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Financial Markets Have Surprising First Half of 2023

Updated: Jul 6

A financial market increasing higher
Graph of Increasing Financial Market

If you are one who has recency bias, you may have expected financial markets to behave in 2023 like 2022. During the year 2022, it was a very difficult year for both stocks and bonds and there was nothing that looked hopeful that things might change heading into 2023. However, as Paycheck to Wealth often states, market timing is a dangerous game. Professional investors do not always get it right; therefore, we should not expect anything different from our own market timing performance.

Paycheck to Wealth’s philosophy is “In the Market Stay In, and You Will Win.” The first half of 2023 has proven that point. Markets move up and down as part of their normal occurrence. However historically over time, markets tend to trend in a more positive direction. If you reacted and changed your investments and moved to cash, you would have missed some impressive gains in the financial markets so far this year.

Just a quick look back at the challenges from 2022 you can see protected investments like High Yield Savings Accounts, Certificate of Deposit (CDs), and Bonds were paying less than 1% interest on your investments. Additionally, growth investments from stock market indexes like the Dow Jones, NASDAQ, and S&P 500 had a very down year. So far this year, the performance of both protected investments and growth investments have done much better. Let’s look at the following table showing the 2022 vs. 2023 YTD performance of protected investments as of June 28, 2023.

Protected Investments:

How protected investments performed 2022 vs 2023
Protected Investments Performance

Now let’s look at Growth Investments:

Growth Investments:

Growth Investments Performance 2022 vs. 2023
Growth Investments Performance

As often stated, past performance is no guarantee of future financial market success. However, as you can see, overreacting to market fluctuations can be costly to achieving your financial goals. You may have missed out on 5% or greater annual percentage rate (APY) on your protected investments and growth investment returns from 2.13% to as high as 29.86%.

This speaks again to getting started and being consistent with sticking to your investment plan. Again, we are long-term investors and should not overreact to the everyday swings that may occur in the financial markets.

If you would like to discuss or learn more about the financial market opportunities to fit your investment goals, please contact Paycheck to Wealth for a free review and to learn more.

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