How should I invest money in 2024?

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The critical question in 2024 is how fast interest rates will fall.

The fact that interest rates will fall in many countries seems inevitable.

Inflation has been falling around the world.

Source FT

The full effects of the interest rate hikes have yet to be felt.

Once they have been felt, interest rates are likely to fall.

That is likely to be good news for the following assets

• Stocks in general, as per the graph below, but especially some non-US stocks if the USD falls when interest rates are decreased. Small caps and technology also get affected more by higher interest rates, as we saw last year with the Nasdaq. So, rate falls could be good for these firms.

Source Simply Wise

• Long-term government bonds. They tend to perform poorly when interest rates increase, and vice versa.
• REITs. Real estate investment trusts are vulnerable to higher interest rates than some other assets, just like direct real estate.
• Real estate will likely stop falling in markets like the UK, but I doubt it will outperform some other assets mentioned above in 2024.

The bottom line is that falling interest rates are good news for most assets.

As Warren Buffett once said, interest rates are like gravity for asset prices.

Falling rates are likely to be bad for money market funds, of course, as they track the base rates of the major central banks.

So, like savings accounts, they will likely pay less in 2024 or 2025.