What’s Next? Financial Planning in 2024

To kick-start their financial planning in 2024, people like to make predictions about the year ahead. But the truth is, nobody knows exactly what will happen next.

Much of what we have to go on are mere forecasts influenced by events in the recent past, which doesn’t always pan out. For example, most financial pundits predicted a global recession in 2023, at the end of an awful 2022 (which didn’t happen!). It’s also why most of them expect a good 2024, after a surprisingly strong 2023.

Despite the ubiquitous theorising of key global risks, the financial landscape appears to be veiled in optimism, painting a promising picture for investors and wealth managers alike. Of course, as we often come to realise, the biggest risks have the tendency to hide in plain sight.

A new year almost always brings about hidden surprises in one form or another. So, to get a head start on financial planning in 2024, here are several factors market participants should pay careful attention to in the coming months.

The year of the vote

2024 will be the biggest election year in history. Along with South Africa, more than half the world’s population is heading to the polls in the coming months – India, Indonesia, Pakistan, Bangladesh, Russia, Mexico, the US (and likely Britain and Canada), to name a few.

Elections this year will determine the leadership of over 40% of the world’s population, so it’s crucial to take note of what’s happening and when, even if some of these events result in a muted impact on economic change.

Here in South Africa, our local elections tend to bring a host of disruptions that can affect daily business operations. They further herald potential policy changes and shifts in industry-specific legislation as new leaders take the reins. Concerns about a weak currency and public finances could slow rate cuts.

Along with Russia, the US election in November is one of the most likely to result in impactful global economic consequences – particularly as a result of Joe Biden and Donald Trump’s markedly different policies on international relations, and trade.

More than 60 countries are heading to the polls this year. Here’s a useful timeline of notable elections taking place throughout 2024.

2024 Interest Rates

The year 2023 was a surprising period of recovery and adaptation, setting the stage for a positive 2024 outlook. Inflation eased from its highs, and by December, central banks on either side of the Atlantic had managed to keep their main interest rates unchanged for the fourth successive month.

The outlook for interest rates this year is another factor contributing to the positive sentiment in financial markets. Central banks, having carefully navigated the delicate balance between economic recovery and inflation concerns, are expected to adopt a measured approach to interest rate adjustments. A gradual normalisation of interest rates can create a stable environment for investors, supporting asset valuations and economic growth.

Inflation, measured as a year-over-year rate of change, has historically come in waves. So as a precaution, diversifying across various fixed-income instruments and maturities can help manage risks associated with interest rate fluctuations. By adopting a proactive and diversified approach to financial planning in 2024, investors can better navigate the uncertainties of potential interest rate fluctuations with resilience.

Tech innovation & misinformation

Although still considered to be in its infancy, the rapid pace of technological innovation continues to shape the investment landscape. As we move into 2024, advancements in areas such as artificial intelligence (AI), blockchain, and biotechnology are expected to drive significant value creation along with the potential for stronger economic growth and lower inflation.

That said, AI-driven misinformation and disinformation is one of the more prominent factors dominating the risk landscape over the next decade, according to The World Economic Forum’s Global Risk Report 2024. This is something investors must increasingly be aware of and prepare for during their financial planning in 2024.

Falsified information and societal unrest are likely to take centre stage amid upcoming elections and the ongoing conflict between Israel and Hamas. But on a positive note, efforts are underway to combat this. OpenAI recently shared its current plan to address these concerns for the approaching worldwide elections, which included changes to ChatGPT’s Usage Policies and APIs.

To conclude

While the above mentioned factors are just some of the areas to watch this year, many other variants that could disrupt the flow of commerce. Ultimately, being prepared and well-informed while creating a balanced, diversified portfolio with a risk profile consistent with your goals is key to successful investing in 2024.

Need personalised support for your financial planning in 2024? I’m here to help.
connect with me directly on LinkedIn, or drop me a direct email at: giles@gapwealth.co.za

I’m Giles Maynard. I provide individual investment and wealth management services for private clients and companies. I have been trusted by clients, large and small to manage, protect, and preserve their wealth. How can I help you with yours?