Anyone who has been investing over the last few years can tell you it is a strange time. Pandemics, lockdowns, constant doom and gloom in social media, meme stocks, all very strange! I believe it has a lot to do with the way we mass communicate, the pandemic era, and other structural changes going on in the US and world. But we will get to that. Current healthy GDP growth points to a soft landing for the US economy, the strongest engine of economic growth on the planet. USA! USA! USA!
In this article I would like to lay out my new rules for money and wealth building for 2024. Some may call these the old rules. But when it comes to money, there are some universal concepts that compound over time and lead to building wealth and financial security. So how can we thrive in the new world we find ourselves in? What tools and techniques will work best going forward?
I am at the point that I do not even want to say the word pandemic anymore, let alone Covid-19. In many ways there is a collective trauma we all worked through. Some are still struggling, but for the most part, most people have thankfully moved on.
The pandemic saw an all-time high for overall net worth. In fact, the average families net worth jumped 37% from 2019 to 2022. An average of 192,000.
I am in that same boat and at one point saw my real estate holdings, equities and other assets reach an all time high. But then about a year ago inflation really started to eat away at things. Some asset prices have dropped and some of the extra money was used for some “revenge travel”. In short, all that extra cash is gone.
Where do we go now?
From Guns and Roses “Sweet child of mine.” Where do we go now? How do we best prepare to prosper in 2024. We can most likely expect a soft economic landing, global tensions, a cooling of inflation but still high and a real estate market stuck in limbo. Well, here are the areas I am going to try and concentrate on to build wealth and health!
Best Laid Plans
I do want to emphasize the need for flexibility and adaptability for the future. The world will continue to throw us curve balls, and sometimes we need to just take a deep breath and figure out what to do next.
1. Cost Cutting is Critical
The people most damaged by the past recessions and market shocks were those over leveraged and not controlling spending. Now is the time to look for all the ways possible to cut costs.
This makes you more financially resilient, leaner and meaner. There are many things in the current world that are junk marketed to us that we really do not need.
2. Inflation Fever Breaks (but not out of the woods)
It is possible that the inflation fever breaks in 2024, in fact it appears to be happening now. BUT, I do not believe this is cause for celebration because the damage has been done. And now that the prices of items are high, they are bound to stay sticky.
3. Quality, Quality, Quality
Unfortunately a flight to quality has not totally buffered investors thus far from market turbulence. But I believe over the medium and long arc this will change.
4. Be Comfortable with Turbulence
From this point for a while, investing appears to be a bumpy ride. I still believe in long term potential. Strong companies are going to continue to innovate and grow and consumers are always going to chase value to their lives.
5. Diversify Strategically
We clearly live in an era when one moment a specific stock is a darling, and the next it is in the dumps. Almost with flimsy reasoning. It is just the typical manic depressive nature of the stock market.
The main way for a normal investor to deal with this is through strategic diversification. I want to emphasize the word strategic. I am not saying own a little bit of everything. I am saying think about the macro forces at play that will influence certain sectors and industries over the next couple decades.
Check out my “Ride My Bike Portfolio” for ideas on how I diversify strategically. NOT INVESTMENT ADVICE, I have no idea what will happen:
6. Staying US Centric
I may diversify a small amount with emerging markets, but most people can see the writing on the wall: The world order is changing. There are all kinds of current and potential conflicts arising that make over seas investing too risky for me. I want to invest in places that have rule of law, a somewhat functioning political system, somewhat under control corruption and an overall human rights acknowledgment.
For me that is investing in the US and mainly North American countries.
7. Keeping Health a Priority
It may not seem like a money rule, but after what we all experienced the last few year healthy living is critical. This means moving, eating right and managing stress. Check out the many ways Money Vikings stay strong and fit.
More Money Rules: