2023 Contribution Limits Updates

Hello folks,

I thought I'd send a friendly reminder about the updated contribution limits for 2023.

401(k)/403(b)/457(b), HSA, and Roth IRA contribution limits all increased for the 2023 calendar year.

Please remember to take this into account as you set your contributions at the beginning of the year, especially if you are utilizing the Backdoor Roth IRA.

The new contribution limits can be found below.

Some of you may be thinking, "Why should I invest into the market now when it's probably going to nose dive further?"

That is a fair question, but my investing philosophy is to dollar cost average during all times and that includes recessions. If you have followed my previous posts, you'll know that this is true ESPECIALLY during recessions. The purple arrow below shows us the housing market crisis and stock market recession of 2008. Did it make sense to buy stocks when the S&P 500 was at 800? Absolutely! You were paying 60 cents on the dollar for stocks.

The S&P 500 peaked at $4,800 during the recent bull run. If you were happy investing during this bull run riding up to the peak (blue arrow), then you should be happier to buy during the red arrow.

"But what if the stock market dips more? I think I should wait before it bottoms out." This is what the talking heads say, but what if they are wrong? No one can predict the future and this is true for the talking heads, Jim Cramer, and even the Financial Samurai (Sam Dogen). Timing the market is a great way to lose money, but hey you could get lucky. Personally, I'd rather not invest my life savings based on luck. That's why it's a good idea to produce your own investor policy statement and stick to that. It's a great way to divorce emotions (like FOMO [fear of missing out]) from your financial decisions/goals.

Sam said, "Overall, I expect the S&P 500 to rise by a modest 5% to 5,008 after a stellar 27% increase in 2021." However, this was clearly not the case. He follows this with, "As of Dec 5, 2022, this forecast has been wrong, with the S&P 500 declining by 25% at one point. But I did write I had a 65% conviction we will see a 10%+ decline for the year. 2022 has, indeed, turned out to be uninspiring!"

Anyone can be wrong, which is why I'll be doing the exact same during this recession. I'll be carrying on with my life and dollar cost averaging into low-cost, market-cap weighted index funds.

How can you get all of the battle-tested, tried and true knowledge as quickly as possible? I wrote a book explaining exactly this; it's short; it's cheap, and it's written in plain English. You can find it here: https://amzn.to/32PLB3x. You may also want to consider subscribing to this blog by entering your email on the homepage next to the “Never Miss a Post” section and following the podcast “Nondelusional Investing” wherever you get your podcasts.

Is there anything you found useful or that I missed above? If so, please leave a comment in the comment box below.

See you on the next one!

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Disclaimer: The article above is an opinion and is for informational/educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. The author has taken care in writing this post but makes no expressed or implied warranty of any kind and assumes no responsibility for errors or omissions. No liability is assumed for incidental or consequential damages in connection with or arising out of the use of this information.