How to Invest in 2024: Insights from Wealth Managers and Stock Market Experts

Wealth managers have been busy lately, answering clients’ questions about how to build and preserve wealth amid stock market turmoil, high interest rates and recession fears. While advisers maintain that their advice depends on each client’s goals, risk tolerance, age and other factors, there is a recurring theme to their recommendations: Don’t panic.  

“Clients want to be reassured and make sure their plans account for an environment like this,” says Ali Phillips, executive vice president and partner at Obermeyer Wood Investment Counsel, with offices in Aspen and Denver. “We spend time telling clients you don’t want to respond to a bad year. Any good plan takes three to five years to come to fruition.”   

READ: Unprecedented Impact of Soaring Interest Rates — What It Means for the Economy

The inflation rate was 3.7% in October, much lower than the 9.1% in June 2022. Still, high interest rates are making mortgages and other loans expensive. Meanwhile, stock prices are fluctuating, and investors wonder whether they should adjust their portfolios.  

Phillips tells clients not to overreact when they read dramatic financial news headlines, and to instead focus on their long-term goals. Clients sometimes want to move money into more conservative investments or increase their emergency savings, especially now that high interest rates are making certain savings accounts more attractive than a few years ago. “Those pivots are appropriate,” she says. “What we don’t want to do is make dramatic changes that can adversely affect the longer-term outlook.”  

Some clients simply want reassurance that it’s OK to travel and enjoy the life they saved for. Others seek guidance on starting discussions with their families about passing wealth and wisdom to future generations, or to charity. “You want to honor their concerns, remind them of the longer-term picture, and guide clients in this environment,” Phillips says. 

Economic uncertainty motivates people to examine their portfolios. “There has never been a better time to look at what you’re doing,” says Adam J. Moeller, president of AJM financial in Greenwood Village. “The biggest thing is evaluating where you are now, what is this money for, and what are the consequences if you don’t do anything.”  

READ: Diversify Your Portfolio — Beyond AI Stocks with Treasury Bills and Dividend-Paying Companies

Many clients don’t know about fees they are currently paying for certain investment products, or what is in their 401(k). “Retirement sneaks up on them and they say, ‘Now what do I do?’” Moeller says. “When you uncover what they have, they don’t know what they are investing in.”  

Some clients are heavily invested in the stock market, which historically goes up, but if the investor is relying on stocks to fund their retirement and the market declines, they might have to return to work. “I see a lot of people who have too much risk,” Moeller says. “They have not done a good job of rebalancing and reallocating.”   

The traditional portfolio strategy of 60% stocks and 40% bonds, and of increasing the bonds when the investor approaches retirement, has not paid off recently. According to a Nasdaq report, stocks, as measured by the S&P500, lost 18.6% in 2022, or 25% when adjusted for inflation. Bonds, as measured by the Vanguard Total Bond Index, lost 13.7%, or 20.3% when adjusted for inflation.  

Meanwhile, people worry about whether there will be a recession, as estimates by the Wall Street Journal and others have put the probability at about 50%. “It’s a flip of a coin,” Moeller says. High interest rates will eventually come back down, so he is educating clients about alternative solutions such as fixed and fixed indexed annuities so they can take advantage of these high interest rates and lock in rates for five to 10 years. 

READ: Higher Interest Rates — What Does It Mean for Consumers, Bond Investors and the Stock Market?

Wealth managers are advising clients to consider other investments. “We are using more hybrid types of investments that don’t necessarily track the stock market such as structured notes,” says Patricia Kummer, senior wealth adviser/principal at Mariner Wealth Advisors in Highlands Ranch. “That includes the upside potential of an index while the client receives higher interest coupons on their investment.” 

Advisers also tell clients to consider individual stock holdings, especially stocks that pay dividends, rather than an index or a fund. “There were only seven stocks that moved the entire market,” Kummer says. “So if you were in a mutual fund that holds S&P 500 stocks, 493 did not perform.” Clients are also looking at U.S. Treasurys, because as of October the yield was around 5% for short-term Treasurys.   

During challenging economic times, it’s important for people to continue to fund their retirement accounts. “The volatility allows you to buy at different opportunities or prices,” Kummer says. “If you don’t want to take as much risk, that’s fine. Go to your adviser and say, ‘I want to update my strategy,’ not that you want to stop, or you may never catch up again.”  

Nora Caley is a freelance writer specializing in business and food topics.