Can the US do it again? You’d think that such a winning streak couldn’t continue – but then you might have thought that a year ago and it did. I usually console myself that I don’t need the answers – I tend to invest in passive funds that simply buy the market rather than outperform it. That way I don’t need to bet on the winners and losers.
Then, whatever was left in my current account I’d be free to spend. I didn’t track it too heavily because my thinking was that if I was saving enough and covering my bills it didn’t matter.
If one of them took a dip it could really dent even a fully balanced portfolio that simply tracks the value of all global stock exchanges. I wonder if this is a year to make some active decisions, so I am less beholden to these enormous US companies – or hope for another gravity-defying year.
Well, last year I did it – and so far, so good. If you’re looking at your new year bank balance – or actively avoiding doing so – and considering a change in strategy, I’d recommend giving it a go. And leaving it up for review – you can always revert or tweak it if it doesn’t suit you.
At the beginning of the month, he splits his pay cheque accordingly into pots designated for each type. He has a bank account that allows you to automate this process, so that when your salary hits your account it flies off into your different pots you’ve specified.
What is different is that in September last year I started a new budgeting technique. Until then I had managed money in the same way for years. I had all my direct debits set up so that my bills would come out on payday.
Behavioural economists have identified the phenomenon of the pain of paying – but there are ways to reduce it
If there’s one thing I wouldn’t have predicted this time last year – after the US stock market had enjoyed a 24 per cent gain in 2023 – it’s that it would do it all over again and rise a further 23 per cent in 2024.
I often wonder: who actually does these things. We may know that a new way of budgeting could be beneficial, but when you’ve managed your money in one way for a long time it can be hard to break the habit. We may not even realise we have a particular style because we’ve done it for so long we don’t even notice it.
For the last four months, all of my household bills, groceries, holidays and even meals out have felt as if they were free. That’s not because I have won the lottery or have a new benefactor – in fact I’ve had no change to my finances at all.
Keep an eye on the Magnificent Seven
My husband swears by a ‘pots’ technique for managing his money. He decides how much he wants to set aside for different types of spending, such as groceries, household bills and petrol.
However, this year I’m getting a bit anxious. Such is the size of the seven biggest companies listed in the US – known as the Magnificent Seven – that they make up close to a fifth of the value of all the large and medium-sized companies listed across the globe in developed and emerging markets.
But all that changed when, towards the end of summer, I married James – a budgeter.
When the balance on this pot starts to rise, it’s a helpful reminder that we haven’t been out for a while. When that happened late last year, it prompted us to book those ballet tickets.
