The Fed Stops Its’ Absurd Low-Rate Behavior

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The Fed had mighty expectations to raise rates and did just that. Rates will go up by 0.25 percent. This is after many years of near-zero rates and it isn’t a big jump. But it will have an impact on world markets.

Finally, savers will get more income. Who knows? Maybe 5-year CDs will break 2% interest.

Yet the majority of consumers, because of their debt, will face larger borrowing costs in the future. Although the rate rise will be slow and gradual, keeping refinancing beneficial and new debt relatively affordable.

To play rising rates you can invest into super-short term bonds that can rise with interest. And avoid long-term fixed-rate investments. These will typically drop in value and provide less income than newer, fixed investments.

Also, I’ve been recommending, for years now, a super-short-term bond fund that’s paying 3-4% income annually. It has an absurdly-low duration of 57 days! Historically, these low durations perform best in rising-interest times (like we’re beginning now), potentially increasing income and value. Call me at (719) 545-6442 or email me at RonPhillipsAdvisor@gmail.com to discuss it further. Happy New Year!

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