BY SUZANNE HAZLETT, MBA, CIMA®, CFP®
Inflation is sometimes referred to as a hidden tax as it reduces the purchasing power of your earnings.
Essential personal finance news you need to know for September – the Federal Reserve has cut its key interest rate by half a percentage point as inflation has fallen to its lowest level since 2021.
Why It Matters
The move and the potential for another rate cut before year-end indicate interest rates will come down for many borrowers while lowering the rates that financial institutions pay savers.
Auto loan rates + car prices have been trending lower as dealerships are expected to continue offering incentives and discounts.
Credit card interest rates on carried balances reached an average rate of 22.76% in May. More competitive rates are on the horizon, particularly with smaller banks or credit unions.
Mortgage interest rates have been uncomfortably high for nearly two years, disrupting the housing market and pushing mortgage payments to record highs. That trend has shifted. According to Freddie Mac, the average interest rate for a 30-year fixed-rate mortgage hit 6.46% in mid-August, the lowest point since May 2023.
Savings Accounts, Money Market Funds + CDs have benefited savers in recent years. Variable yields will decline with the FED’s decisions.
Fixed-income investments with locked-in yields typically increase in value as rates decline, as previously purchased bonds become more attractive than newly issued bonds with lower rates.
Stocks tend to perform well when borrowing costs decrease.
A personally tailored investment mix that factors in liquidity needs, risk tolerance, and time horizon is well worth the time it takes to assess changing market opportunities and protect long-term purchasing power.
Suzanne Hazlett, MBA, CIMA®, CFP®, is a Certified Investment Management Analyst® and CERTIFIED FINANCIAL PLANNERTM professional. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc. Securities are offered through Raymond James Financial Services, Inc., member FINRA/SIPC. HAZLETT WEALTH MANAGEMENT, LLC is independent of Raymond James and is not a registered broker/dealer. 675 Sun Valley Road, Suite J1 + J2, Ketchum, Idaho, 83340 208.726.0605 HazlettWealthManagement.com