The end of the year represents an excellent opportunity to save part of your bonus, that extra money you receive which, invested correctly, can make a big difference in the long term.
What are the best options to invest part of your holiday bonus in 2024? What investments might give the best risk-adjusted returns?
To answer these questions, we analyze four strategies to invest your end of year bonus in 2024, comparing their performance to the depreciation of the Mexican peso and the US dollar, as well as other global economic factors.
1. Fixed Term Bank Investment
One of the most traditional options is to invest that money in a fixed-term bank account. In Mexico, this type of investment at the moment offers annual rates close to 10%. Although in reality its actual performance is lower when considering factors such as Mexican inflation (projected at 3.5% for 2025 (1) and depreciation of the Mexican peso against the dollar (estimated at 7.3% by 2025 (2).
This means that, although the return on a fixed-term investment is nominally 10%, the value of the money invested will be negatively impacted by the loss of purchasing power of the Mexican currency. For reference, the Mexican peso has lost the 16% of its value against the dollar during 2024.
2. Investing in CETES
Another safe investment option are CETES (Mexican Federal Treasury Certificates), considered one of the safest investment instruments in the Mexican market. These certificates issued by the Mexican government offer an approximate annual interest rate of 11% and can be purchased in small amounts. This allows investors to participate even if they don’t have a lot of capital.
The interest rate may be attractive, but under the same environment of elevated inflation and peso depreciation, this does not translate into a strong performance when adjusted to these factors. And, like fixed-term bank investments, funds cannot be withdrawn before maturity of the financial instrument.
3. Buy Dollars
Another option is to purchase US dollars. Even though the US dollar is a currency that has traditionally been considered a safe haven, in 2024, it has shown signs of weakness against other strong currencies like the Swiss franc, the Pound Sterling or currencies of some emerging economies (3).
Its recent depreciation, having lost 2.4% of its value only during the third quarter of 2024 (4) (according to figures of the United States Federal Reserve), is due to FED monetary policies, reduction of interest rates, lower expected economic growth in the United States, and the gradual dedollarization of large economies like Russia and China.
4. Save in Gold
Gold is considered the epitome of protective assets, proven over centuries to be an efficient long-term safe haven. From the start of 2024 to the date of this article (December 15, 2024), the price of gold increased from $2,037 USD / ounce, to $2,658 USD / ounce, a return superior to 30% in dollar terms.
Analyzing the Mexican currency, during the same period, the price of gold has gone from $35,078 pesos / ounce, to $53,550 pesos / ounce, a return of more than 52% in Mexican pesos.
It is clear that during 2024 gold has shown strength as a safe haven, outperforming other much riskier investment options. Gold reaffirmed its position as one of the best options to protect savings from inflation and currency devaluation.
Knowing the performance of the financial instruments behind each of these four strategies to invest your holiday bonus in 2024 is key to making an informed decision that allows you maximize your returns and protect your long-term heritage.
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