When you are preparing for your financial future, there are a wide variety of factors that can influence your ability to reach your goals. While you have some level of control over many of these variables, there are others that you have almost no control over. One risk that could alter your financial future is if the government decides to raise or reduce key interest rates. Recently, the team at HCR Wealth Advisors gave insight into how a change in interest rates could affect your financial future.
Impacts Return of Cash
The most direct way that a change in interest rates can impact a person is by changing the return that they will receive on their cash. When interest rates were higher and you could earn 5% or more in a risk-free account, it made more sense to keep money in cash. However, with the reduced rates, it now makes less sense and investing elsewhere could be a better option.
How and Where you Invest
When interest rates change dramatically, it could also have a big impact on where you invest. When interest rates are going up, it is generally beneficial for banks as they will earn more interest income and will not increase deposit rates at the same rate. This could make them a good investment in rising rate environments but a bad investment when you think that rates will be going down.
Changing interest rates is just one of many things that can impact your financial future. Since there is so much variability and risk out there today, it would make a lot of sense to seek out the guidance of a professional. One firm that can help you to better understand your financial needs and risks is HCR Wealth Advisors. When you meet with HCR Wealth Advisors, the team can provide you with a variety of services to help you prepare for the future.
This article is provided for informational purposes only and should not be interpreted as investment advice.