Global outlook for 2024

As we start the new year,  what’s the global outlook for 2024. What might be in store for investors? Listen to our expert investment team.

2023 saw global equity markets shrug off inflation, a cost-of-living crisis, interest rate hikes, and rising geopolitical tensions to deliver double-digit returns, while bond markets also delivered robust gains.

Take a look at our global outlook for 2024 video:

Quilter Investors’ market outlook

Watch Lindsay James, investment strategist at Quilter Investors, provide her expert opinion on the three possible economic outcomes in 2024 and how the battle between inflation and interest rates will be key to determining the likely path for global markets.

Views from the Quilter Investors investment team

Hear from Quilter Investors’ portfolio managers as they explore the outlook for the key asset classes, regions, and sectors in 2024. They highlight the opportunities for investors, the markets that are best set for success, and identify the challenges that may lie ahead.

Insight from Quilter Investors’ investment partners

With specialist knowledge of their markets, we are delighted to include the views of some of Quilter Investors’ investment partners. They look back at 2023 and share their thoughts on what 2024 may bring – demonstrating the depth and breadth of expertise available to our portfolio managers.

Global Outlook 2024 (quilter.com)

If you have any questions about the global outlook for 2024 and what it means for investors, please don’t hesitate to get in touch.

You may have heard of the Financial Independence, Retire Early (FIRE) movement, which claims it can boost
people’s chances of early retirement success. Many of us dream about an early retirement, spending time doing things we enjoy. Financial realities inevitably mean few of us will realise those dreams. But how attainable is it really?

Igniting the fire
FIRE  – Financial Independence, Retire Early. The movement has a growing band of UK-based devotees, having taken off in the USA where followers adopt extreme saving techniques meaning they are able to invest as much as possible during their working years. The aim is to attain financial independence at a relatively young age, with some retiring in their late thirties or early forties, while for others it’s simply the financial freedom to be able to work part-time.

Playing with fire
Some of the key principles associated with the FIRE  – Financial Independence, Retire Early movement include maximising savings, with followers setting aside up to 70% of their income every month; paying off a mortgage and other debt; and living exceptionally
frugally. Devotees also invest, for example into a stocks and shares ISA, hoping to maximise returns while sheltering proceeds from tax.

Another pillar of the movement is the ‘4% rule.’ In very simple terms, it’s considered that 4% is the amount someone can typically afford to withdraw from their retirement pot each year without too much risk of running out of money. So, if someone expected to spend £20,000 a year, they would need a pot worth at least £500,000.

The reality of the FIRE – Financial Independence, Retire Early approach to investing The basic principle of FIRE may sound appealing, especially if it means you can retire in your 30s or 40s. But the reality is it requires extreme financial discipline to aggressively save money, and lifestyle changes often meaning you’re living below your means.

For most people in the real world living this way is not going to be achievable, and only spending thrifty amounts of money all the time is a pretty miserable existence.

If you have ambitious retirement goals, the best thing you can do is talk to us, we can help you put an achievable plan in place.

It’s harvest time in the farming calendar, do you know how to harvest your investments for over £30k tax free income a year? Land management has proven that the timing and order in which crops are harvested makes a great deal of difference to the yield. Some factors are relatively predictable, such as when a crop is likely to be ready. Other factors are very uncertain, like the weather.

Investments are similar – markets are unpredictable although tax allowances and rates are more predictable, but not completely. So, when it comes to harvesting your hard-earned money, timing, and the order in which you do this is very important – how to harvest your investments for over £30k tax free income a year. Whether you are in retirement, shortly approaching it, or it still lies some way in the future for you, it can be tempting to assume that you go to your pension first as your source of income in retirement. But beware – taking income from your pension first could mean that you are losing out on significant disposable income.

Many people arrive at the age they want to partly, or fully, retire with a range of assets. These can include cash, property, ISAs, bonds, pension plans such as SIPPs, and maybe some multi asset funds or other investments. As a result, you will have a choice of where to take your income from first. But it’s likely that the best choice is not your pension.

Why is this? Well, it can be complicated. Which is why it’s a good idea to have a qualified financial adviser whose job it is to optimise how you take your income. But to give a simple example:

  • Tax rate on your income from your ISA – 0%1
  • Tax rate on your income from your other investments – normally Capital Gains Tax at 20%, and
  • Compared to the tax rate on your income from your pension – Income Tax at 20%, 40% or even 45% depending upon your income2.

This too is another benefit in organising your retirement income to come from several different pots at different times. It can be a good idea to take more investment risk on the portion of your money that you don’t need immediately. This is because you are more likely to get a higher return on it on average, plus it stays invested longer for that higher return to compound. And it can be even more efficient if this is in a pension because the compounded growth is not taxed.

However, along the way there will be times when investment markets are down, and you don’t want to be to having to sell these investments to take income at such times, which would result in temporary losses. That’s why it’s usually a good strategy to take the higher investment risk only with the money that you are sure you aren’t going to need in the short term and have your ‘essentials’ money come from cash or short-term deposits.

So, it’s about organising your ‘pots’ not just in the most tax efficient way, but in a way which optimises the balance of investment return, investment risk, and timescales for when you will need the money.

It is worth noting too that even when you do finally come to take income from your pension, you can make a massive difference to how much tax you pay depending upon how you take the money from it. This is especially true if you have more than one pension, and a spouse or partner who has pensions too. Factors to consider include your respective ages, how much to take of the tax-free cash allowance, what to leave in flexi access drawdown and with which provider, inheritance tax (IHT) implications, whether and how you can get access to your capital, and death benefit flexibility.

Again, it’s the job of your financial adviser to optimise this for you and show you how to harvest your investments for over £30k tax free income a year. If you’d like to learn more, please get in touch now.

References:

1 https://www.moneyhelper.org.uk/en/savings/types-of-savings/isas-and-other-tax-efficient-ways-to-save-or-invest#:~:text=You%20pay%20no%20Income%20Tax,free%20of%20Capital%20Gains%20Tax.

2 https://www.theprivateoffice.com/insights/pay-tax-on-investment-income-gains#:~:text=Typically%2C%20all%20other%20sources%20of,for%20an%20additional%20rate%20taxpayer.

 

 

Approver Quilter Wealth Limited, Quilter Financial Limited, Quilter Financial Services Limited, Quilter Mortgage Planning Limited. September 2023

Following a positive start for markets this year, our chief investment officer, Marcus Brookes discusses why our cautious optimism has begun to deliver returns for investors this year.

Our latest update gives a brief insight into the current global macroeconomic picture and expectations for the markets in 2023. Download and read it here a positive-start-for-markets-in-2023 or watch the video overview.

If you have any questions at all, please get in touch with our wealth manager, Ian Brown.


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