Top 5 Financial Instruments to Watch for in 2024

As the 2024 financial landscape continues to evolve, investors are seeking opportunities to expand their portfolios to achieve their financial goals.

While the nature of financial instruments is generally volatile, they can be beneficial for traders who are trying to make a profit. Financial experts need to stay vigilant, especially when stock prices are expected to rise.

In this article, we’ll be listing our top five financial instruments to watch out for in 2024 so you can expand and diversify your portfolio where possible.

How volatility is a key element in achieving profits in the financial market

Volatility refers to the rate at which a stock price increases or decreases over a particular period. High volatility typically suggests higher risk and helps an investor determine potential price fluctuations that may occur in the future.

While investing in volatile markets can be seen as a risk, it can also give investors great potential to make strong, long-term returns. You could consider setting up a funded trading account to receive more substantial capital to potentially make higher profits. However, you should always assess your risk tolerance with profit-sharing arrangements before creating an account.

Investors can take advantage of volatility, especially as it can provide an entry point into the market. Downward market volatility helps those investors who believe markets will perform better in the long run, and therefore, will continue to buy company stock at a lower price.

The same applies when a stock price rises quickly. Investors can take advantage by selling out, so the proceeds generated can be invested in other areas that offer greater opportunity.

So, what are the top five financial instruments to watch out for in 2024?

Gold

Despite economic uncertainties and inflationary pressures, gold remains a safe and secure asset. As its price is inversely correlated with the US dollar, this makes the asset a hedge against currency fluctuations.

The cost of gold has increased in recent years, making it an attractive investment for those financial experts seeking diversification. The value of gold can rise and drop very quickly and in large quantities, offering traders the exposure to large profit-making opportunities. The price of gold as of December 2023 is $2,030 per ounce.

Cryptocurrencies

The cryptocurrency market has gained popularity among investors worldwide. Due to advancements in technology over the last few years, digital currencies are becoming more desirable by the minute. Using cryptocurrency makes it easy to transfer money without any involvement of traditional banks and other financial institutions.

Although volatility remains a concern among many low-risk traders, the potential for high returns attracts investors with a higher risk tolerance.

Emerging market stocks

Emerging markets offer the potential for high growth. Diversification is a key factor, too. Having international investments can expand your portfolio and offset economic downturns that may occur in one country against another.

However, such markets present higher risks due to political and economic instability. Investors should carefully assess their risk tolerance before exploring these types of markets.

Real Estate Investment Trusts (REITs)

Real Estate Investment Trusts offer investors exposure to the real estate market, without them having to go through the hassle of direct ownership. These trusts can provide regular income through dividend payouts and potential capital appreciation.

While REITs mostly deliver high-yield dividends and portfolio diversification, there are some drawbacks, too. For example, most REIT dividends don’t meet the definition of qualified dividends, and therefore, are taxed at a higher rate.

Index funds

An index fund is a type of mutual fund that collectively tracks a specific market index, replicating its performance. Historically, these funds have outperformed others that are actively managed by top investment firms.

Investing in index funds is considered a smart investment move. They’re affordable, enable diversification, and offer low expenses, making them most suitable for long-term investors seeking broad market exposure.