TSP

At the end of 2021 Fidelity managed 442,000 401(k) type accounts that had balances of $1 million or more, and one year later the number had decreased by 32% to 299,000. Image: Yury Zap/Shutterstock.com

“What goes up, must come down” begins the 1968 folk hit Spinning Wheel by Blood, Sweat, and Tears. Were they singing about the risk inherent in investing? Were they urging us to stay our investing course regardless of the ups and downs of the market? Probably neither, but you must admit there’s been a lot of ups and downs in the investing/financial world lately. Here are just a few of them.

Fidelity Investments announced that the number of retirement millionaires is going down. At the end of 2021 Fidelity managed 442,000 401(k) type accounts that had balances of $1 million or more, and one year later the number had decreased by 32% to 299,000. Fidelity stated that the same is true in the world of Individual Retirement Arrangements (IRAs), saying that there had been a 25% decrease in million-dollar IRAs between the end of 2021 and the end of 2022.

Also on the way down is the total value of U.S. homes. Real estate brokerage Redfin points to a 4.9% drop in home value (a loss of $2.3 trillion) over the second half of 2022.

What’s going up? Debt, according to the Federal Reserve Bank of New York. U.S. Millennials’ debt increased by 27% from the end of 2019 through the end of 2022.

Also on the rise is the number of “dollar stores”. The New York Times reported that Dollar general now has more locations than Walmart and Target combined.

Interest rates might continue increasing in order to drive the inflation rate down. Just recently, Federal Reserve Chair Jerome Powell said that the Fed will likely have to take interest rates higher than was previously expected. Former Treasury Secretary Larry Summers opined that he would not be greatly surprised to see the Fed take rates as high as 6%.

But the above may not be true after the failure of Silicon Valley Bank. Pundits are now suggesting that the fed will need to lower interest rates to keep more banks from going under.

Apartment rents have gone down, with the median rent 3.5% lower than it was back in August according to The Wall Street Journal.

The Transamerica Center for Retirement Studies says that almost 40% of workers expect to retire at age 70 or older (or do not plan to retire at all). I’m not sure if this number is going up or going down, but it is scary.

It appears that more financial professionals are expecting that some type of recession will happen. Summers guessed that the taming of inflation will likely bring on a recession at some time, “…as it almost always has in the past.”

Let’s hope that another line in Spinning Wheel does not come true – “You got no money, and you got no home.”

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