Mike’s Moments - October 2024 Edition

?? New Edition of Mike’s Moments is Here! ?? September was full of exciting experiences and key developments in the financial and tech worlds. In this edition, I’ll share my recent encounter with Gareth Southgate, discuss major September market performance updates, and cover the latest news from tech giants like Micron Technology, Ubisoft, and OpenAI. You’ll also find out how banks are leveraging AI to drive growth. Keep reading to gain valuable insights for your financial journey!

Lesson of the Month: A Night with Gareth Southgate – Taking Risks

One of the highlights of September was attending a charity event where I met England’s football manager, Gareth Southgate. During the night, Gareth emphasised the importance of taking calculated risks—both in sports and in life. His insights really struck me as a financial planner. Whether it’s leading a football team or managing your finances, taking well-calculated risks can lead to extraordinary outcomes.

This encounter got me thinking about risk profiles in investment. While some prefer a conservative approach, others are willing to take more risks in exchange for higher potential returns. The key is knowing when and how to take those risks.

What does taking more financial risk mean for your portfolio over time? Let's explore the impact of a higher-risk portfolio that could potentially provide a higher return with an example.

Higher Risk, Higher Reward: The Power of Compound Growth

To demonstrate the impact of risk tolerance, let’s assume two different portfolios: one with a conservative 6% annual growth rate and another with a higher 8% growth rate. Here's how those portfolios could grow over 30 years with an initial investment of ￡10,000 (assuming no additional contributions):

• At 6% Annual Growth: After 30 years, your ￡10,000 would grow to approximately ￡57,434.
• At 8% Annual Growth: After 30 years, your ￡10,000 would grow to approximately ￡100,627.

The Difference in Growth: The higher 8% growth rate results in nearly ￡43,193 more than the 6% growth rate over the same 30-year period. This example highlights the power of compounding and how even a small increase in annual returns (2% per year in this case) can significantly impact your wealth over time.

Risk Warning: While these projections show the potential benefits of higher returns, it’s important to note that higher risk doesn’t always mean higher rewards. Investments with higher returns typically come with increased volatility, and there is always a chance of losing money. Make sure to assess your risk tolerance and consult with a financial adviser before making decisions that involve higher-risk investments.

Stock Market Update – September 2024: Global Market Insights

September brought more volatility to the markets, and understanding these movements is crucial for smart investment decisions. Let’s break down the performance of key indices and what it means for you:

1. MSCI World Index Price: 2,864.21 Year-on-Year Performance: +9.8% Month-on-Month Performance: -0.5% The MSCI World Index, which tracks global developed markets, saw a slight dip last month. While global uncertainties caused some short-term volatility, its long-term growth still signals stability in key sectors like tech and healthcare.

Educational Insight: Global equity markets remain a good barometer for developed economies. A dip here isn’t necessarily a bad thing—sometimes, it opens buying opportunities for long-term investors.

2. S&P 500 (USA) Price: 4,473.91 Year-on-Year Performance: +7.5% Month-on-Month Performance: -0.9% The S&P 500 experienced a small decline in September, mostly due to inflation concerns and tech sector volatility. Nevertheless, tech giants like Apple and Nvidia are still driving overall market growth.

Educational Insight: Even with slight declines, the S&P 500’s long-term trajectory remains positive. Staying diversified is key—focus on sectors that continue to thrive, such as tech and healthcare.

3. FTSE 100 (UK) Price: 7,270.34 Year-on-Year Performance: -3.1% Month-on-Month Performance: -0.9% The FTSE 100 continues to be impacted by rising interest rates and energy sector volatility. However, some sectors, like commodities, are starting to show signs of recovery.

Educational Insight: Short-term dips can be unsettling, but keeping a long-term view helps. Market fluctuations are normal, and downturns can provide opportunities to enter strong sectors at lower prices.

4. Nikkei 225 (Japan) Price: 32,422.56 Year-on-Year Performance: +23.9% Month-on-Month Performance: -0.6% Despite a slight dip, the Nikkei 225 continues to be one of the strongest performers, bolstered by tech and export growth. Japan’s innovation in robotics and AI is driving international investment.

Educational Insight: Japan’s market is benefiting from global tech demand, making it a favourable option for those looking to diversify into international equities.

5. Shanghai Composite (China) Price: 3,069.21 Year-on-Year Performance: -4.8% Month-on-Month Performance: -0.5% China’s market continues to face regulatory challenges and economic slowdown concerns, particularly in the real estate sector. Investors remain cautious. Educational Insight: While China’s market remains volatile, it’s important to recognise the long-term growth potential in sectors like tech and green energy.

6. MSCI Emerging Markets Index Price: 1,028.12 Year-on-Year Performance: +1.5% Month-on-Month Performance: -0.7% Emerging markets saw a modest decline, with mixed results across regions. While Asian markets were weighed down, regions like Latin America posted stronger performances.

Educational Insight: Emerging markets offer high growth potential but can be risky. Diversifying your portfolio with a mix of developed and emerging markets can help balance risk and reward.

Tech Industry Highlights: Key News for October 2024

1. Micron Technology’s AI Surge Micron Technology reported a significant revenue increase of +93.3% year-over-year, driven by strong demand for AI and data centre products. With its data centre SSD sales exceeding $1 billion for the first time, Micron is solidifying its place as a key player in the AI boom (GlobeNewswire) (Kiplinger.com).
2. OpenAI Stake Expansion Microsoft has increased its stake in OpenAI, doubling down on its commitment to AI-driven technologies. This further strengthens the partnership between the two companies, with Microsoft integrating OpenAI’s tech across its cloud services(Kiplinger.com).
3. Banks Embrace AI Major banks like JPMorgan and HSBC are leveraging AI to enhance customer service and fraud detection. JPMorgan has started integrating AI into its core banking systems, while HSBC is using AI to streamline operations and improve client relationship management (Kiplinger.com).
4. Ubisoft’s AI Integration in Gaming Ubisoft is leading the charge in using AI to create more immersive video game experiences. By leveraging AI for in-game environments and NPC interactions, Ubisoft is pushing the boundaries of what’s possible in gaming (Kiplinger.com).

What Next?

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Final Thoughts: Embracing Risk for Long-Term Growth

As I reflect on September’s experiences, the key takeaway is that calculated risk can play an essential role in achieving long-term financial growth. Whether it's in life or investments, taking well-considered risks can unlock significant rewards. The difference between a 6% and 8% growth rate over 30 years shows how even small adjustments in risk tolerance can lead to large financial gains. However, it’s important to balance risk with your personal financial goals and risk tolerance.

Stay focused, assess your risk wisely, and always celebrate the progress along the way.

Until next time, Mike Your Financial Tech Planner Same Mike time, same Mike channel.

Disclaimer:

The levels and bases of taxation and reliefs from taxation can change at any time and are dependent on individual circumstances. Remember with any investment, your capital is at risk, investments can go up as well as down.

Belvedere Wealth Management is authorised and regulated by the Financial Conduct Authority.