How to Invest In 2024 So We Can Catch Flights Not Feelings

Inflation is cooling, household spending is up and personal savings are down; here’s how we plan to invest in 2024.

Let’s start at the top. It feels like we are still fighting back the pandemic flu. Just when you think it’s a new year, here comes even more Katt Williams shenanigans. We even have real wars, supply chain crises, and election conflicts playing out in the background. It’s tiring. I’m even tired of going to the movies.

One thing is for sure, no matter how this current period ends, most Americans will be worse off for it. Especially if we don’t learn to maximize our dollars and invest with the same energy and zeal as we spend. And, don’t mind the Loud Budgeting.

It’s another fad. Don’t let investing for your future end up being another TikTok dance challenge. Fleeting and Empty but you get the point.

Overall TNFG Financial Strategy and How we intend to Invest in 2024

We just came back from another international trip.

The mountains and beaches of Brazil, aka the old green and yellow, managed to impress Mrs. TNFG. So much so that she agreed to have a vacation home there in retirement. With phase 2 complete, all that’s left is 13 whole years until retirement.

Our initial strategy is to move away from low-performing stocks by selling at least at the breakeven point. After that, we will be consolidating into high-growth and high-performing stocks when the market retreats 7%-10%. See Exhibits A and B

While this strategy will change over the year so far, we will continue to:

• Max out my tax-advantaged retirement accounts (401k) in which we can each contribute $23,000 pre-tax.
  • This will ensure that our adjusted gross income for 2024 receives a reduction of $46,000 saving us at least $9,200 in taxes. Since 401k options tend to be more mutual fund-centered, we are shooting for the funds that cater to younger people since the time horizon is related to the risk-reward.
• Add $7,000 each to our ROTH Individual Retirement Accounts (IRAs). While they might not have the tax deferment benefit, we get tax-free growth.
  • Additionally, since, we are in the income phaseout threshold, we can still pump in the maximum with no penalties. In this case, we can be more aggressive on what stocks we pick. The goal is to maximize growth potential.
• Finally, we are adding $14,500 to our after-tax brokerage account. In this account, we are rebalancing at least once or twice to capture gains and reorganize if there are losing positions.
  • We are still working on it so that we can best the market by at least +8 percent. It’s a hard push but we will see how we can build a $1M dividend portfolio.
• If the S&P 500 falls below 4,850 again, we will start allocating the remaining cash position of $15,000 into quality high-performing stocks.
• We anticipate, the S&P500 to close at 5,200 for the year. This may also lead to +200 if the tailwins post-election are as strong as 2020. Either way, our total investment contribution goal for the year is set at $86,000, not including any dividends that we might earn along the way.

What the experts say to invest in 2024

Wall Street forecasts are all over the place. The S&P 500 racked an impressive 26.29% total return in 2023, rebounding from negative 18.11% in 2022. 2024 promises to be a bit more subdued with 7%-12%.

The market pivots on a dime. It’s not that things are bad, it’s that there are a lot of retail investors hanging on every morsel of words that come from Jerome Powell (Fed Reserve Chairman). He could have a muffin instead of a bagel on Tuesday and it will be analyzed for breadcrumbs of inspiration.

It’s chaos that feels worse than the Cocaine-Bear economy of 2023.

No matter what the news says, my wife and I are taking full advantage of tax-advantageous accounts. You should too. My 401k had gains of over $55,000 in 2023 (+25% rate of return) not including the matching contribution. At this rate, in a year or two, the gains from one account will equal the median salary of an American worker. That’s the power of investing, literally an extra person. And that’s just one account. If I remember correctly, our total investment growth in dollars for 2023 was $216,921. That’s nearly 3x the median American salary.

Suffice it to say, you have to get into this game. It’s mandatory to survive through 2060.

With mortgages, rent, utility bills, debt repayments, and groceries chomping at your checking account, it might seem like you are starting from scratch but there are ways to shift. From budgeting to cash flow management, you can either organize your expenses and/or increase your income. Either way, you can’t choose to do anything.

Doing nothing is an expensive hobby.

New to Investing

If you are new to investing, you have a lot of questions. It’s OK. If you aren’t new but you still have questions, it’s ok too.

The one bad question is asking “What can I invest in to make money?” For one, it’s a silly question.

Secondly, no one can predict the future to tell you which stock will make money and when. It’s a wild card. You never know what the day or the year may bring. Just the other day, Tesla was riding high now it’s down 24% (YTD as of 2.14.24).

To mitigate your risk you can invest in an ETF aka the basket of investments. That way, you aren’t relying on one company to get you over the hump. Instead, you diversify your risk over a ton of companies. You let the experts do the heavy lifting and still come out on top.

Other questions might come up. How much money do I need? Who am I? How do I get started? Will I lose all my money (all of the $500 that you invested yesterday)? What are the best investment strategies to be a millionaire?

That’s a bit much but I hope this helps.

Here are four steps to start investing this year:

1. Start investing as early as possible

Investing is truly a game that requires time. The longer you hold a great investment, the better it will return. For example, even $1,000 in Apple $AAPL stock on January 1, 1998, would be worth over $1.53 million with an M. That’s the power of compound interest, this tool can be your most powerful ally or worse enemy ie credit card interest.

Start early and let your work compound for you. It doesn’t matter how few dollars, you start with. The name of the game is consistency in the process.

Let’s say you invest $400 per month for 10 years and earn an 8% average annual return. At the end of the 10 years, you’ll have $72,050. Of that amount, $24,050 is all earned interest from your initial investments. This represents 33% of your portfolio. But that’s not all.

By year 16 1/2, something interesting happens. Your total portfolio would have reached $159,175 with half of it being all interest earned. By the end of year 40 (normal working years), a simple investment of $100 per week or $400 per month could have grown to nearly $1.3 million. Of the total amount, $1M would be all total earned interest on your investments.

You really can put a price on your brunch dollars.

2. Decide how much to invest

How much you should invest depends on your financial situation, investment goal, and when you need to reach it.

The most common investment goal is retirement but you can generate your own ‘Why’. I think about not working anymore and traveling the world while receiving checks from our investments.

You have to develop a powerful enough ‘Why’ to keep you moving forward while everyone else is spending.

As a general rule of thumb, you want to aim to invest more than 10%. Why more than 10%? Because most people settle at 7% if they hear 10%.

I think it’s better to shoot for 28% of your income each year for retirement. The simple reason is that at less than 10%, you will be working for at least 66 years to squirrel enough to retire. The 28% breaks that down to early 50s if you want to retire while assuring that your money lasts.

No matter what you choose, remember that your time and health are not guaranteed. The best you can do is to mitigate the future by investing today.

3. Go ahead and Open an investment account they have specials

Most people are afraid to cross this threshold. All of this investing talk doesn’t work if you don’t apply. The first access point will be through your employer’s retirement account i.e. 401k. If you don’t have that, you can jump to investing in an individual retirement account (IRA), like a traditional or Roth IRA.

You can also consider a taxable brokerage account. The benefit of investing without the restriction on your money. Just remember, brokerage accounts lack tax benefits. It’s great if you can add this option after you maxed out your retirement contributions.

Some of these brokerages offer first-time investor specials (terms and conditions apply):

• Get $101 through the Schwab Starter Kit
• Earn $100 From A $50 Deposit With Fidelity Bloom
• Get $250 through M1 Finance

4. Pick an investment strategy, the fun(d) part

Once you decide how to invest, you’ll need to choose what to invest in. Every investment vehicle carries some form of risk. Make sure you align it to your risk profile and your goals. The most popular investments include Stocks, Bonds, Mutual Funds, ETFs, international and Alternatives.

Furthermore, your investment strategy depends on your time horizon. If your savings goal is more than 20 years away, buy low and hold. Picking specific stocks can be complicated and most people mess it up. It’s like gambling. You can help yourself by having a solid entry strategy and exit strategy.

I included our overall strategy below as an example. This is the one we used back in 2020-2021. It held up but since moved away from $JEPI and more into growth. Also traded $VOO for $QQQ as our main ETF. Our Google sheet with all of our investments is posted on the main page or click here. As always hope all of this helps.

See my strategy style below

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