December 2024: Your Wealthwide 2024 Review

As we reach the end of 2024, investors have much to reflect on and deliberate.

Global equity markets (year-to-date) have delivered returns far above average, with below-average volatility (fluctuations in price).

However, at the start of the year, none of this was forecastable. From ongoing wars to numerous elections that have led to changes in government, 2024 has been a year that served up plenty of uncertainty.

As we wind down to a time that will, for many, be filled with family, friends, celebrations and rest, let us reflect on a few lessons we’ve taken from 2024.

The Budget

After months of speculation, the Autumn Budget was delivered by the Chancellor Rachel Reeves on 30 October.

While many investors were rushing to make changes based on mere speculation, we encouraged caution.

Now that the Chancellor has delivered the budget, we have a clearer picture of the changes ahead and can begin to unpack the details that are yet to emerge.

Before looking at some key takeaways, let's remember a core financial planning principle: your long-term financial security should always be the foundation of any decisions you make.

While tax is a crucial component of sound financial planning, it should not be the sole driver of our strategies.

Ignoring The Noise Is Rewarded

After great market returns in 2023 and looming uncertainty, investors could have been forgiven for feeling anxious about the short-term impact on markets. Inflation and interest rates had not yet returned to their previous levels and, in some economies, the risk of recession was ever-present.

Yet, once again, the stock market (made up of many companies that we know and use every day) has reminded us that it operates independently of the daily noise in the media. The market is made up of real companies, selling real things, to real people.

As we leave this year behind, let us resolve to carry this message with us and remember that, if we have a long-term plan, we can safely ignore most of the media hype we regularly encounter, as hard as it is in practice.

Inflation Is The Investor’s Number One Enemy

Now that inflation is largely under control, it’s worth reflecting on its impact.

Often a silent threat that compounds over time, it has reared its ugly head in a significant way over the last three years. For a short period, its impact became obvious to all when inflation hit a high of 11.1% in October 2022.

Skyrocketing living expenses have highlighted the importance of investing for longer-term growth rather than short-term preservation. With this lesson fresh in our memories, let us remember its dangers as we plan for the future.

Fortunately for the long-term investor, an investment in the global share market has consistently provided protection from this enemy.

Good Times Do Not Last Forever

After two excellent years for global markets, it’s precisely at this time that we should remind ourselves that good times do not last forever. Stock market history shows that, on average, one out of every four years produces negative returns.

While we do not know when the next negative year will arrive, we know it will.

We will never forecast markets, but we will always advocate for maintaining realistic expectations and being prepared for temporary market declines. Let us resolve never to be surprised when the market does what it has always done.

Can I Mention The Budget?

If you’ve had enough reading about the changes to pensions in the latest Budget – you might prefer the following graphic.

Thank You

In summary, 2024 has been a year in which investors' ability to anchor themselves to a well-thought-out, long-term plan has been crucial and richly rewarded. As we head into a new year, let’s continue to focus on what we can control – maintaining robust financial plans and practicing patient and disciplined investing.

Most importantly, if you have any stock market investments, I’d encourage you to stay in your seats when we next encounter market turbulence because it will come.

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“Money is numbers and numbers never end. If it takes money to be happy, your search for happiness will never end.”

Bob Marley

Making An Impact

I was chatting to a retired client this week and he told me he had recently met some dentists at an event who explained they each had £1m in their pensions. He asked them what the money was for and they said: “It’s for the kids”.

As a long-standing Wealthwide client who has heard us talk about ‘living the life you want’, he encouraged his colleagues to use the 25% tax-free cash of £250,000 each and do all the things on their “bucket list”, which they became quite excited about.

I really hope these dentists have taken his advice as the alternative is that, if they don’t spend it, HMRC is likely to get a significant share on their death.

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As always, we’re here to help you.

Hope you and your family have a lovely Christmas and I’ll see in you 2025.