Bloomberg Wealth: Buckle Up For a Tricky Tax Season

The market crash is far from over.

That’s the view of Rob Arnott, co-founder of Research Affiliates. In an interview with my colleague Suzanne Woolley, Arnott offered his thoughts on where to invest $1 million right now. Think global real estate, treasury inflation-protected securities and international value stocks. Or you could buy a piece of Banksy’s art. 

For those who are still reeling too much from last year’s market losses to think about deploying cash in the market again, there may be some relief this tax season. However, it’s also going to be a particularly complicated one for a lot of people.

Consider the following questions:

In 2022, did you:

switch jobslose money in the stock market

move states d) start a side-hustle If you answered yes to any of the above, expect the unexpected this tax season The annual slog of filing to the IRS is in full swing, and changes to your finances last year may make the process particularly tricky. My colleague Charlie Wells asked experts for tips on how to navigate it all. 

Complications await those who moved statesstarted a side-hustle. And if you quit your job or were laid off, your new employment status could also mean extra work this tax season. You might also receive some good news: unexpectedly large refunds. 

Unfortunately, the most common shared experience for readers of this newsletter is probably losing money in the market, after the S&P 500 Index posted its worst annual performance since 2008. For you, Charlie has three words: tax-loss harvestingBloomberg News is conducting a survey on what it means to be rich in America and we want to hear from you. Take our survey 

The market slump has been particularly hard on those saving for retirement, with the average 401(k) balance down about 20% last year. To make matters worse, the value of the US housing market just shrunk by $2.3 trillion in six months, the most since 2008.

So how much is enough to  comfortably? 

Well, it depends who you ask. According to 553 investors worldwide who shared their views in a recent Bloomberg survey, the answer is between $3 million and $5 million Of course, building a seven-figure nest egg is an impossibility for many would-be retirees. But there are ways to step up your retirement savings if you know where to look, even in the current market environment.  

Alas, some of you might be considering moving to a remote home near the French or Spanish Riviera and leaving all of your worries behind. Hate to break it to you, but my colleagues Charlie Wells and Alice Kantor wrote about why that possibility just became much more difficult. Several European countries are appear to be ending the golden age of golden visasMisyrlena Egkolfopoulou

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Don’t Miss

• US claims for unemployment benefits unexpectedly fell to the lowest in three weeks, another sign of the labor market’s relentless strength.
• There are still winners in the crypto market: Two former Barclays bond traders made over $9 million after selling 72 Bored Ape Yacht Club NFTs.
• The value of the US housing market  by the most since the 2008 as the pandemic boom fizzled out.
• The average 401(k) balance  20% of its value last year. 
• McKinsey plans to  about 2,000 jobs, one of the consulting giant’s biggest rounds of cuts ever.
• The Federal Reserve seems inclined toward more hikes to bring down inflation.

Bloomberg Opinion this week, Andrea Felsted noticed that even though inflation remains stubbornly high, there’s been some good news in pricing out of the grocery aisle this year:

Food retailers and consumer-goods groups are pointing to fewer price rises during the course of this year. That doesn’t mean groceries will get cheaper any time soon, but hikes in cheese and cat food likely won’t be as steep as in 2022. Good news for struggling shoppers and central bankers.

Read her full story

Financial FAQ

What is your top suggestion for someone trying to save for their first home?

First off, what a mess the housing market is… sheesh! It amazes me what we have seen prices do while real incomes remain pretty much flat. For those trying to save for their first home, my top suggestion is to not neglect their savings needs outside of the down payment. Too many first-time buyers focus every dollar on their down payment and closing costs without factoring in an emergency fund and moving expenses. They will go as far as depleting their emergency fund in order to get to the closing table. Once they close and move in, they inevitably encounter unforeseen expenses, and quickly find themselves with a credit card balance. These expenses can be anything from repair costs to furnishings. I have a client in Colorado whose hot water heater tank burst the day after he moved in. Quick way to hit your homeowner’s deductible! I have another who ran into $20,000 of repairs to a bathroom during their first month of ownership.

Colin Moynahan, financial adviser for Twenty Fifty Capital in Charleston, South Carolina

Send us questions about your own financial dilemmas to [email protected]or fill out this form