Where to invest in 2024 – 12/09/2023 – From Grain to Grain

Every December, we are eager to know what to do with our investments for the following year. This year would be no different and videos and texts are already popping up about where to invest in 2024. Most of the time, our aim is to discover which asset will be the best of the year. However, there is an alternative that may not be the best for next year, but should be the best for all future years together.

You may wonder: how can an alternative that is not the best of the year be the best for several years?

I’ll give an example in investments, but you’ll be able to make the analogy with sports and any other type of competition.

Do you know which three Ibovespa shares had the highest return in the last 15 years?

The three companies whose shares presented the highest returns in the last 15 years and their respective profitability were: Raia Drogasil (5,052%), Equatorial (4,183%) and Localiza (3,834%).

In these 15 years, only once has one of them been among the top three in a closed year. Two of them have never been among the five best stocks of any closed year in this period.

They weren’t usually the best of the year, but they were consistent.

Consistency is one of the most important characteristics when we think about long-term wealth growth.

Looking for the best investment in one year can lead us to having the worst investment in the following year or even in the very year in which it should be the best.

Maybe you are frustrated because your portfolio yields below 83% of the CDI over the last 12 months. This return is equivalent to IPCA+6% per year. In this period, it seems that it was not a good deal.

This profitability has not been the best alternative at all over the last 15 years.

However, over the last 15 years, a return of IPCA+6% per year would have been the best alternative. It beat the Ibovespa, the CDI, the average of multimarket funds, the average of real estate funds, the American stock market, the dollar and the average of Brazilian real estate (according to FipeZap).

Over the last 15 years, it has not always been possible to invest safely in assets that yield more than IPCA+6% per year. But now it is fully possible.

At this moment, there are private credit alternatives with returns above IPCA+6% per year exempt from income tax for the next 10 years or more.

Take the opportunity now to lock in for the long term this which may not be the best investment in 2024, but should be the best for the coming years.

Therefore, instead of trying to decide where to invest in 2024, the most appropriate option is to seek consistency in long-term investment, as it is this consistency that should provide the best compound result in the future.

Michael Viriato is an investment advisor and founding partner of Investor’s House.

Speak directly to me via email.

Follow and like De Grão em Grão on social media. Follow investment lessons on Instagram.

LINK PRESENT: Did you like this text? Subscribers can access five free accesses from any link per day. Just click the blue F below.