EV tax credits, holiday spending tips, mutual fund basics, and more

[Charles Schwab & Co., Inc.]

Your monthly roundup of market news and commentary from Schwab

December 2022 View on web      Investing Insights Quick Takes     • Inflation trends are moving in a favorable direction. Is it enough for the Fed?   • What do our experts see in their crystal balls for 2023? Check out Schwab’s outlook for U.S. stocks and bonds, as well as global markets.   • For the first time in a long time, municipal bond investors may be able to earn attractive yields without having to take undue risk. Taxes   6 Questions to Help Prepare for Tax Season Nailing down these six points about your tax situation can help you reduce your taxable income and minimize what you owe when it’s time to file. Read the article   Investment Expenses: What’s Tax Deductible? The IRS allows deductions for certain expenses if they’re related to producing taxable investment income. Do your expenses qualify? Read the article   Beware Taxes on Discounted Munis The interest that municipal bonds pay is generally exempt from federal tax and may be exempt from state and local taxes. But munis aren’t exempt from all taxes. Here’s what to know before you buy. Read the article Ask Carrie   5 Tips for Holiday Giving Without Straining the Budget Looking for holiday gifts that don’t break the bank? Here are some ideas for giving while keeping costs in check. Read the article Quiz: Question   Q: According to economists, what’s the most efficient holiday gift? A) Cash, because the recipient can buy what they really want. B) Gifts, because they show you care. C) It’s a matter of debate. Keep scrolling to see if you got it right. IRAs   Avoid These Costly IRA Mistakes IRAs may offer tax benefits, but if you don’t understand—and carefully follow—all the relevant rules governing taxes, rollovers, and distributions, the consequences can be significant. We explain:     • Tax Rules for Traditional IRAs   • 6 Mistakes to Avoid With Roth IRAs Risk Management   How Much Risk Can You Really Handle? Trust a bear market to show us when our appetite for risk is getting too big for our stomachs. The trick is to find your personal Goldilocks zone, so you don’t panic when things are going poorly or miss out when good times return. It’s a two-step process:     1. Emotions matter, so start by deciding what your nerves can handle.   2. Then be realistic about what you can afford. Your strongest convictions won’t matter if you don’t have the resources to back them up. Chart of the Month   The Gift That Keeps on Taking A poll by creditcards.com earlier this year found that Americans are holding unused gift cards, vouchers, and store credit worth a grand total of $21 billion. Talk about holiday cheer deferred—and that’s before you factor in inflation. After all, when prices rise, you lose purchasing power. For example, that $100 gift card you just realized has been sitting in a drawer since last year? It would get you the equivalent of about $90 worth of goodies today. Source: Charles Schwab and the Federal Reserve Bank of Minneapolis’ Inflation Calculator. Inflation Reduction Act   Rundown of New Tax Credits for Going Electric If you’re in the market for an electric vehicle or are planning to make your home more energy efficient in the coming years, be sure to check out the new tax incentives on offer—they could save you some money. Read the article Quiz: Answer   A: C—A matter of debate. Economist Joel Waldfogel caused a stir with his 1993 paper “The Deadweight Loss of Christmas,” which estimated that poor selection can degrade a gift’s value by up to a third, and that cash is a more efficient route to holiday cheer. However, a panel of economists at the University of Chicago Booth School of Business offered a rebuttal—54% either disagreed or strongly disagree with the Scrooge-ish notion that giving specific noncash gifts is “inefficient,” suggesting that it may indeed be the thought that counts. Investing Basics   6 Things to Know About How Mutual Funds Work Mutual funds can simplify investing by packaging up diversified investments in easy-to-trade, often low-cost bundles. But the work that goes on behind the scenes can be quite complex. Here’s what investors should understand about these popular investment vehicles. Read the article Want to learn more? Visit us online Twitter Facebook YouTube Schwab Mobile Unsubscribe Privacy  Log in   Brokerage Products: Not FDIC-Insured • No Bank Guarantee • May Lose Value The Charles Schwab Corporation provides a full range of brokerage, banking, and financial advisory services through its operating subsidiaries. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (Member SIPC), offers investment services and products, including Schwab brokerage accounts. Its banking subsidiary, Charles Schwab Bank, SSB (Member FDIC and an Equal Housing Lender), provides deposit and lending services and products. 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