TOGETHER WITH  | Happy Thursday. Based on a recent CNBC survey, what was the top action Americans took in 2022 to build their wealth? a. negotiate a higher salary, b. start a side hustle, c. invest in the stock market. 🌊 Check below for the answer. Here are today's money topics: - The deflating financial bubbles
- Is living sensibly the goal for 2023?
- There aren't enough remote jobs to go around
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ECONOMY The Deflating Financial Bubbles | | | | Keeping the economy in check is like trying to un-stack a perfectly balanced house of cards. It's almost impossible to do without toppling the entire thing — it requires a little poise and a lot of luck. That's what the Federal Reserve has been tasked with this year — deflating some bubbles without popping them. Thus far, they've done a remarkable job of this, but how? Steady hands - Stocks: Bulls enjoyed massive plunder throughout 2020 and 2021 as indexes soared. Between the first trading day of 2020 and the last of '21, the S&P 500 gained 47%, the Nasdaq 73%, and the Dow 36%, with hundreds of individual and meme-related stocks pushing much higher as valuations ballooned. Despite the pain, 2022 has brought a necessary correction across the board, patently humbling high-multiple tech stocks specifically.
- Housing: Interest rates were at their floor, savings balances were high, and inventory was low. Home prices rose accordingly, up 31% in just 2 years. And while home prices are still rising (37% overall since Q1 2020), the Fed's rate hikes have contributed to bringing that growth down to a trickle, slowing sales and demand while giving supply some time to catch up. They've tamed the flames without tanking the market and putting homeowners underwater — this isn't 2008.
- Budding areas: This year has also managed to expose the nascent crypto world. There have been 7 well-documented crypto bankruptcy blow-ups this year alone, with the latest being FTX, a giant most never expected to fall. While the Fed can't take all the credit, their rate hikes have no doubt created a risk-off environment that's led some players to pull their cards from the crypto space, making it much more costly to do business.
Job not done We've made it through the game without stepping on lava, but that doesn't mean the coast is clear. While the Fed has done at least a commendable job in certain areas, there's still an ongoing war with inflation at hand and miles left to go. Take this related lesson on this topic and earn Dibs 🟡 while you're at it: | | | |
FINANCIAL PLANNING Is Living Sensibly the Goal for 2023? | | | | The collective goals of a society change over time, usually in the direction of broad trends and in response to recent events. We've experienced a lot of change in recent years, and it seems to have made an impact on us, imprinting itself on the goals of many. A recent study from Fidelity showed Americans are feeling more trepidation about their finances right now. In 2021, 72% said they expected to be better off in 2022, whereas this year only 65% say the same. Meanwhile, 75% said they were looking to proceed with caution, 43% cite inflation as their top concern, and 49% say they'll try to maintain their pandemic savings habits. Optimism is out, pragmatism is in, and 2023 looks to be the year of living sensibly. Get in on the movement - Reassess: With the top 3 resolutions for 2023 being saving more, paying off debt, and spending less, goals seem to be shifting toward prudence during these uncertain times. While we'd never encourage you to curtail your dreams, ensuring your goals are sensible is equally important as dreaming big. Now may be a good time to reassess, change, or adjust according to your situation as things have changed.
- Contribute: If you invested $500 per month at an 8% return over 30 years, an extra $50 per month would pocket you an additional $67K by the time you retire. The markets have been choppy this year, but there's no better time to invest than the present. In the spirit of sensibility, perhaps the best thing you can do to shore up your future is up your retirement contributions. If you haven't already, make every effort to contribute to your employer match this year, (it's free money) and even max out if you can.
- Check your debt: Interest rates are on the rise across the board, and high-interest debt is one of the most prominent victims. If you're carrying a balance, it's important to stay up to date on the rate you're paying as it often increases quietly. Subsequently, let this create a greater sense of urgency for paying down that debt too.
- Reduce expenses: Spending less money is a top-voted resolution for 2023, and it might not be such a bad idea. Inflation is still historically high, interest rates are rising, budgets are shrinking, and layoffs are coming. In one way or another, it's likely the ripples of all this will impact us all eventually, so creating some space in your budget is a smart move.
- Expand your saving: For similar reasons cited above, it's a better time than ever to expand on your emergency fund and savings. If you only have a month of expenses saved, now's the time to shoot for 3. If you've got 3, go for 6. Beyond that, it's up to your discretion and comfort level, but it never hurts to save a little extra.
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FEATURING STACKIN | | | | Budgets, like diets, don't work for everyone. Instead, Stackin focuses on helping you do the emotional work of finding what you truly value. Then, they provide insights to help you understand the connection between your emotions and your money, so you can reach your goals. Start today by taking this money relationship quiz for free on Stackin. | | | |
ECONOMY There Aren't Enough Remote Jobs To Go Around | | | | The pandemic pushed our inevitable shift toward remote work tendencies into overdrive, and we're now more zealous than ever for that WFH lifestyle. While it's not idealized by everyone, the facts are that 92% of employees are working remotely at least one day a week, and they want more. Demand for remote positions is through the roof, and employers can't keep up with the applicants. Get in line - The climb: An estimated 26% of Americans are now working from home, up from 5.7% just 4 short years ago. Sixty-eight percent of Americans would prefer to work fully remotely, and 16% of companies are already there.
- Discrepancies: Recent data from LinkedIn shows that about 50% of applications submitted on the platform are going to remote jobs, yet only 15% of job postings are for those positions. That divergence has been growing for some time now but took off in the second half of 2021.
- The outcome: This is just an anecdotal example, and truthfully the gap between demand and availability for remote work spreads much farther. Economies never reach a permanent equilibrium, and the labor market is no different. It'll take some time to find a resolution here, but there's no doubting the long-term trend and shift toward remote work.
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🌊 BY THE WAY | - 🤓 Answer: While it takes some perseverance to invest in the stock market, that's what 27% of Americans said they did to build their personal wealth—the top wealthbuilding move of 2022. Other popular answers include getting a second job or side hustle (20%) and negotiating a higher salary at their primary job (15%) (CNBC)
- 📈 Fed raises key rate by half-point and signals more to come (AP News)
- 📊 ICYMI. Budgeting tips crafted for 2023 (Finny)
- 🤢 World is 'driven by envy,' not 'greed'—Billionaire Charlie Munger (CNBC)
- 📲 US government charges 8 social media influencers over alleged pump-and-dump scheme (CNN)
- 🧼 Finny lesson of the day. Given the higher volatility in the stock market this year, review the IRS wash sale rule if you've made any trades:
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| Finny is on a mission to simply finances & benefits for employees. The Gist is Finny's twice-a-week (Tues & Thurs) newsletter covering personal finance & investing insights and money trends. The content team: Austin Payne & Carla Olson. Finny does not offer investment and stock advice. Please support our brand sponsor—Stackin—as they make rewards on our platform possible. If you're interested in sponsoring The Gist, please reach out to us. And if you have any feedback about this edition or anything else, please email us and we'll be sure to respond. | | | | | | | |
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