Seven Reasons for Investors to Be Grateful in 2023

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For many years, I’ve shared an updated list of reasons for investors to be grateful in my Thanksgiving Day Investor Update. I’m doing so again today.

I started this about a decade ago in response to all the constant headlines, calls to buy or sell, economic data and overall information overload. Combined, such things make it easy to forget what has gone right for you. All too often, we need to make a conscious effort to be grateful. This is a shame because being grateful for even seemingly small things can make you happier, as monk and interfaith scholar David Steindl-Rast explained in this 2013 TED Talk.

Here is this year’s list. Though it is focused on investing and finance, I would encourage you think about what you would put on your own list. I’m sure it will extend well beyond the world of finance, as it should.

1. Softening Inflation—The pace at which inflation is increasing has been decelerating. This deceleration is occurring in many countries, not the just U.S. (Argentina notably being an exception). While the rate at which inflation is growing in the U.S. is still above the Federal Reserve’s target, it is fortunately lower than a year ago.

2. Higher Interest Rates on Savings—The interest rate environment continues to be very favorable for savers. Money market accounts and funds, certificates of deposits (CDs) and many savings accounts are paying juicy interest rates. However, you may need to shop around to get them. Bankrate.com calculates the national average yield for savings accounts as 0.60%. In comparison, Discover is offering AAII members an annual percentage yield of 4.40% on savings. (If you have debt, shop around as well. You may be able to get a lower interest rate, which can help you pay down your debt quicker.)

3. Highest Bond Yields in 16 Years—Yields on the benchmark 10-year Treasury note remain at levels not seen since the early part of the global financial crisis. This is good news for those with income from bond ladders to reinvest or those who are otherwise seeking to add some bonds to their portfolio. Should the Fed be at or near the end of its tightening cycle, bonds could also potentially realize some capital appreciation going forward.

4. Very Low Expense Ratios on Many Mutual Funds and Exchange-Traded Funds (ETFs)—Earlier this year, I mentioned that fund expense ratios may be bottoming out. State Street lowered the expense ratio on the SPDR Portfolio S&P 500 ETF (SPLG) to 0.02%. Though definitely a welcome event, investors have many choices among funds with expense ratios of 0.10% or lower. There are 93 no-load mutual funds available to individual investors with such costs. There are also 194 ETFs with similar expense ratios and at least $100 million in assets under management.

5. Having a Portfolio—This year has been better overall than last year in terms of returns. Most of the major mutual fund groups AAII tracks had positive year-to-date returns as of the end of October. The performance of your portfolio is, obviously, dependent on what you hold in it and how you are allocated. Large growth mutual funds gained 17.8% during the first 10 months of this year. Small growth was down 3.4%. (Credit the S&P 500 index’s Magnificent Seven technology-related stocks for driving the large growth returns.)

6. Compounding—There is no greater friend to investors than compounding. As many of you know, compounding takes a dollar’s worth of assets today and turns it into far more than a dollar’s worth of assets tomorrow. This is why no-commission trading and very low mutual fund and ETF expense ratios are beneficial: Every dollar you save is a dollar you get to keep investing.

7. Being a Proactive Manager of Your Wealth—If you’re reading this, then you are a person who has chosen to be in control of your finances. Regardless of whether you do everything yourself, work with an adviser, use index funds or actively pick stocks, you have made the decision both to be engaged and to continue learning. Be proud of yourself and be grateful that you have the ability to do so.