PCIA Charleston’s Jason Noble was recently featured in The Wall Street Journal in a discussion about the Fed’s recent rate increases. What do they mean for the average investor?
2022 has brought historic rates of inflation, market volatility and six different rate hikes, the four most recent of which were all 75-basis-point increases. Those increases have been accompanied by many questions from Americans with even modest financial dreams, such as retiring comfortably or purchasing a home.
As the times change, so must financial plans and the strategies investors put into place to achieve their objectives. Jason Noble offered a temporary solution to what financial professionals and experts see as a temporary problem. He believes that those looking into purchasing a home may want to hold off for the moment, giving themselves time to save for a bigger down payment while potentially waiting out skyrocketing housing prices. He says:
“That is an important conversation to have, because if you are putting down 5%, you could get underwater on your home rather quickly, and we saw that in 2008. You want to get as close to 20% or over as possible.”
A larger down payment on a home could cut your mortgage costs while also buying you time to wait for lower interest rates and more competitive prices. It might even make it easier to find a house, as the competitive market has made it difficult for buyers all across the country to find the right home.
The article also offers two more tips for those looking to weather the storm. First, as the federal interest rate climbs, it can be a great idea to pay down any high-interest debt. Right now, higher interest rates are driving the annual percentage rates of credit cards up, making it even more difficult to pay off debt, especially as it accrues over long periods of time. The best course of action is often to work toward paying that debt off so that it doesn’t grow exponentially.
The piece also recommends using this time to save money. As interest rates rise, so do the returns on savings, or at least they should be. Banks can be slow in raising interest rates, meaning that your cash may not be earning interest at fullest potential. It’s important to make sure that your bank is offering a competitive rate when crediting interest, and if it’s not, you can likely shop around to find options that allow you to take advantage of the current financial climate.
To read more about how your debt, savings and financial plan are affected by the Fed’s rate increases, you can read the entire article on The Wall Street Journal.
If you have any questions about how working with an advisor can help you stay on track and achieve your goals, call Jason Noble and PCIA Charleston at (843) 743-2926.
Don’t miss Clear Picture Financial, Jason Noble’s radio show and podcast each Sunday, where you will learn how you can protect your portfolio and stay on course with your long-term financial and retirement plans. Jason and his team help retirees, those who want to retire early, and business owners who are looking for a work-optional lifestyle.
Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd. Suite #150, Overland Park, KS 66211. PCIA doing business as Prime Capital Wealth Management (“PCWM”) and Qualified Plan Advisors (“QPA”).