An Interest Rate Increase Is Long Overdue

An Interest Rate Increase Is Long Overdue


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An Interest Rate Increase Is Long Overdue
By:
02 Dec 2016
Business

What should you do if it does? If you are risk-averse, you can take advantage of the higher yields from bank products such as certificates of deposit, money-market accounts and savings accounts. For those who have exposure to the markets, evaluate your current stock and bond market exposure and make necessary adjustments.

The last time the Fed increased rates was December 2015, and an expectation was set at that time—based on the strength of the economy and the labor market—that we would see three to four increases in 2016. So we waited and watched and... nothing.
 

Meanwhile, if you're looking for a way to save and invest, you're being punished. If you put your hard-earned dollars in a money-market account or certificate of deposit (you know, the way your risk-averse but savvy-about-saving parents and grandparents did?), you're actually losing money. And you have been for years. Because if you're making 1% interest, and inflation is 1.5% to 2% (those are the Fed's figures, by the way), you're simply not keeping up.

This is especially unfair to older workers who want to move from stocks and bonds to something more conservative as they prepare to retire and to elderly Americans on a fixed income, who rely on interest income to cover their living expenses.


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Rahul Raj

Rahul Raj

This lazy StoryTeller forgot to write something about itself.


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