So many are wondering will the increased interest rates affect us and where will be the best place to invest their money now that the Fed raised rates?Carolyn McClanahan, a certified financial planner and founder and director of financial planning at Life Planning Partners, sees opportunities in bonds. In the short term, the stock market will probably get a boost and bonds may take take a hit. But longer term, rising rates will be bad for stocks; therefore, investors may want to evaluate their portfolios and move out of some equities and invest more in bonds, she said
For the past seven years, low rates have made bonds relatively unattractive, and the stock market comparatively more attractive. When rates go up, some of that money will tend to flow back into bonds and away from the stock market, so investors need to pay close attention to this, said McClanahan.
If you invest at all in stocks and bonds, even if you just have a 401(k), this Fed rate hike will be important to you and your portfolio. It could trigger volatility in stock and bond markets, which are already on a roller coaster ride. Stocks can continue to gain, but investors may need to be choosy. Stock investors don’t necessarily need to fear rising interest rates, but some sectors could fare better than others
As of today, our markets are being controlled more by what the oil is doing, last week DOW was down because oil started dropping again, but today DOW is up due to the fact oil is up higher than it has been in over a week. If oil will keep going up the market will keep doing well, although Gold may take a hit since it is down today.So far the increased interest rate hasn’t made a change in the stocks, but time will tell. For some reason when the dollar goes up oil goes down but when the EURO goes up which it is doing now because it has pretty much bottomed out then oil seems to go up. The dollar seems to be just staying or going up slightly and also when the dollar goes up then Gold goes down. So you really need to keep an eye on the market. It really may be time to invest in oil because oil should not drop much lower then it already is.
It is too early to see how the higher interest rate is going to affect the housing market but here again time will tell. I think the rate has not gone up enough to change the market unless we begin to see a big change in unemployment. Hopefully, Unemployment won’t begin to hit right away but should begin as companies get hit with the higher interest rate and have to try to make up for the added expense. If you want to buy a house this is the time to do so while the interest is still down, but it would be wise to keep the payments low to what you can handle because who knows what are economy will be like in the future.