I’m a financial expert: here are five things Australians can do to get rich by 2024

Australians can still make money in 2024, despite the Reserve Bank’s aggressive rate hikes and fears of a recession.

Despite the gloom, Finder investment analyst Kylie Purcell said next year offered opportunities that didn’t require big risks during a cost-of-living crisis.

They range from simply keeping your money in the bank to investing in recession-proof assets, to buying stocks at a low point before the market hit another record high and renting out the spare room during a housing shortage.

1. Invest in the Australian dollar

The Australian dollar is now recovering after a tough few months and you don’t have to be a currency trader to benefit.

The currency fell below 63 US cents for the first time in a year in early October and Westpac feared it would fall further to 62 US cents within weeks.

But in November the currency recovered, rising to 66 US cents for the first time since July, after the Reserve Bank of Australia raised interest rates for the thirteenth time in eighteen months.

The unit is still below the 71 cents level at the end of January, but Ms Purcell said the Australian dollar was unlikely to continue to recover until 2024, meaning it would be a better investment in the bank than US dollars.

“The Australian dollar is expected to rise against the US dollar after falling to 63 cents earlier this year,” she told Daily Mail Australia.

“If you’re in the foreign exchange market, you can buy low on the AUD in the hope that it continues to rise. Even if you are not a forex trader.’

The difference between Australian and US interest rates is a key driver for the local currency.

The Australian dollar weakened for most of this year as the RBA cash rate lagged the US federal funds rate of 5.25 to 5.5 percent.

But in November the RBA raised rates again by another quarter of a percentage point to a 12-year high of 4.35 percent, narrowing the gap with US rates, which last rose in July.

Australian inflation of 4.9 percent in October was still above US inflation of 3.2 percent.

The US Fed is now considered much less likely to raise rates than the RBA.

A stronger one also means cheaper travel to the United States and many other countries, meaning that simply putting your money in the bank is a good investment.

“It’s worth taking into account if you plan to travel to the US or shop there, as your Australian currency could go further than it has lately, which is, well, not far,” said Mrs. Purcell.

2. Buy government bonds

When interest rates are high and the economy is slowing, fixed-income assets such as government bonds are a safer investment.

Governments issue bonds when they borrow money and investors receive an annual return, also called a yield, until maturity.

The interest rate on ten-year government bonds is now at a twelve-year high, at 4.63 percent.

They are also above the RBA cash rate of 4.35 per cent, which could well be cut in late 2024 or 2025 if the economy were to slow.

This ten-year interest rate is not as high as the interest rate on term deposits of 5.1 percent, offered by Judo Bank and Rabobank with terms of four and five years.

But Ms Purcell said buying longer-dated government bonds now means an investor can now lock in high rates and earn annual returns that would not be available in coming years.

“As interest rate hikes come to an end, fixed income assets such as bonds are looking attractive again, especially high quality government bonds,” she said.

‘If interest rates fall, cash in the bank will yield lower returns, so it could be a good time to take advantage of fixed-rate bonds.’

3. Buy stocks when the market recovers

The stock market has been weak this year and the Reserve Bank expects economic growth to slow to just 1.5 percent by the end of this year.

The benchmark S&P/ASX200 fell to 6,826.9 points in October – its lowest level in a year.

But since then the Australian Securities Exchange index has recovered to 7,049.80 points.

Ms Purcell said now is a good time to have a diversified stock portfolio, with Wall Street’s benchmark S&P500 already approaching record highs last reached in 2021 when interest rates around the world were at record lows.

“Bull markets tend to last longer than bear markets,” she said.

‘If you enter the market at the right time, this can be a great opportunity to benefit from rising prices over an extended period of time.

‘It is of course impossible to predict exactly what the market will do in 2024. The most important thing is to stay diversified and invest for the long term.”

Possible rate cuts in late 2024 could also lead to a stock market recovery, such as in 2021 and early 2022.

“Once we see interest rates start to fall again, we can expect a stock market recovery and we could see a bull run,” Ms. Purcell said.

4. Invest in recession-proof companies

Defensive stocks such as supermarkets and healthcare are considered safer from the effects of a recession and high inflation because consumers cannot avoid using these products.

Some economists fear the Reserve Bank’s rate hikes so far, and another in February next year, risk pushing Australia into a technical recession for the first time since the 2020 Covid lockdowns.

‘Of “If inflation and interest rates remain high, there could be a recession next year – in both Australia and the US,” Ms Purcell said.

‘No one can predict how big this will be. It’s critical to stay diversified and make sure you have enough emergency cash to tide you over for at least three months.”

Ms Purcell said Coles and Woolworths shares, healthcare, food and drink and gold were sound investments in uncertain economic times.

“To make a profit during a recession, you need to invest in stocks that tend to do well during a recession, such as consumer staples – products you need regardless of the economy,” she said.

5. Rent out your spare room

With Australia’s vacancy rate at a record low of one per cent, finding a flatmate could help some have some extra cash to cope with rising mortgage rates or higher costs of living.

More than 400,000 net migrants moved to Australia in the year to September, with half of that influx including international students needing somewhere to live.

Finder calculated that the average Australian could earn $667 a month or $167 a week by renting out that empty bedroom.

“If you don’t mind living with a flatmate, this is a great way to create an additional income stream,” Ms Purcell said.