The new year is here, but the market remains quite the challenging place. Despite hoping for an economic rebound, investors remain cautious — especially if we hope to be well suited for a bull market in 2024.
January can be a difficult time to start investing with so much behind us and so much ahead. This is why investors will need to take a strategic approach that looks to capitalize on growth while remaining cautious about uncertainty in the market. Today, let’s look at the best tips to have a successful 2024.
Keep cash on hand
While we certainly want to be investing during this market, make sure that you always have some cash on hand in case of an emergency. Life happens, and a recession could lead to job insecurity. So, making sure to have at least three months to six months of wages on hand will help you feel secure during this time.
Yet that’s not to say you can’t do anything with that cash. Right now, interest rates remain high. And there are Big Six banks offering immensely high interest rates on Guaranteed Investment Certificates (GICs). In fact, you could just put your cash into a GIC for 30 days and get a rate of 4.5% right now!
As we exit poor market conditions, these interest rates are likely to become lower and lower. So, these GIC rates aren’t likely to last much longer. And it’s guaranteed income! You can’t lose if considering this option in 2024.
Be prepared
Now that you have cash on hand in terms of investing in a GIC, create some other cash set aside specifically for investing. For this, you’ll need to assess market conditions before diving into something head first. Assess the market, look at recent trends, global events, and anything else that might influence your valuable insights.
Look specifically at ways to diversify your portfolio. This is a key practice for sound investing. You’ll want to invest across different asset classes, industries, geographical regions and more, all with the goal of reducing risk. This diversification will help you during unforeseen market fluctuations.
Then make sure you remain adaptable. Continue to keep informed about the market, as it can be quite unpredictable, especially during this next year. Everything from geopolitical events to industry-specific news can impact performance. Make sure you can remain adaptable during this time for long-term success.
Quality over quantity
As the market continues to transition, a key is to focus on finding quality investment instead of just investing in everything that the market says could do well. Focus on companies that provide strong fundamentals with a solid history of weathering all economic storms. These would specifically include blue-chip stocks, with a long history of dividend payments and stability in tough times.
Consider then finding defensive stocks that have done well during recessions and do well afterwards as well. Allocate some of your portfolio to these stocks, focusing on areas such as consumer staples, healthcare, utilities, and more. These can provide stability during economic downturns.
A strong option these days would include Dollarama (TSX:DOL), which provides consumer staples for a low cost. Canadians continue to seek out Dollarama during tough times to bring costs lower. However, during good times, Canadians still choose it with more cash in their pockets to spend on other items. Further, it has a long history of share growth, with more to come in the near future from acquisitions as well.
All in all, remember to remain consistent, focused on your goals, and be prepared to adapt to changing market conditions.
