As we approach the end of 2022, gas prices have doubled and we have 40-year-highs in inflation. The first six months of 2022 were the worst the stock market has had in 40 years. As of 11/28/2022, the S&P 500 Index is down 17% and the Nasdaq Index is down almost 30% in 2022.
In 2022, the US inflation rate hit the highest since 1981. According to U.S. Labor Department data published on 10/13/2022, the annual inflation rate was 8.2% for the 12 months ending in September, 2022, after rising 8.3% the previous month.
During the last 18 months, the US inflation rate has steadily increased and is at a 40-year high. The Federal Reserve Bank has two missions: fight inflation and promote full employment. These 2 missions are now in conflict. The Fed’s main tool to fight inflation is raising interest rates.
The Inflation Reduction Act (IRA) was recently passed and signed by President Joe Biden on 8/16/2022. According to Wikipedia, these are the main parts. The first is allowing Medicare to negotiate prices with drugmakers and limit out-of-pocket expenses to seniors on Medicare to $2,000 per year.
Over the decades, millions of Americans have made major errors in their investment, tax, and retirement planning decisions by not understanding advanced math. I will cover two examples now, including common myths.
On 6/13/2022, a CNBC article by Samantha Subin and Fred Imbert was titled “S&P 500 tumbles nearly 4% to new low for the year, closes in bear market territory”. The S&P 500 Index was down 21% from its January, 2021 record.
I’ve studied the world of economics and investments for over 50 years. One needs to know the math that is relevant to making better investment and retirement planning decisions. Here’s what I mean.
My February 02, 2022 Ahwatukee Foothills News article was titled “Traditional IRAs can be a Tax Time Bomb!” The more your traditional IRA or 401k grows, the more the eventual tax, either through Required Minimum Distributions (RMDs) that start at age 72;