January is a popular time for people to plan out their year with new resolutions. Most importantly, people like to set new goals to improve their lives in terms of health, relationships, career and money. Among these, financial goals lend themselves especially well to methodically undertake, since anyone can engage in studies and researches to figure out what is likely to going to happen and plan ahead. Here, we discuss some of the most important financial trends to be aware of in 2018, so that you can make smarter preparations for what’s to come in the new year.

Interest rates will continue to rise

The US Federal Reserve has announced its intention to continue its rake hike in 2018. For most people in Asia, this also means that their interest rates will go up. This is because the US Dollar has such a big influence on the Asian economy, especially on its exporting business, and Asian governments largely attempt to maintain a relatively stable exchange rate to the dollar. For example, our own analysis has shown that the correlation between SGD and USD is extremely high around 90% over a 20 year period.

For consumers, this mainly has two implications. First, as interest rates rise, it becomes all the more imperative that they reduce the amount of loans that they carry. Most consumer debt in Singapore have floating interest rate, meaning the cost of these loans will increase as the market rates rise, and interest charges will will end up consuming more of people’s income over time. Those who may not have enough capital to immediately pay down their debt can still benefit from refinancing their loans to lock in the low rates for a few years before rates go up even more. Secondly, rising rates can have negative implications for the stock market, which we discuss further below.

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The stock markets have enjoyed some of the best bull markets in history

2017 was one of the best bull markets for the stock market globally, with many markets reaching their historical peaks. For example, the S&P 500 is enjoying a 9 year long bull cycle, its second longest ever. The Hong Kong, Korea, Japan and Singapore stock markets are also at their highest levels in the last 10 to 15 years. But, will this continue in 2018?

While no one has a crystal ball to make accurate forecasts regarding these questions, there are certain signs that one can consider to make a more educated guess. For example, rising interest rates don’t bode well for the stock market. This is because interest rates are inversely correlated with market valuations: when rates are low, investors flock to the stock market to chase higher returns; when rates return to normal levels, investors are likely shift their money out of the stock market into safer assets that are now offering an acceptable level of yield.

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Certainly, it’s entirely possible that the market will make history by continuing to rise in 2018 and forming the longest bull market ever. But, it’s certainly worthwhile to note that many of the major market indices are at their peaks in recent history. Given how market cycles always go up and down over time, it wouldn’t hurt for consumers to start investing more carefully this year.

Beware of cryptocurrencies

Bitcoin and its other cryptocurrency competitors have been all the rage in 2017. You couldn’t go to a bar or a restaurant without hearing someone discuss why bitcoin is the best or the worst investment opportunity ever. Before you decide what to do with cryptocurrencies, there’s a question that we recommend you to ask yourself: would you be willing to double down on your Bitcoin investments the next time it declines in value by 30% to 40%?

If you think you can, we would love to hear your reasoning on why Bitcoin (or other cryptocurrencies) is currently undervalued and at what price you think it will be overvalued. Otherwise, without clear answers to these types of questions, buying a bitcoin would not be investing, but rather gambling. It’s definitely possible to make a lot of money from bitcoin (or gambling), but would you really have the confidence to buy more of it when it declines massively in value? Since there still isn’t an intelligent and methodical process of evaluating an asset’s fair value, we advise you to be wary of buying cryptocurrencies as investments (if you have a logical methodology, please let us know).

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The article 3 Financial Trends You Must Know in 2018 originally appeared on ValuePenguin.

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