What were the best investments for last year?
Money Mixtape
Monday, 6 January 2025 - 7 minutes
Summary: 2024 Swiss Investment Highlights and 2025 Outlook
The year 2024 marked another strong performance for Swiss investors, continuing the momentum from 2023. With impressive returns across several asset classes, the big question now is whether to maintain these positions or scale back in anticipation of 2025’s uncertainties. Here’s a recap of the year’s highlights and what might lie ahead.
Cash Accounts:
Swiss cash savings faced challenges in 2024 as the Swiss National Bank (SNB) progressively reduced interest rates from 1.75% to 0.5%, resulting in modest returns of 0-1%. The outlook for 2025 appears even more challenging, with potential hints of negative interest rates if economic conditions demand. This reinforces the notion that cash accounts are unlikely to generate significant wealth.
Bonds:
Swiss bonds delivered a strong performance in 2024, with the Swiss bond index rising 5.35%. The gains were primarily driven by the SNB’s rate cuts, which boosted bond prices. However, foreign bonds underperformed as other central banks were slower to cut rates. This underperformance could create growth opportunities for foreign bonds in 2025.
Equities:
Equity markets provided notable returns, albeit with geographical variations. US equities delivered an impressive 35% return in CHF terms, fueled by continued optimism in technology, AI advancements, and political developments. Swiss equities also performed well, gaining 7.5%, exceeding their historical average. However, with back-to-back gains—14% in 2023 and 35% in 2024—there is growing skepticism about whether US markets can sustain such momentum. Investors might explore opportunities outside the US for diversification and potentially better returns in 2025.
Alternative Investments:
Alternative assets like Bitcoin and gold stood out in 2024. Bitcoin delivered a staggering 120% return, while gold gained a solid 26%. Additionally, holding foreign currencies such as EUR, USD, and GBP proved advantageous, as they appreciated against the CHF.
Financial Advisors and Balanced Portfolios:
Swiss financial advisors performed commendably, with the average balanced portfolio in CHF yielding a robust 6.46% return, according to Performance Watcher. This result reflects effective strategies amidst a dynamic market environment. Advisors emphasized a long-term perspective, focusing on diversification and navigating short-term fluctuations with an eye on decade-long goals.
2025 Outlook:
As 2025 approaches, investors face pivotal decisions. Cash savings are unlikely to offer attractive returns, and bonds might see mixed outcomes depending on rate movements globally. While equities have been a stronghold, particularly in the US, their future potential could hinge on exploring other global markets. Alternative investments like cryptocurrencies and commodities might continue to thrive but carry inherent volatility. Balanced portfolios, with their focus on diversification, remain a prudent strategy, especially for those with long-term horizons.
In conclusion, 2024 was a rewarding year for Swiss investors, characterized by diverse opportunities across asset classes. As 2025 looms, the focus shifts to balancing optimism with caution, capitalizing on emerging opportunities while preparing for market challenges.
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