WHO would have thought in 2024 that Willie Mullins would win the British Leading NH Trainer for 23/24 or Bitcoin would reach new record highs!

Here, I look back on 2024 at some of the major global financial highlights and recent changes enacted by the Budget and the Finance Act 2024.

Growth vs value stocks

Growth stocks (the ‘hare’) in general have out-performed value (the ‘tortoise’) over the last decade and particularly in 2024. Apple, Nvidia, Microsoft and Amazon are the some of the top growth stocks in the S&P 500. In terms of the magnificent seven (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla), most of them have boasted solid gains heading into the final month of 2024. The Bloomberg Magnificent Seven index (in $) is up 44.4% year to date up to December 2, 2024.

Global stock market

2024 was a buoyant year for world stock markets. Global stocks have delivered strong returns to date. This is on the back of the threat of inflation waning and a strong belief in a ‘soft landing’. The US Stock Market represents circa 61% of the world equity market capitalisation. China represents just 3%! The S&P 500 Index grew by 21% in the first three-quarters of 2024.

Artificial Intelligence

2024 was the year that AI came to the fore. Nvidia topped the market in this regard. The company makes semiconductor chips that currently power AI. By the summer of 2024, its market share had surpassed US$3 TRILLION!

Trump re-election

Donald Trump was re-elected in November for the second time, as President of the world’s largest economy and stock market. Some of his economic policies could have a huge bearing on the direction and growth of the Irish economy, with our high dependence on FDI. €8 billion was collected in corporation tax in November. He has just recently announced several tariffs on Mexico, Canada and China when he takes office in 2025.

Could Europe be next for tariffs? It looks distinctly possible.

Interest rates

2024 was the year that interest rates continued to be reduced by the European Central Bank (ECB). The ECB’s interest rate on the deposit facility, the main refinancing operations and the marginal lending facility were most recently decreased to 3%, 3.15% and 3.4% respectively, with effect from December 12, 2024. This follows from three previous cuts in 2024 of 0.25%.

Inflation

A key focus for the Federal Reserve and the ECB in 2024 was to endeavour to reduce this heightened rise in prices. The annual Euro area inflation rate for the 12 months to the end of Nov 2024 = 2.3% compared to the same period for 2023 = 2.8%. The target for this % inflation rate for the ECB in 2025 = 2% as espoused by the re-elected President of the ECB, Christine Lagarde

Cryptocurrency

With the recent re-election of Trump, crypto has come front of stage once again on investment markets. Bitcoin soared to a new high of over $106,000+ in mid-December last. If you are interested in Crypto, be aware that it is an extremely volatile investment. It is prudent to treat it as a small part of one’s broader investment portfolio overall, rather than going all in.

Capital Acquisitions Tax (CAT) thresholds (gifts and inheritances)

The recent budget on October 1 last increased the CAT thresholds for beneficiaries with effect from October 2, 2024.

Group A €400,000

Inheritances by children from their parents.

Group B €40,000

Brother, sister, child of a brother or sister, lineal ancestor, or descendant

Group C €20,000

Other

Finance Bill 2024

The Bill published on October 10, 2024 included several proposed significant pension changes. They will become effective from January 1, 2025. The Standard Fund Threshold (SFT) for pension pots is to be increased to €2.2m in 2026, €2.4m in 2027, €2.6m in 2028 and €2.8m in 2029.

A new ‘employer limit’, will apply to employer contributions to an employee’s Personal Retirement Savings Accounts (PRSAs). The employer limit has been defined as 100% of an employee’s total income.

Auto enrolment date announced

The date for the commencement of auto enrolment was eventually announced late in 2024 by previous Minister, Heather Humphreys, as September 30, 2025 next. Employers and HR departments will need to educate themselves on the scope of the ‘My Future Fund’ roll out and prepare, budget and plan for it. A prudent approach here is to chat to a qualified financial advisor to establish what type of scheme best suits your requirements.

Some of the challenges ahead for Irish Economy

  • Future changes in US taxation policies and tariffs following Trump election, with knock-on effect for FDI here in Ireland, could be significant.
  • Capacity constraints and infrastructure challenges.
  • Recent Economic and Social Research Institute report published – the residential property market in Ireland is currently over-valued by 10%. We need more supply!

    • Tip for 2025

    ‘Everyone wants to be heard, but no one wants to listen.’

    Happy New Year!

    Niall Rooney is a financial planner with CityLife Galway.

    Contact: 091 520608 / niall@citylifegalway.ie