What to consider when setting money goals for 2024

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Planning for the new year works best when you have an idea of what may lie ahead. Chris Paton, Chief Investment Officer at La Trobe Financial, takes a forward look at what to consider when we're setting goals for 2024.

The New Year is traditionally a time of resolutions, and along with pledges to get fit and eat better, the flip of a calendar is also a great time to give yourself a financial health check. It can help you organise money matters and be a handy starting point to set achievable financial goals for 2024.

The key to an effective financial health check is to be mindful of what the year ahead may hold.

sponsored content 2024 outlook

So through that lens, what can we expect from the New Year that investors should plan for? Of course, if the last few years have taught us anything, it is that we can never say anything with certainty. Facing into 2020, who would have expected two-plus years of a global pandemic?

How about the war in Ukraine or the demise of Silicon Valley Bank? While it would be easy to say expect the unexpected, that doesn't necessary help an investor plan for the next 12 months.

So let's take a closer look at the trifecta of factors that will shape the New Year.

1. Continued high inflation

It's becoming clear that high inflation is not about to end any time soon.

Part of the problem is that the inflation we're experiencing in Australia is not entirely homegrown. Global issues beyond our control such as the conflicts in Ukraine and more recently Gaza/Israel, are making inflation harder to contain.

The takeout for investors is to have a strong grip on your finances this New Year.

We will continue to face a cost-of-living squeeze in 2024, and it's important to reflect on whether your lifestyle goals for the year are matched by your income and budget. Consider investment strategies that continue to thrive and respond to inflationary environments.

2. Interest rate movements

The pace at which inflation trends downwards will play a critical role in Reserve Bank interest rate decisions.

On an international scale, Australia was late to pull the interest rate lever. That being the case, we could be looking at a sustained period of higher rates - potentially for another 12 months - until inflation is defeated.

3. Ongoing volatility in equity markets

Continued volatility in equity markets is likely in 2024. This reflects uncertainty around interest rates and the pricing of assets that are sensitive to interest rates.

This is not to say that equity markets should be avoided, but investors should plan for a bumpy ride in the New Year.

Lowering volatility in your portfolio

Understanding what the year may bring makes it easier to reflect on how your portfolio is positioned for the upcoming 12 months.

Most notably, the ongoing cost of living crisis makes it attractive to look for investments that can boost income without adding volatility to your portfolio. One type of investment that can - with the right manager - achieve both of these goals is property credit funds.

These funds work by providing loans to borrowers that are secured by a mortgage over either a residential or commercial property. This makes credit funds easy for investors to understand, something that should always be a priority irrespective of the market cycle.

The appeal of credit funds is that they can deliver high yet stable yields.

However, it's important to choose a fund manager with care. Given the challenges 2024 is likely to bring - let alone those that may arise throughout the year - it's worth looking for a credit fund manager with experience spanning the full economic cycle.

The last few years have seen demand for credit funds soar as investors take the opportunity to earn healthy yields. If your goals for 2024 include making your money work harder while bypassing the volatility seen in stock markets, credit funds have a well-deserved place on your radar this New Year.

La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence 222213 Australian Credit Licence 222213. Financial product advice in this article is general only and does not consider your personal circumstances. Consider the PDS and TMDs on La Trobe Financial's website latrobefinancial.com.au before investing.

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Chris Paton is chief investment officer at La Trobe Financial. He has more than 14 years' experience in banking, asset management and financial services and has held a number of senior roles since joining the business in 2017. Prior to joining La Trobe Financial, Chris worked in law specialising in the banking and finance sector. He holds Bachelors in Commerce (Distinction) and Law (Hons).