Should You Change Your Investing Strategy in 2024?

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Is your current investing strategy working for you? Here’s how to tell. 

At this point, we’re far enough into 2024 that you may no longer be in the habit of writing “2023” on all of your checks. But it’s still early enough in the year to make positive financial changes.

One of the things it pays to do early in the year is assess your investment portfolio. You may want to ask yourself these important questions to see if any changes to your strategy are in order.

1. Has my portfolio been gaining value in accordance with the broad market?

The S&P 500 index, which is commonly considered an accurate measure of the stock market’s overall performance, is up about 23% over the past year, as of this writing. Now, this doesn’t mean that your investments are going to follow suit exactly.

However, if you find that your portfolio has gained a lot less value than the overall market, it may be time to ask yourself why. Take a look at the various companies you’re invested in. Are there any struggling performers whose stocks it could pay to dump? Or is your portfolio not invested in enough stocks?

If you’ve gone heavy on bonds, it could explain why your portfolio is trailing behind. And in that case, you may want to shift to a portfolio that has a larger concentration of stocks and a smaller position in bonds.

2. Is my portfolio as diversified as it should be?

Your portfolio may be showing nice year-over-year gains. But it’s still important to see what your asset mix looks like. And if you find that you’re overly loaded on one particular segment of the market, then it may be time to switch gears and focus on diversification.

Let’s say you look at your holdings and find that 50% of your investments are tech stocks. That’s not a great thing, because if that particular sector of the market takes a beating, the value of your portfolio could plummet in short order. So in that case, it makes sense to research different industries and branch out.

Another thing you may want to do is buy some broad market ETFs, or exchange-traded funds. Buying shares of an S&P 500 ETF is sort of like going out and investing in 500 different large companies — only without having to actually buy shares of every single one, which could be a very time-consuming endeavor.

3. Have I been reaping any tax savings when investing?

Perhaps a big reason you’re investing is to have a nice retirement nest egg. But in that case, you should know that certain investment accounts offer tax savings you may want to take advantage of.

Traditional IRAs allow you to contribute a certain amount of money to your account tax-free every year. (In 2024, it’s $7,000 if you’re under 50 or $8,000 if you’re 50 or older.) And Roth IRAs allow your investments to grow tax-free. So if you’re specifically trying to invest to be able to retire comfortably, then you may want to look beyond a regular brokerage account.

The start of a new year is a good time to take a deeper dive into your investment strategy. You should consider some tweaks if your portfolio is lagging behind the market, you’re not well-diversified, and you’re not enjoying any tax breaks.

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