Wealth and Wisdom: Week of May 29, 2023

Here is what’s playing out in the financial markets right now: an unexpected spike in inflation caught the Fed off guard, prompting it to aggressively hike interest rates. Inflation is now beginning to ease, but higher borrowing costs are cutting into corporate profits. To compensate, companies are cutting payrolls, which in turn is slowing the economy, possibly to the point of a recession.

We might not like it, but all of this is part of a normal business cycle. If it’s like every other business cycle, the economy will continue slowing, purge itself of inefficiencies, reset, and then resume growing. Stock prices historically mirror the business cycle several months in advance.

Investors are trying to figure out what will happen before it does – that’s what markets do. There’s just some added uncertainty this time around, for at least three reasons: (1) The pandemic prompted an unprecedented response from the federal government and the Fed; (2) There seems to be no end-game for the war in Ukraine; and (3) Congress and the president have chosen to play politics over the debt ceiling right in the middle of it all.

Cashing out your Series I bonds

Inflation made yields attractive on these government bonds. Now savers are looking for the most efficient ways to move their money elsewhere. (Reading time: 3 minutes)

HSA limits get a big bump in 2024

Higher inflation means you’ll be able to put a lot more money into health savings accounts next year if you qualify. (Reading time: 2 minutes)

Used cars are still really expensive

Higher prices, rising finance rates, and smaller inventories are forcing more drivers to hang onto their cars longer. (Reading time: 5 minutes)

Tipping has gotten out of control

The pandemic changed how Americans tip – and how much they are expected to. (Reading time: 4 minutes)

Let the government do your taxes?

Send the IRS your personal information and let them figure out what you owe. What could possibly go wrong? (Reading time: 3 minutes)

Managing taxes in retirement

Many tax rules change when you retire – and your strategies should change along with them. (Reading time: 3 minutes)

How retirees cope with inflation

Rising costs can deal permanent damage to your retirement. Here are some ways to handle it. (Reading time: 5 minutes)

The next bailout?

A new study says millions of Americans will retire with insufficient savings over the next 20 years – costing the government $1.3 trillion. (Reading time: 2 minutes)

How much we spend on housing

Paying for a place to live is a huge budget item for Americans of all ages. See how your costs stack up with the rest of the country. (Reading time: 4 minutes)

A commencement speech I’d love to hear

Instead of exhorting new graduates to go out and save our doomed world – how about showing them how to make what’s good even better? (Reading time: 3 minutes)

“There is no sadder sight than a young pessimist.”

– Mark Twain

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