How to Invest in 2024 to Avoid Costly Mistakes

In any year, you should always invest with the utmost caution, without using money that you are going to need in the short term and with a time horizon of at least 3 to 5 years.

The year 2024 comes with uncertainties: there are wars uncertainties and many other situations will certainly appear.

There really will always be something that makes the front pages of the newspapers and the news that can make you postpone your investment decision. That is why it is key to be comfortable with the portfolio you have.

Where to invest my money in 2024?

To find out where to invest your savings, let’s take a brief look at the main assets to invest in.

Equities: This is usually the most popular choice for investors. The main drawback to buying shares is investing without knowledge.

If you invest in a company because it is trendy, because you read about it in the press or because some guru recommends it, you are likely to lose money because you will not be convinced when it falls, you will sell too early or too late and you will make mistakes because you do not know the company.

Sometimes you may have done everything right. You have researched the securities you want to buy. You have carefully researched information to choose a safe and licensed broker in Europe and you have considered your time horizon. But sometimes all this is not enough and the market still goes against you and exposes you to temporary losses.

This should not cause you much stress. When your investments take a hit, always go back and look at what your time horizon was. If you have decided to hold shares in your portfolio for five years, there is no point in worrying about their performance after one year.

Investment funds: Along with shares, this is the most popular choice among investors.

The good thing is that you don’t have to know the companies you invest in, because the managers do. Here you need to be very careful about the fund you choose (check the profitability over the last 5 years) and the commissions they charge you.

Fixed income: If your profile is conservative, you will have a high percentage of your portfolio in fixed income.

With interest rates at historic lows, there are many funds that are making losses. In the long term, they are more useful for capital preservation than for multiplying your savings.

ETFs: ETFs tend to track indices such as the SP500, although they can also track the price of commodities, the largest capitalisation companies in the technology sector, etc.

There is a wide range to choose from. However, for tax reasons, we do not recommend investing through ETFs or shares, but through investment funds.

Deposits: The favourite choice of many Spaniards. The problem with them is that they do not cover inflation and although you see that the money is the same, the reality is that each year that passes in the deposit or current account, you can buy fewer products.

Choosing the right investments and diversifying across different sectors is key to your long-term investment success. So when you ask yourself where to invest in 2024, ask yourself if what I buy today will have appreciated in value in 5 years’ time to make the most of my savings.

Best investments in 2024

After such a turbulent year in 2023, with inflation at an all-time high and doubts about Russia and Israel, predicting 2024 is quite difficult. It is still too early to tell whether inflation is temporary or permanent and how the conflicts will develop.

As we mentioned in the previous section, choosing the right investments is the key to achieving positive returns in the long term, even if there is a crisis in the middle.

One asset that we see as risky, but which is very stabilising for the portfolios, is real estate crowdfunding in Europe.

Putting up with the news, the volatility, the negative news.

It is not easy to see your hard-earned savings fall.

Where can I invest without risk in 2024?

There are low-risk products that can help protect your capital and minimise losses in a downturn, but their profitability is low. Depending on your age and risk profile, you may want to maintain or increase your capital.

One of the safest products is the fixed-term deposit offered by banks, but as mentioned above, the return is below inflation and the purchasing power is lost. It is advisable to invest in mixed funds or to spread your savings between variable income funds, fixed income funds, monetary funds, property funds, etc., allocating a higher percentage to one or other depending on your ability to withstand volatility and how close you are to retirement.

Saving to buy a house

If your goal is to buy your own home and you are struggling to save the 20% deposit that the bank may require, investing some of your savings can help you reach your goal sooner.

Of course, with a long-term view and not selling at the first stock market shock. Although you may think it makes sense to buy when it goes up and sell when it goes down, it’s actually the other way around.

When would you buy a television? When it goes up or when it goes down. We know that buying a television is not the same as watching your money go down, but the idea is that it is better to buy a good asset at a good price, and if it goes down further and continues to be a good asset, to buy more, than to buy it when it goes up further.

It is not only the goal of buying a house that can be achieved by investing wisely for the long term. You can also invest to earn the money to send your children to university, to pay for a good and well-earned holiday, to supplement your future pension, to start your own business.

Whatever your goal, you will achieve it more quickly by investing than by leaving dead money in a deposit or current account.

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