With under a month remaining of 2023, I’m looking back at how various asset classes have performed this year. Also, I’m thinking ahead to what financial markets might do in 2024 — and what I could buy inside my 2024-25 Stocks and Shares ISA.
Four months until the the big day
In the UK, one tax year ends on 5 April, while the next starts on 6 April. This means that I have around four months until the new 2024-25 ISA contribution limit arrives. Currently, the maximum yearly amount I can put into this savings account is frozen at £20,000.
Now for a personal confession. By nature, I’m a fairly carefree, flippant and flighty person. Often, I’m told I have a butterfly brain, living with my head in the clouds. Hence, I find it tedious to sit down and complete boring, repetitive tasks, such as opening new accounts.
That said, as a maths geek fascinated by capital markets, I love doing analysis, number crunching and stock picking. Conversely, my wife is a hyper-disciplined, organised and driven person. This makes her ideal for delivering projects and results on time.
Hence, when we build our family’s portfolios, my wife handles account openings and ongoing requirements, such as admin, routine management and our tax affairs. By working this way, we both play to our strengths.
What to buy in 2024?
As the year comes to a close, it’s natural to look both back and forwards — like the two-faced Roman god Janus, after whom January is named.
Looking back, it’s been a superb year for US stocks. The S&P 500 index has leapt by 19.7% since 30 December 2022 — one of its best years on record. Even better, the tech-heavy Nasdaq Composite index has surged by a whopping 36.7% over the same period.
However, US stocks look expensive to me today, plus S&P 500 earnings are actually down in 2023. Also, my family already has plenty of exposure to the American market through US and global tracker funds, together with our mega-cap tech holdings.
In short, I can’t imagine piling much more cash into US stocks in the 2024-25 tax year. Not only are they pricey, but buying more won’t really ‘move the needle’ for our family portfolio or help to diversify our holdings.
The Footsie looks fab
Instead, I’m considering doing one of two things. First, backing the lowly rated FTSE 100 index by feeding cash into a Footsie tracker. Second, by buying unloved, unwanted and undervalued Footsie shares.
Right now, I see deep value in several UK market sectors, including mining, oil & gas, banking and insurance, consumer goods, healthcare and telecoms. In fact, we already own over 20 individual stocks across these sectors.
Furthermore, with a dividend yield exceeding 4% a year, the FTSE 100 offers a cash yield far higher than other major markets. As older investors (my wife and I are both 55), we enjoy seeing this passive income come rolling in month by month.
In summary, with large-cap London shares looking cheap on several measures, I think I’ll fill my next Stocks and Shares ISA with big, beautiful, British stocks. For me, these look my best bet for decent future returns!
