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Form 1040: Definition, Types, & Tips

Various 2021 IRS tax forms on a wood desktop.

Filing a 1040 tax return can be daunting, but understanding the form is crucial. This comprehensive guide breaks down everything you need to know about the form, including types of 1040, standard deductions, and additional schedules. Get tips for filing, FAQs, and more.

Inflation and mortgage rates continue to rise

The Stock Market Memo

Memo #3: Inflation and mortgage rates continue to rise October 14, 2022 Why does it seem like every time you turn around, the cost of living goes up? It’s not just your imagination–inflation is real and only getting worse. According to recent reports, inflation and mortgage rates are both on the rise. What does that mean for those of us who are trying to keep up with the Joneses? Well, it looks like we’ll have to keep working harder and spending more just to keep our heads above water. And that’s not even taking into account the rising cost of education and healthcare. But on the bright side, the stock market has been doing well in October, validating claims that the month is a “bear-market killer” (more on that later). Key Market Data 3 Market-Impacting Discoveries Yesterday’s CPI report showed that inflation continued its upward march last month. The higher-than-expected 0.6% increase erased hopes that inflation was slowing down. It also revealed that the Fed’s multiple rate hikes have yet to ease inflation pressures and that even when the rate hikes do kick in, it will be a long slog back to normal inflation levels. The kicker is that the Federal Reserve will likely keep raising interest rates aggressively until inflation drops significantly. Mortgage rates hit a 20-year high after rising from 6.66% to 6.92% this week.  The last time the 30-year fixed-rate mortgage was this high was in April 2002, and just a year ago, the 30-year fixed-rate mortgage stood at 3.05%. Home sales are dropping, and prices are cooling in response to the upward trend in mortgage rates. Fed officials expect higher rates to stay in place. They reiterated rate hikes are likely to continue, and higher rates will prevail until there is compelling evidence that inflation is on course to return to the 2 percent objective. Interesting Developments in the Market The good  It would seem October is living up to its reputation as a “bear-market killer,” a phrase which describes it as a crazy month in which bear markets bottom. This reputation came from the fact that stocks have bottomed in October six times out of the past 17 bear–or near-bear markets.   The bad  BMO Capital Markets cuts 2022 year-end S&P 500 (.SPX) outlook, saying it underestimated inflation. This came after Goldman Sachs cut its 2022 year-end target for the benchmark S&P 500 index by about 16% to 3,600 points because the Federal Reserve shows little signs of stepping back from its aggressive rate-hike stance. To Do Watch: This interesting video by Tom Hougaard will change the way you approach stocks and indices trading. Read: 5 investment options to help you generate retirement income. Listen: Check out the unconventional investing wisdom shared by Dan Irvine in this podcast: The Investing Secret To Maximizing Your Wealth. Until next week, Alex Smith, ​Author of Introduction to the Modern World of the Stock Market P.S: Telling moms a secret Get newsletter updates from Alex No spam. Just the highest quality ideas that will teach you how to build wealth via the stock market.

New quarter begins with a rally

The Stock Market Memo

Memo #2: New quarter begins with a rally October 7, 2022 The start of a new quarter is always an exciting time for stock markets, and this one was no different! U.S equities kicked off strongly, with strong rallies in key indexes like the Dow and the S&P. The energy sector continues to outperform most other sectors, and cannabis companies surged higher. Key Market Data 3 Market-Impacting Discoveries Oil prices rose to a three-week high after OPEC+, the group of oil-producing countries, agreed to cut production by 2 million barrels per day. This represents its biggest cut since the world shut down in April 2020 during the early stages of the Covid-19 pandemic. The idea is that slashing production should increase oil prices, which many OPEC countries rely on for revenue. Did it work? Well, Brent crude, the international benchmark, is hovering around $93, representing a three-week high. Energy remains 2022’s best sector, with the S&P 500 energy sector (.SPNY) up 44% year-to-date, despite a broader market swoon. Crude oil futures also rose by more than 10% this week alongside gains made in the wider energy sector. If this news is any indication, it doesn’t look like gains in the energy sector will be slowing up any time soon. Cannabis companies surged after President Biden signaled a major shift in federal marijuana policy, pardoning all prior federal offenses of simple marijuana possession. Shares of Tilray Brands (TLRY.O) and Canopy Growth Corp (WEED.TO), two well-known marijuana sellers, jumped 22% and 31%, respectively. Also, the ETFMG Alternative Harvest ETF (MJ.P), which includes shares of several cannabis companies, rose almost 20%, while the MSOS cannabis ETF jumped 34%. Interesting Developments in the Market The good  U.S. stocks start the new quarter with a rally as the Dow rose by 2.7%, the S&P 500 by 2.6%, and the Nasdaq Composite by 2.3%. This happened after U.S. equities sustained deep losses for the first nine months of 2022, primarily due to interest-rate increases and monetary tightening. The bad  It’s a troublesome time for the semiconductor industry as dwindling demand for PCs after the PC boom of the pandemic, coupled with supply chain issues, creates a perfect storm. The slump in demand for semiconductors is due to soaring cost pressure from interest rate hikes by the Fed to keep rising inflation in check. Semiconductor giant AMD warned of a Q3 revenue shortfall on Thursday, which caused its shares to drop by around 4% in extended trading. Micron also reported mixed earnings for September, and Nvidia issued preliminary earnings reports far below expectations, leaving investors disappointed. To Do Watch: Check out this insightful speech from Robert Kiyosaki on why the poor stay poor and the rich keep getting richer. Read: What Do You Need to Know About Financial Literacy? By Ramsey Solutions. Listen: Check out this podcast from the Motley Fool on what the future holds for interest rates. Until next week, Alex Smith, ​Author of Introduction to the Modern World of the Stock Market P.S:  Giving radio a chance Get newsletter updates from Alex No spam. Just the highest quality ideas that will teach you how to build wealth via the stock market.

U.S. Stocks end their losing streak amid a bear market

The Stock Market Memo

Memo #1: U.S. Stocks end their losing streak amid a bear market September 30, 2022 Did you know that the Tampa Bay Buccaneers have the longest losing streak since the 1970 AFL–NFL merger? The team lost its first 26 games between 1976 and 1977. Their fans must have heaved a sigh of relief when the team ended their losing streak. Investors are pretty much heaving a sigh of relief after U.S. equities ended a six-day losing streak (more on that later). Key Market Data 3 Market-Impacting Discoveries After moving above 4% for the first time since 2008 on the 28th of October, 2022, bond yields (10-year note) are testing the 4% level again. Rising yields significantly impact borrowers, savers, businesses, investors, and consumers. Read about what this means for you: https://bit.ly/3SURa5O. This data from Bloomberg shows that buying a home is more expensive than it has been since 2021. With mortgage rates at 3% in early 2021, if you wanted to spend $2,500 on a home, you could buy a house that costs about 758k. But with mortgage rates more than double what it was in 2021, that same monthly payment would get you a house that costs $476k. That means we are talking about not just higher prices but also much lower affordability levels.  The Bank of England’s decision to step in and calm investor fears about its teetering markets is just what the doctor ordered for the weak performance of bonds. That announcement also helped end the six-day losing streak of the Dow and the S&P 500. And the US 10-year Treasury yield posted its largest one-day drop since 2009 after the announcement! Interesting Developments in the Market The good  Arguably the world’s most iconic car, Porsche made its stock market debut two days ago. At 82 euros per share (around $73 billion), Porsche’s listing on the stock market makes it the second-largest IPO in German history. The luxury vehicle has been around since 1931 when Arnold Foachieveur made his first vehicle at their Munich factory for members of the Hitler Youth movement who wanted something faster than motorcycles but not as noisy or dangerous enough so they could drive around town without getting noticed by enemies lurking nearby.  The bad  We’re in a bear market, folks. All major U.S. stock indices: the S&P 500, Dow Jones Industrial Average, and Nasdaq, are now in a bear market, defined as at least a 20% drop from their peaks. In fact, the S&P 500 closed at a new 2022 low.  To Do Watch: Check out this inspiring speech from Warren Buffett as he shares two stories about women who started from nothing and sold their businesses to him. Read: Inflation is a stealth threat to your savings and investment returns. Your savings’ and investments’ rate of return has to outpace inflation by a significant percentage to get any return at all. Read about which equity sectors can help you combat high inflation. Listen: Check out this interesting podcast on how Warren Buffett became the greatest investor ever. It’s packed with interesting insights. Until next week, Alex Smith, ​Author of Introduction to the Modern World of the Stock Market P.S: Sometimes unconditional love looks like this Get newsletter updates from Alex No spam. Just the highest quality ideas that will teach you how to build wealth via the stock market.

Investing in the US Stock Market

Investing in the US Stock Market

There is no escaping it. The topic of investing always seems to come up when people are discussing their finances. For those who work a traditional job, their company’s 401k plan is often the first option they consider when it comes to investing. However, what about self-employed people or […]

How to Invest Successfully in the US Stock Market

How to Invest Successfully in the US Stock Market

Like most people, you probably think of the stock market as a mystery that’s too complicated to understand. And if you’re like me, you may have been scared off by all those stories about day traders losing their shirts. But the truth is, investing in stocks […]

10 Compelling Reasons to Start Investing in the Stock Market

10 Compelling Reasons to Start Investing in the Stock Market

Are you considering investing in the stock market but not sure if it’s the right move for you? If so, you’re not alone. Many people are hesitant to invest in the stock market because they don’t understand how it works and are afraid of losing money. However, investing in stocks is […]