Why Ordinary Investors Got Hit So Hard in 2022: A Morning Brief
The year 2022 was a tough one for investors, with the S&P 500 index falling by more than 20%. But ordinary investors , who tend to have less money to invest and less experience in the markets, were hit even harder. There are a number of reasons why ordinary investors were hit so hard in 2022. The Federal Reserve's interest rate hikes One of the biggest reasons for the market sell-off was the Federal Reserve's decision to raise interest rates. In an effort to combat inflation, the Fed raised rates by a cumulative 4.25% in 2022. This was the largest increase in interest rates since 1980. Higher interest rates make it more expensive for businesses to borrow money, which can lead to slower economic growth. This, in turn, can lead to lower corporate earnings, which can hurt stock prices. The War in Ukraine Another factor that contributed to the market sell-off was the war in Ukraine. The war has caused a great deal of uncertainty in the global economy, which has led to in