Wealth and Wisdom: Week of October 3, 2022
The Federal Reserve has made its intentions very clear. It will continue raising interest rates – likely twice more this year – in order to bring inflation under control. Fed Chair Jerome Powell concedes that rate-tightening could trigger a recession.
Investors are now calibrating the economic cost of the Fed’s decision, which explains the recent selloff in stocks. The Dow Jones industrial average joined the S&P 500 and Nasdaq Composite in bear market territory last week.
These are scary times. As an investor, the question you face right now is whether to put your head down and stick with your plan – or to give in to your fears, sell your stocks, and lock in these lower prices. Yes, the market may have farther to fall before it recovers, but selling not only hurts your long-term returns, it turns off the most powerful ally you have: compounding.
That’s a high price to pay for some temporary comfort.
Bracing for recession
If Fed policymakers believe an economic downturn is the only way to tame inflation, this often-reliable indicator is saying they may get their wish. (Reading time: 3 minutes)
Seniors are already feeling the pain
Without the option to go back to work for higher income, many older Americans are struggling against high inflation. (Reading time: 6 minutes)
Are stocks cheap now?
The ongoing market selloff appears to be creating some attractive bargains for long-term equity investors. (Reading time: 5 minutes)
The Big Mistake
Inflation and market volatility are scaring young investors out of the market – at what could be precisely the wrong time. (Reading time: 3 minutes)
Student loan burden isn’t helping, either
More than half of those who borrowed for college say their debt burden is causing anxiety and depression. (Reading time: 3 minutes)
An expensive bailout
The nonpartisan Congressional Budget Office says President Biden’s student loan cancellation plan will cost taxpayers $400 billion. (Reading time: 2 minutes)
Pre-tax or Roth 401(k) – which is better for you?
Deciding whether to pay taxes now or later not as simple as it sounds. Here are several other issues to consider. (Reading time: 3 minutes)
Getting paid to wait
Postponing your Social Security benefits until full retirement age and beyond will mean bigger checks – and larger cost-of-living adjustments. (Reading time: 4 minutes)
Webinar: Social Security Planning for Women
Women face more challenges – and opportunities – when it comes to Social Security benefits, as we explore in this recent webinar. (Running time: 51:52)
Mike’s Pro Tip of the Week
Amazon’s second Prime Day sale is October 11-12, which means special discounts for members. To see how good a deal you’re getting, download the CamelCamelCamel app, which tracks the price history of items on the Amazon site.
Words to the Wise
“Most investor interventionism against looming market crashes ultimately lead to lower compound returns than those crashes would have cost them. Markets have scared us far more than they have harmed us.”
– Mark Spitznagel
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Brown Family Wealth Advisors and not necessarily those of Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Expressions of opinion are as of this date and are subject to change without notice. Past performance does not guarantee future results. Prior to making an investment decision, please consult with your financial advisor about your individual situation.