you try to allocate more money to locking in the 4-5% interest rates you can get today by buying longer term safe investments before they come down (ex. 5 year CDs or 10 year Treasury Bills), or do you roll the dice with most of your investments and play the market again in 2024?

👪 Closer to home: We caveat our view here by saying the answer likely will depend on you and your family’s unique situaiton.

If you are younger and have more time until retirement, maybe you can roll the dice a bit more with your 401(k) or investment accounts and allocate a bigger portion to stocks. If you are older and closer to retirement, maybe you allocate a bit more to locking in a 5 year CD rate (for example) which is likely to move down should interest rates move down.

There is no one right answer here no matter what any “financial expert” may tell you and you should do what you think is best for you and your family (we will always tell you that).

Whatever you decide, the time to start thinking about it is now and if you have any questions we are always and email away.

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