It’s not a shock that the markets had a pretty abysmal year last year, in fact the worst since 2008. Not only that, 2022’s double-digit loss was the worst for the bond market since 1976, the first year tracked by the Barclays Agg. That being said, the miserable market is great news — but how?
It’s all about perspective, and the one thing that a terrible year in the market does is give us all some perspective, both in investing and in life in general. There are a few perspectives that we can all take thanks to the 2022 market outcome.
First, your financial plan has been tested, and you’re likely in an all right place. The whole purpose of a financial plan is to see you through the market ups and downs, and 2022 was certainly a downturn. The good news here is that your financial plan got a thorough test in last year’s market, and you’re likely in a spot where you will still recover and can rely on your plan.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
If you’re not, that is something that you can adjust and work through. If you need help, you can rely on a financial adviser or planner for advice. But take solace in the perspective that the markets threw what could be their worst at you, and financially you made it through.
Secondly, investing is a long-term process, and hopefully that is something you’ve realized over the last year. If you’re investing in order to get rich quickly or for short periods of time, then investing may not be for you — because you need time to ride out the market ups and downs.
The S&P 500 hit 735 at its lowest point in 2008 (before going even lower in 2009), while after a decent-sized sell-off in early 2023, we’re looking at a market around 4,000 now — which is an increase of more than 3,000 points. These increases take time, and you need to ride them out.
The final perspective you need to take is zooming out and looking at the bigger picture. When you think about your life in general, the worst years likely have nothing to do with the market. And if 2022 was one of the worst years of your life (market or not), here’s hoping that next year is an improvement.
The good news is that 2023 is already looking brighter. Unemployment is at a low, inflation is seeming to abate and reverse, and interest rates aren’t too far from where we’re accustomed to seeing them.
As you can see, it’s all about perspective, and while the markets may not have performed how we liked last year, there’s hope ahead for a better tomorrow.
Diversified, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. A copy of Diversified’s current written disclosure brochure which discusses, among other things, the firm’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. Investments in securities involve risk, including the possible loss of principal. The information on this website is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.
-
Holiday Office Party Taxes: Know Before You GoTax Tips The IRS could tax your gifts from Christmas raffles, Secret Santa, and White Elephant. Here’s how.
-
2025 Tax Reform: Will the SALT Deduction Cap Be Repealed?Tax Deductions Some lawmakers say it’s time to end the $10,000 cap on state and local tax deductions.
-
Three Charitable Giving Strategies for High-Net-Worth IndividualsIf you have $1 million or more saved for retirement, these charitable giving strategies can help you give efficiently and save on taxes.
-
The Wealth-Building Powers of Health Savings Accounts (HSAs)Health savings accounts could be the most underutilized wealth-building tool out there. Here’s who should use them and how to maximize their benefits.
-
Seven Ways to Be an Absolute Jerk as a LawyerHere's what law students need to know about damaging their relationships with other lawyers and judges and running up the bill for clients.
-
One Good Way to Withdraw Retirement Assets (and a Bad One)Don't withdraw retirement assets haphazardly. Managing distributions intentionally can lower your taxes, conserve your wealth and reduce Medicare premiums.
-
What Is Capital Gains Tax Deferral?Spoiler alert: It's the secret weapon of savvy real estate investors. Here's how it works and details about the tools you need to do it.
-
Don't Leave Your Heirs an IRA Tax BombYour traditional IRA has served you well, but when your heirs inherit it, watch out. Consider some of these strategies to minimize their tax burdens.
-
Five Ways to Maximize Your End-of-Year PhilanthropyTo do the most good, pick the right charity, be smart about how you donate and consider giving something just as valuable as money: your time.
-
Three Options for Retirees with an Old (Forgotten) AnnuityDid you buy an annuity in the 2000s? If it’s been out of sight and out of mind since then, it's time to dust it off and start making it pay for your retirement.
