5 Surprising Investing Trends to Watch in 2024

Whether you're a new or seasoned investor, you're probably wondering what to expect from the stock market and other asset classes in 2024. Unless you have ESP, it's impossible to tell what the year will bring. But there are several trends that are already taking shape in the first two months of the new year. Here are five surprising investing trends to have on your radar in 2024.

1. We're bullish on stocks again

Investors are more bullish about the stock market than they've been since January 2022, according to a recent Bank of America survey. Case in point: The S&P 500 index -- which is a collection of 500 of the largest, most profitable companies in the U.S. -- crossed the $5,000 mark on Feb. 8 for the first time in history. That's a big deal because the S&P 500 represents about 80% of the American stock market's value.

While there's lots of attention devoted to short-term swings in the S&P 500, there's never been a bad time to invest in its underlying stocks through an S&P 500 index fund if you're in it for the long haul. Though there are good and bad years, the index has a remarkable track record, producing average annual returns of about 10%.

2. Short-term CD rates are still highest

Usually, you get the best rates on long-term certificates of deposit (CDs) because banks want to incentivize you to lock up your money for several years. But the best CD rates you can find right now are generally for 12-month CDs rather than those with longer terms, like 36 months or 60 months.

The reason: CD rates are closely tied to the federal funds rate, and financial institutions believe that the Fed is likely to slash interest rates at some point this year. So they'd rather not commit to a higher interest rate on a long-term CD because they believe interest rates could drop before the end of the term.

3. AI is still unstoppable

Artificial intelligence (AI) has been on a frenzy ever since ChatGPT launched in 2022. Investors have poured massive amounts of money into AI stocks, while a McKinsey & Co. report finds that 40% of organizations plan to increase their investments in AI.

Much of the S&P 500's tear in 2023 and 2024 has been driven by AI stocks. A recent analysis by Bespoke Investment Group found that 67 stocks in the S&P 500 that are related to AI have soared by 45.3%, while the other 433 stocks rose just 9.2% in the same period.

In 2024 alone, those 67 AI-related stock prices are up 3.7% on average, compared to 1.1% for the remaining 433 S&P 500 stocks.

4. Bitcoin is back

After a brutal crypto winter that tanked its price to less than $16,000 in late 2022, Bitcoin has made quite the comeback. It's back above $50,000 again, with its price up about 16% thus far in 2024.

Two big factors are driving up the price of Bitcoin: One is the approval of several spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission, which makes it possible to invest in crypto with a brokerage account or retirement account instead of using a crypto exchange.

The second is the Bitcoin halving, which is expected to occur in April. Bitcoin halvings occur about every four years and will continue until the entire supply is depleted. After a halving event, miners get 50% fewer bitcoins when they verify transactions. That, in turn, limits the supply and often pushes the price upward in the following months. Many investors are likely putting money into Bitcoin out of anticipation that it will happen again this time around.

5. More interest in socially responsible investing

There's growing evidence that sustainability initiatives are associated with better financial performance and that ESG investing -- that is, investing with environmental, social, and governance factors in mind -- tends to provide downside protection in bad times.

In 2024, more investors are interested in sustainable investing. According to Morgan Stanley research, 54% of individual investors plan to allocate more into sustainable portfolios, while more than 70% believe focusing on ESG objectives can deliver superior financial returns.

Climate change and healthcare were the top two themes investors surveyed are prioritizing in 2024.

Should you invest in 2024?

Before you invest, you typically want to pay off high-interest debt and have a solid emergency fund in place. After that, though, it's essential to start investing as soon as you can.

A good way to get started is with an S&P 500 index fund or another fund that invests your money across most of the U.S. stock market since you get automatic diversification. Be more cautious before you invest in individual stocks or cryptos, though. Putting too many eggs in one basket is risky, especially with cryptocurrency, which is notoriously vulnerable.

Investing is the best way for regular people to build wealth and improve their personal finances. The sooner you get started, the more time your money has to grow.