Interest rates…What’s next?

07 Sep 2016
I came across these recent headlines…”The cost of higher rates” followed by “The pain of zero interest rates.” Confused??  So am I.
It just goes to show, you can find about any article, if you look hard enough, to argue two sides to any story.  After reading both I have come to a startling conclusion.  No one really knows when, how much, or why interest rates may or may not go up. I put this in with the “we can’t control” box that I try to not spend a lot of time on.  Kidding aside, rising interest rates and keeping rates low both have positive and negative outcomes. It all just depends on which side of the fence you are on and for how long.
If Rates go up…
The Bad:
– We pay billions more on our already staggering $18.1 trillion national debt
– This will eat into increases in federal revenue in the future
– The cost to borrow money will increase-May slow down growth. Less Refi’s and higher interest charges on credit cards
– Bonds will suffer ( inverse relationship with rates)
– There may be short term heightened stock market volatility
The Good:
– CD and cash equivalents will earn more-Good for conservative investors and senior citizens
– Banks may have an incentive to loan out reserves at a higher rate which may boost economic growth
– The Dollar may strengthen as Fed raises rate so European travel may look better ( book those tickets!)
– The stock market “may” do well as investors focus back on market fundamentals and not the fed tinkering with policy
– People sitting on the fence to borrow for a house may now seem the timing will never get better. Could stimulate homes sales and the economy?
Ok….ok…I hope I have demonstrated that no matter WHAT happens someone will benefit. Let’s just hope that someone is you!  I wanted to thank “Jim” for inspiring me to write on this topic–Good luck! Jeff

Jeffrey Johnston

Jeffrey is originally from Solon, Iowa. He currently resides in Swisher, Iowa with his wife, Prudence, and his three children, Seth, Ian, and Roman. He graduated from the University of Northern Iowa in 1989, where he majored in Finance and Investments. He has 24 years of experience in the investment and estate planning business. He is currently the President of “Premier Investments of Iowa, Inc.” Jeffrey’s main focus is Estate and Investment Planning for Senior Citizens and Pre Retirees. Jeffrey became a Chartered Financial Consultant (ChFC) in 2001. He is the author of many articles on industry related topics and he is a frequent seminar presenter. He is a Board Member TRIAD Linn County Seniors Against Crime, and he is also a past Board Member of the Heritage Area Agency on Aging Task Force. He is a member of CEO Roundtable in Cedar Rapids, a Daybreak Rotary Member, and a member of the Cedar Rapids Estate Planning Council. In March of 2009, Jeffrey became the host of the Premier Investments of Iowa Financial Hour which airs every Tuesday Evening from 6PM -7PM, on WMT 600 AM Radio. In his free time he enjoys golf, fishing, scuba diving, traveling, and coaching son’s basketball teams.