In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:
How Inflation is Altering the Tax Landscape for 2023 – Inflation has hit everything from groceries to airline tickets to energy bills, the effects of which are very visible to U.S. consumers. Less visible and understood is the effect inflation is set to have on taxes in 2023. Because of formulas set by Congress, the IRS adjusts key tax code parameters based on inflation, and since inflation is running at 40+ year highs, these adjustments are poised to be significant. For one, the standard deduction is set to rise by 7% in 2023, to $27,700 for married couples and $13,850 for individuals. This adjustment marks the highest upward move to the standard deduction since 1985 when core features of the tax system were first indexed to inflation. Also set to increase are income tax brackets, with the highest 37% tax rate now applying to incomes above $578,125 for individuals and $693,750. On the contributions front, the maximum that can be contributed to an HSA (health savings account) will jump from $2,850 in 2022 to $3,050 in 2023, and changes are likely to come to 401(k) and other retirement plan contributions. Finally, there are estate tax implications coming as well, with the lifetime gift tax exclusion rising to $12.92 million per person from $12.06 million. The annual gift tax exclusion will also rise to $17,000 per year per person from $16,000 in 2022.1
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Trading Your Retirement Could Be Hazardous to Your Financial Health…Here’s Why!
It’s no secret that many investors let their emotions and fear drive their investments. Even if you’re a seasoned investor, trying to self-direct your retirement investments can lead to extremely high risk – not because you aren’t competent, but because you are human. Instead of letting your emotions take control, it is essential to focus on the long-term outlook and the hard data.
If you have $500,000 or more to invest, get our free guide, “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health”—it offers some compelling reasons—backed by facts and research—why trading your retirement assets can be hazardous to your financial health.
Download Your Copy of “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health.”2
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Heating Bills Could Be Higher This Winter – Forecasters at the Energy Information Administration (EIA) stated this week that not only should the U.S. brace for a colder winter this year, but also that Americans should expect to pay more to heat their homes. Almost half of U.S. homes are heated with gas-fueled furnaces and boilers, and prices for natural gas are significantly higher now than they were last year. According to the EIA, Americans should expect it to cost almost $1,000 more to heat a typical home from October to March, which marks a nearly 30% increase from the cost to do so during the 2021-2022 winter season. If this winter ends up being colder than forecasters are currently predicting, the bill could increase 50% or more. Households that use electricity or propane to heat homes are likely to fare better, with just 5% and 10% increases over last year expected.3
Bank of America CEO Says U.S. Consumer Remains Healthy – There was one notable bright spot in earnings calls this week, which came from Bank of America CEO Brian Moynihan. On the call, Moynihan said the U.S. consumer remains strong and healthy, with stronger-than-expected spending on travel, entertainment, and discretionary items. Bank of America noted solid data in transactions, number of transactions, and deposit balances, adding that debt delinquencies and loan defaults remain historically low. Moynihan’s comments followed more bearish comments from J.P. Morgan CEO Jamie Dimon, who said last week an “economic hurricane” is likely on its way. Major banks have been preparing for a slowdown in economic growth and activity by adding to reserves, which has caused a drag on earnings in Q3.4
China’s Economy is Slowing, But Few Know by How Much – Economic data coming out of China is notoriously opaque, but analysts and economists faced an even bigger challenge last week in assessing the state of China’s economy. The challenge: there is no data at all. Last Monday, China’s National Bureau of Statistics canceled the release of quarterly GDP data with no explanation, and days earlier the customs agency withheld trade data with no update for when the data may be released. The withholding of key economic data came just as China was holding a Communist Party congress, with leader Xi Jinping expected to secure a third term which would also rupture the norms established to prevent a Mao-style dictatorship. Economic data that may be weak or point to economic instability in China runs counter to the state narrative that their policies are effective, which arguably leads to their retraction or outright withholding. Many analysts have lately turned to satellite imagery to gauge production and consumption activity, which in 2022 has pointed to significant weakness relative to 2021 and pre-pandemic.5
Protect Your Retirement – In this economy, it’s common for investors to make sudden decisions when investing. If you are managing your own retirement assets, this could be jeopardizing your financial security. Trading for short-term profits and investing for long-term goals are two very different things.
If you have $500,000 or more to invest, get our free guide, “Why Trading Your Own Retirement Can Be Hazardous to Your Financial Health”6—it offers some compelling reasons—backed by facts and research—why trading your retirement assets can be hazardous to your financial health.
This guide explores some of the key differences between trading and investing for retirement:
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