Good morning investors! Yesterday was another slow day and today is the last day of the year. There isn’t much to keep an eye on as most investors appear to be busy relaxing.

Today we cover:

• China to worsen in 2024?

• Stocks to break records?

• The right age to start saving for retirement.

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📊 Economy and News 

2024 could be worse for China

After a bad phase due to the pandemic, the Chinese economy was expected to recover quickly in 2023; however, it has failed to meet expectations. In fact, the International Monetary Fund called China a "drag" on world output.

Residents aren’t happy either and only 52% are optimistic about their five-year business outlook, the lowest ever.

What do the numbers say? China had been recording an impressive growth rate of 6% or higher before Covid. However, it has been stagnant for a while and is expected to report a growth of 5% this year, which is higher than several major economies but lower than what the country is used to.

IMF expects the growth rate to decline to 3.5% in 2028. Even states and cities are suffering and many are in debt, unable to offer basic services to residents.

But why? The country is facing several challenges, including a property crisis, weak spending, and high youth unemployment. Also, China’s population is aging. The average worker age in China has increased to 38.3 years in 2022 from 37.1 in 2017. It is expected to cross the 40 year mark in the next few years.

Furthermore, some big manufacturers and investors, such as Apple, are leaving the country. In the third quarter, a measure of foreign direct investment (FDI) into China turned negative for the first time since 1998.

Several other sectors are suffering as well. The real estate crisis has worsened and home sales have fallen down forcing developers like Country Garden to send warning signals. Even the shadow banking sector is not safe and many are defaulting.

What then? Experts think that 2023 is only the beginning and things will worsen in 2024. However, not all is lost. There’s still some hope since China is a major market with the potential to bounce back but the next few years will definitely be challenging for the country.

Global hits:

• China’s Xiaomi dreams of building a car ‘as good as’ Porsche and Tesla.

• Biden administration’s Medicare drug price negotiations will face major tests in 2024.

• Boeing urges inspections of 737 Max planes for ‘possible loose bolt’.

Good to know: About 41% of people in the USA tune into a podcast every month.

Shocking: Global mergers and acquisitions reached a ten-year low in 2023, with M&A activity dropping by 17% to $2.87 trillion. Higher interest rates and a subdued deal appetite contributed to keeping the market restrained.

📈 Stocks

S&P 500 4,783.35 (+0.037%)
DJIA 37,710.10 (+0.14%)
NASDAQ 16,898.47 (-0.049%)
BRENT CRUDE 78.39 (-1.58%)
* Prices as of Dec 29th, 12:20 AM UTC

Will 2023 create another record?

The S&P 500 enters the final trading day of 2023 only 0.5% away from a new high. The year has already turned out to be an incredible year with most major indexes showing incredible results, and there’s hope that this rally will continue next year.

The S&P 500 is up 24.6% in 2023, with the Dow rising 13.8%. The Nasdaq Composite has led the way with a gain of 44.2% on the year — on pace for its biggest annual increase since 2003. The Magnificent Seven played a very important role in pushing the Nasdaq to new highs.

Also check: Investors expect bank stocks to make a comeback in 2024.

💵 Personal Finance

The right age to start saving for retirement

We typically ask people to start saving as early as possible but that’s not easy. Yesterday, we talked about how much you need to save to have $5 million by 67 and our subscribers shared how saving $2,000 a month is not possible in your 20s.

Think about it, most 20 to 24 years old make about $38,000 a year. This means saving $24,000 may not be easy since you’d only be left with about $14,000 per year. This is not enough to cover education and day-to-day expenses.

So, what’s the right age? There is no answer to that… in simple terms, as soon as you can. Some people can easily save $2,000 a month.

Think about a 24-year-old web developer living in a country with a low cost of living and working for a US company making $38,000 a year. Let’s assume that country is India where the average person needs only about $500 to live. Even if this said person spends $8,000 a year, they’d have $30,000 to save and invest, thus bringing them closer to their goal of $5 million.

But, most of our subscribers are not from such countries. So, if you are in the US, you should ideally start planning for your retirement in your 20s. Don’t worry if you cannot save $2,000 this year, you can start as low as you easily can and then move up as you start to make more money.

The chart above shows median earnings by age. You can look at it to determine the right age to save (based on your expenses and earnings).

The Milken Institute, an economic think tank, found that young adults need to start saving regularly by age 25. This is when most people will be making above $50,000 a year. Assuming you’re not dealing with debt and have your expenses under control, you’d be able to save a good chunk of your income at this age.

A weekly $100 investment in the stock market, earning a 7% annual rate of return, will over time compound into savings that top $1.1 million by the age of 65.

Twenty-five is also the age Fidelity Investments and other financial service companies often use when offering guidelines on how much money a person should aspire to save for retirement.

Watch this video for more information:

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.