With 2023 almost behind us, everyone’s focus seems to have switched to 2024.
One would imagine that the new year is some magical transition into a new realm rather than just another Monday morning come January 1st.
Those bent on having a great investing year come 2024 have begun to ask questions. How do I invest in 2024? What assets would perform in the next year? Should I sell my share of my inheritance to purchase digital currencies?
If only someone out there has a crystal ball to see the future. If only someone could tell us exactly what stock would perform in 2024 beforehand or what asset class would have a stellar run.
While no one can say exactly what the future will bring, with access to the right information, an expert can make a great prediction.
This is exactly what this article intends to do; predict what asset classes may perform in 2024. With that being said, let’s go!
Generally, there are two ways of preserving or growing wealth. Saving and investing! Without these two wealth-preserving vehicles, wealth simply gets squandered or depreciates by itself over time.
Savings vs Investing
Saving is simply putting aside a portion of income with a custodian like a bank, or modern custodians like Cowrywise and Piggvest.
While assets put in savings are relatively safe, returns are not exactly something to write home about. As per an Apple report, its wallet launched in April 2023 has an APY of 4.15%. According to Apple, this is more than 10 times the national average.
With APY of this kind, N50,000 investment will yield an N2,075 return in a whole year.
With inflation in Nigeria standing at 28.2%, your returns on savings would most likely be swallowed by the hyperinflation in the economy.
Investing on the other hand is simply putting your assets into vehicles that have potential for returns. Investment vehicles include equities, commodities, mutual funds, digital currencies, etc.
While it is possible to lose all or some of your portfolio when investing, it also promises some serious upside potential.
For example, a N50,000 investment in Solana; one of the top five digital currencies, in January 2023 would have produced N457,000 in returns by the end of the year. Solana had a stellar run of over 900% in 2023.
Find below how these assets performed in 2023 –
Apparently, to grow wealth, one must shift their focus from savings to investing.
Now let’s look at nine asset classes that are tipped to perform in 2024.
Equities
Equities had quite a stellar run in 2023, with a handful even yielding triple-digit returns. The interesting thing about the 2023 “bull run” in equities, is the fact that even traditional big-cap stocks that weren’t expected to produce staggering returns did.
Meta (197.76% YTD), Tesla (105.54%), and Nvidia (238.87%), all produced triple-digit returns despite having very large market capitalization already. These aren’t pink sheet stocks!
In Nigeria, the equities market also had a great rub with outliers like Chams Plc (733% YTD) hitting multiple triple-digit returns.
One shocking top performer this year was Transcorp Hilton. The stock pulled a staggering 679% in YTD returns.
More of the same
With no considerable change in economic prospects and in fact good tidings as per reports of deliberate slowing of interest rates by the US feds, we may see another great run of equities in 2024. This however is not financial advice. Always consult a financial expert before investing.
Indexes/ETFs
Stock picking could be a tedious and disappointing endeavour. When stocks are performing as they did in 2023, one may miss out on the ones that perform exceptionally well because they “stockpicked”.
It is difficult to know exactly which stock will perform well but relatively easier to tell which sectors will. Indexes and ETFs are baskets that group stocks that share similar characteristics, allowing investors to invest in all of them at once.
Indexes like the S&P500 (25.08% YTD) have ETFs that allow the investor to invest in the top 500 listed companies in the US. Investors don’t need to know which individual stock will perform well, just the knowledge of a rising US equities market puts the odds of making good returns in their favour.
In 2023, with the buzz around Artificial Intelligence AI and big companies like Meta supporting the idea, Musk’s open AI, Grok and ChatGPT musings, an intelligent investor could have bet big on the sector. But how does he know which stock will perform? He doesn’t need to.
Why not invest in an ETF like Global X Artificial Intelligence and Technology ETF (55.89% YTD)?. A N50,000 investment in this ETF would have returned N27,500 in 2023.
DYOR
In 2021, right after the Covid pandemic hit, the XLV Health Care Select Sector ETF produced a 26.03% yield. Do your research on what trends and sectors are most likely to perform come 2024. What are the rewards for that you may ask. Mouth-watering returns.
Mutual Funds
Imagine your stocks and ETFs being picked by seasoned experts. I mean experts that have probably been doing this job for the last thirty years. Have seen the dot com bubble in the late 1990s, the ‘08 financial crisis and what have you. This is what mutual funds offer.
Mutual funds are offered by investment houses like Black Rock, Vanguard, Stanbic IBTC, ARM etc. Unlike ETFs though, the assets selected need not have anything in common. For instance, a balanced mutual fund may invest 20% in treasury bills, 50% in equities and 30% in commodities.
In 2023, mutual funds in Nigeria outdid themselves. While one can attribute this to the general performance of the markets, the bottom line is that mutual fund investors smiled with a wide grin to the bank.
Let’s take a look at some of the highest-performing mutual funds in Nigeria. (YTD 49.9%), Stanbic IBTC balanced fund (YTD 26.75%), Siaml pension etf 40 (YTD 52.24%), Stanbic IBTC aggressive fund (YTD 49.9%) Stanbic IBTC Imaan fund (YTD 41.18%), ARM aggressive growth fund (YTD 11.4%), ARM money market fund (YTD 13.01%).
See you again next year
With general market sentiments poised for a stellar performance in stocks and commodities in 2024, mutual funds may have yet another great year. But what if they don’t? Then the investor must cut their losses as no investment is 100% certain of posting great returns or any returns at all.
Currencies
Investing in currencies is simply speculating and taking advantage of fluctuations in the currencies of different countries.
One great example of a period when investors took advantage of currency trading opportunities was late 2022 when the British Pound GBP, reached parity with the US Dollar.
Smart investors knew that the parity would not last for too long and they took advantage of it. Fast forward to 2023 and GBPUSD is up 5.10% YTD. A $10,000 investment in the opportunity would have yielded $510 in returns.
In Nigeria, the Naira had a free fall relative to the Dollar losing 46.7% of its value in the process. In fact, if you kept your assets in Naira this January, attempts to convert them to Dollar now may send you into unconsolable agony as we are looking at a near halving of value.
Foot on the brakes?
In the Nigerian scenario, some investors wooed by how profitable currency investments was in 2023 have pitched tent for another run in 2024.
Foot on the brakes my good friend. With FX policies at the front burner of the Tinubu administration, it’s more likely than not that the Naira would appreciate come 2024.
Cryptocurrencies
Many seasoned investors consider cryptocurrencies a fad. It will come and go they say. We have seen many euphoric contraptions come and go.
And in fact, at the end of 2022, the sceptics had the win. The digital currency king Bitcoin was down -64.14%. What store of value loses more than half of its value in one year? Sounds bad, but did I tell you that Tesla shares shed 68.49% that same year?
Was it a bad year for digital assets or a bad year generally? Well in 2023, Bitcoin was up 157.06% outperforming the S&P (25.08% YTD), NASDAQ (45.33% YTD), DJI (13.80% YTD), NGX ASI(45.37% YTD) FTSE 100 (2.03% YTD) all put together! Not bad for the new kid on the block.
WAGMI or NGMI?
We are going to make it WAGMI and Never going to make it NGMI are crypto slangs used to depict a bullish or bearish stance respectively. Is 2024 a WAGMI year?
With Black Rock adopting a Bitcoin-based ETF, El Salvador’s Bitcoin portfolio, and more adoption, it’s getting better and better for the pro-crypto herd. NGMI in 2024? Well, we will have to wait and see.
Commodities
Commodities are a more traditional kind of investment. They include investing in gold, silver, oil, wheat, sorghum, citrus etc. These investments are most times just contracts as no one is supplying two barrels of crude to your doorstep or ten bushels of soybeans.
In 2023, commodities performed relatively well. In Nigerian parlance, “Not too bad”. Gold (13.14%), Silver (0.96%), posted positive YTD returns albeit smaller than other assets. WTI(-10.73% YTD), Brent (-9.79% YTD), US Sorghum (-26.60% YTD) had negative returns for the year.
Commodities are relatively safer and it is customary that massive declines and indeed spikes are uncommon.
Give me more barrels and bushels?
With the abysmal performance of commodities in 2023, one would treat it with a bit of caution come 2024. No fundamental changes in demand and supply, consumer characteristics and trends to warrant a stellar move in commodities. In fact, returns like 0.96% on Silver for the year is nothing short of depressing.
Startups
The golden hands and eyes of Peter Thiel, the grit of Warren Buffet or the wisdom of late Charlie Munger. These are the superstars of VC investing aka investing in startups. This is a very rewarding investment but did I tell you that as per Forbes, 90% of startups fail? To put it in a better way, you are more likely to find yourself in nine unprofitable startup investments than one profitable one.
In Nigeria and Africa, there is the buzz about the unicorns (startups valued at > $1 billion) like Andela, Flutterwave, Jumia and Opay. Investing in these startups at their infancy would have yielded incredible returns. But what are the odds?
Get to work, Mr VC
If investing in startups is your thing then you need to get to work! It is no small task picking and vetting a team of young and probably inexperienced entrepreneurs to throw your buck at. You would need a thorough review of their previous works, team spirit, grit determination and ability to pivot quickly. Unlike investing in other asset classes, startups aren’t hands-off!
Real Estate
Investing in real estate is another profitable investment option. As per Forbes, 90% of millionaires in the US made their fortunes from investing in real estate. Isn’t that mind-blowing?
In 2023, investing in real estate in Nigeria was a profitable investment. As per Statista, the real estate market in Nigeria is poised to grow by 7.64% annually till 2028. By that time, the market volume is projected to be about $3.02 trillion.
As a potential investor, one can decide to go into low-end or high-end real estate investing. Low-end investors target low budget and middle-income families and develop properties either for rent or outright purchase. High-end investors target the high-income individuals and develop for them. In Lekki for example prices of homes are mostly north of N100 million.
Bubble burst?
One major concern about the real estate market in Nigeria is that of over-valuation. Many argue that the prices slapped on these houses are not worth it.
In large cities like Lagos and Abuja, some houses go for as high as N1 billion and many claim this is outrageous. Such prices are at par with the price of a five-bedroom 3000 Sqft property in Lincoln Avenue, Brooklyn New York!
As a prudent investor, you must make sure that you stay on top of your game and play to your advantage to avoid holding the bag should the naysayers’ prophesies materialise.
In conclusion, 2024 could be one of the best years for you in terms of investing if you can pick the right assets to put your money into, adopt the right strategies and exit when necessary. Cheers to a stellar 2024!
Very insightful, I pray your wealth of knowledge increases.
Thank you for this insights.