Money Management

It’s impossible to predict the future, but 2023 isn’t looking too bad to Suze Orman. 

Recently, on her podcast Women & Money, Suze Orman offered an interesting and hopeful prediction about investing in 2023. Here’s why she says 2023 is looking more predictable than last year.

A caveat

Before diving in, Orman reminded listeners that anything can happen. “All of us are vulnerable to nature. All of us are vulnerable to what Congress decides to do. All of us are vulnerable to what happens in Ukraine and where that goes. And who knows what can happen?”

“So, how do you protect yourself?” Orman asked. “You make sure that you have significant amounts of money invested in a way that no matter what happens, you are safe and sound. And one of those ways is really through what? Treasury bills or certificates of deposit.”

And with that advice, Orman shared with listeners how she believes 2023 may play out.

Another dip

“I still think for this market to really, finally one day turn around and go back up, it needs to go back down further,” Orman said.

The financial guru pointed to the Standard and Poor’s 500 (S&P 500) Index. At the time of taping, it was around 4,000. But, according to Orman, the resistance level is about 4,155.

Here’s what Orman means by resistance level: As prices rise, sellers are tempted to sell. However, buyers are less willing to buy. When those two things are happening at the same time, it’s called the “resistance point.” Since values only move upward when there are willing buyers, prices begin to drop.

Orman also said that she’s “really concerned” that 60% of the stocks in the S&P 500 index appear to be overbought.

That means most people who wanted to buy S&P 500 stocks have already made their purchases. Without that pool of buyers supporting higher prices, Orman believes they may be poised to fall.

And that’s good news for investors.

The flip side of the coin

If Orman is right and the market is positioned for another downturn, investors have the opportunity to scoop up stock in companies they believe have an excellent long-term outlook.

To that end, she suggests that listeners continue dollar-cost averaging into investments that suit their objectives. Dollar-cost averaging means investing a fixed dollar amount on a regular basis, regardless of where the price stands. For example, if someone is currently investing $200 per month, that $200 will buy fewer shares when the market is up, but when it’s down, their dollars will buy more. Over time, this strategy could lower the average cost per share.

Branching out

Finally, Orman suggested that particular exchange-traded funds (ETFs) may work out this year.

“The areas of the market for this year that are projected to do well are consumer staples, healthcare, and utilities,” Orman said.

An ETF is similar to a mutual fund in that the buyer buys a bundle of assets, potentially lowering their risk by diversifying their portfolio. However, ETFs generally track a specific index. For example, an investor may choose to invest in small businesses, stocks from a specific country, currency, or utilities. It’s stock from a specific sector that goes into their portfolio.

As Orman made clear, we live in a world that is impossible to predict. However, calling last year one of the more challenging investment years she’s experienced, Orman believes this year should be better.

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The credit may have lost its boost, but it didn’t disappear. 

At this point, many people are deep in the throes of preparing their 2022 taxes. And you may be eager to eke out as much tax savings as possible.

The IRS has already warned taxpayers to expect smaller refunds this year. But claiming the right deductions and credits could help a larger refund land in your bank account.

Now you might assume that the Child Tax Credit isn’t a tax break you can claim for 2022. But actually, if you think that, you’re way off base — and you risk losing out on a giant tax benefit you’re entitled to.

The Child Tax Credit was alive and well in 2022

In 2021, the Child Tax Credit got a major boost as part of the American Rescue Plan, a massive stimulus package that also resulted in $1,400 checks. That year, the maximum value of the credit rose to $3,600 for children under the age of 6 and $3,000 for children aged 6 to 17.

The Child Tax Credit did not retain that boost in 2022, much to the disappointment of families all over the country (and a number of lawmakers as well). But that doesn’t mean the credit went away in 2022. And it’s important that families realize that they can, in fact, claim the Child Tax Credit on their 2022 tax returns.

Of course, the value of the Child Tax Credit isn’t the same for 2022 as it was for 2021. Last year, the Child Tax Credit’s maximum value was $2,000 for children of all ages. Also, unlike in 2021, the credit wasn’t fully refundable. Rather, only $1,500 was. This means that if you have no tax liability and are eligible for a full $2,000, the most you can get back is $1,500.

But still, given the way inflation has been surging and so many families have been struggling to make ends meet, it’s important that anyone eligible for the Child Tax Credit claim it on their 2022 tax return. It could make a huge difference, especially among filers who find that they owe the IRS money for underpaying their taxes last year.

Will the Child Tax Credit get a boost in 2023?

Lawmakers haven’t given up on fighting for a boosted Child Tax Credit once again. And so at some point, we could see the maximum value of the credit rise beyond $2,000. Whether that happens in 2023, however, is up in the air.

Although inflation is surging right now, some lawmakers might argue that boosting the credit will only make that issue worse by giving consumers more money to spend. Meanwhile, some lawmakers have proposed making a boosted credit more targeted so that any extra money it results in lands in the pockets of those who need it the most. But nuances like that are apt to be hard to implement, so it may be a while until we see the Child Tax Credit again become worth more than $2,000 per child.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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