“Here is something to think about: How come you never see a headline like ‘Psychic Wins Lottery’?
–Jay Leno
Like the psychics noted in the quote above, a lot of pundits try to predict the events of the coming year. And then they spend the next year hoping they are right.
Not me. Jay Leno is right. It is not easy for predictions to pan out.
Being psychic is hard. So, instead, I will talk about obvious trends moving into next year–and your habits, health, taxes, and opportunities. It often happens that tending to the obvious is a recipe for success. So, we will look at the kinds of plain trends and behaviors you should pay attention to in 2022.
NUMBER ONE 1: MANY PEOPLE WILL MAKE FINANCIAL NEW YEAR’S RESOLUTIONS—AND THEY USUALLY SUCCEED WHEN THEY ACT ON THEM
I have no problem making new year’s resolutions—lose weight, work out, and learn a new skill.
Easy.
And when the new year comes around it is not hard to come up with new ones either. I just use the same ones as last year.
Of course, I have a lot of company when it comes to this kind of repeating-loop thinking.
Resolutions don’t start out that way. People have good intentions. For instance, here is what most people are aiming for in their financial lives:
- Improving their budgets
- improving their credit score
- spending wisely and in a strategic way
- changing financial institutions and
- investing money
However, to achieve those goals people must track their progress, act, and set some completion deadlines. See here. This post outlines some basic steps.
In spite of my jaded attitude, I believe most people will have success in 2022–if they act. And I hope you will too.
NUMBER 2: INTEREST RATES WILL RISE
How do I know? Well, because the Federal Reserve, the body that controls rates, says it will raise them.
At present, rates are extremely low—to the point where the situation is downright strange. The 10-year Treasury Bill rate is well below two percent, while the inflation rate is near double digits. Essentially savers are losing money–but remain more concerned about safety than anything else.
One of the reasons for that is there are no obvious places to invest money right now. Stocks are valued at high levels. Real estate has run up sharply. The situation overseas for investment looks murky.
There are not a lot of clear paths forward.
What to do:
- If you have not refinanced your home, you should lock low rates now.
- If you can make significant purchases financed by loans at low-interest rates, this is a good time to think about it and do it if it is feasible. Just don’t overpay for whatever you are going to finance.
- Think hard about investing in long-term bond funds at all—and then think again. Some people you should listen to are very leery of them. Since prices move inversely to bond yields, you can lose money if the yield rises, and if you are in anything but short-term investments. See here, for some ideas.
NUMBER 3: OMICRON WILL HAVE A SERIOUS IMPACT IN THIS FIRST QUARTER. HOWEVER, THE ECONOMY WILL RECOVER.
How do I know? I don’t for sure. But as the pandemic has dragged on, there has been no appetite to repeat extensive or long-lasting lockdowns from medical professionals or political pundits–even as the latest variant spreads like wildfire. That, in turn, makes the economic damage more manageable and recovery easier.
Of course, we are in for a VERY rough time in the meantime. New infections are rising at an alarming rate. And a major concern is not just the number of people we are losing or the staggering number who are sick. It is also how many medical professionals are getting sick from Covid, or burning out, and quitting. That makes it especially important for you to keep safe and avoid needing emergency rooms and hospitalizations in the first place. Unfortunately, medical professionals, our heroes, are overwhelmed and understaffed.
But there will come a time for more optimism. Covid may soon become endemic and slightly more manageable in the next year or so. History tells us that pandemics do end eventually. This situation won’t last forever.
I think a return to normalcy will accelerate in 2022 based on advances in medical technology and treatment. But there will be some significant ups and downs. So, hang on.
What to do:
- First, keep yourself safe. The lack of a lockdown does not mean that the danger is over. Since I believe in vaccines, I have already gotten a booster.
- Give yourself a break and understand that major decisions are just that much more difficult when there is an ongoing threat to your health and that of your loved ones.
Let’s face it, all of us are tired and stressed. After three years of this pandemic, people do not make major financial decisions as well as they might. That might include you. Get a second opinion on major decisions and take your time as you make them.
- Cherish your friends and family members. Hug your kids. They ought to be your highest priority.
NUMBER 4: WASHINGTON WON’T MAKE MAJOR TAX CHANGES
Washington is the poster child for an extensive division in the country–we are not getting along or agreeing with each other as much as we used to. We DO seem able to deal with each other in a dysfunctional way when there is a crisis (Covid-19) or if there are immediate needs that can’t be put off (infrastructure)– but that is about it. So, I don’t think that the rules about something as controversial as taxes will change much in 2022.
There may be changes to the tax code, but they will be piecemeal and are not likely to be significant given the political stalemate.
What to do:
- Watch Washington events, but don’t obsess over them. You are likely to have another year before any tax changes become law.
- Don’t let potential tax changes distract you from making solid decisions. Don’t put things off.
NUMBER 5: WATCH FOR THE UNEXPECTED: SOMETIMES PSYCHICS DO WIN THE LOTTERY—SO KEEP ALERT AND BE LOOKING FOR OPPORTUNITY
If there is one thing that you can expect in 2022 it is the unexpected.
To underscore that, consider the story of a woman in Sydney, Australia, who consulted a psychic. The psychic predicted that someone in the family would win the lottery. So, when the woman herself won $7.5 million, it should not have been a surprise. In fact, it should have been a foregone conclusion.
Nonetheless, the lottery winner confessed to the local media that she was shocked and could not believe her sudden good fortune.
So much for her confidence in psychics.
There is no further word about the psychic in the aftermath of an avalanche of positive publicity. Opportunities abound for her. It is not clear if the psychic is now offering financial management advice, selling her autograph, or raising her hourly rates.
CONCLUSION
Tend to the obvious first. When you do, many other aspects of your life often work out.
And have a happy and healthy 2022!
Photo Credit: Kate Jewell
License: Wikimedia Commons
Disclaimer: consult with a financial fiduciary before taking any steps outlined here. Not all advice is suitable for your circumstances or investment style.