We are all a party to the ebb and flow of rising costs as well as interest rates. They affect our ability to borrow money for a student loan, mortgage and car. However, higher interest rates can lead to better yields on fixed accounts like savings and investments.
When rates go up, whether it’s car insurance or interest rates, saving is important. Look at your budget and scale back on some things might make sense. If you have extra dollars after you have reviewed your budget, now is the time to pay down as much as you can on a credit card (if you have credit card debt). Or, save more!
Shop Around
According to CNBC, this year car insurance rates across the US may top off by rising by 8.4%, bringing the total average premium for full coverage to $1,780 per year.[1] One way to try to lower your rates is to shop around. Some insurance companies offer discounts if you bundle your home and auto – you’ve heard the commercials. This applies to renters too. It’s wise to revisit your policies every few years to see if your current insurer can lower the rates or, if it makes sense to switch.
Invest in Emergency Planning
In times of economic uncertainty, we also recommend you keep an eye on the savings in your emergency fund and have enough to cover three to six months of savings.
Find Investments Favorably Impacted
Consider investing in a fixed rate short-term cd, especially as rates are around 5%, which according to MarketWatch is four times higher than the average.[2]
Remember this, when rates go up –
In terms of your investments – Don’t pull everything out of the market! If the market goes back up you still want to be invested so that you capture this momentum. If you are trying to time the market – good luck! And as we always say, make sure you are diversified across several asset classes.
The bottom line is rising interest rates may make it harder to purchase items or secure a loan in the short-term, but can be a boost in the long-term.
Reach out to us a Maxwell Financial - visit our website at https://www.maxwellfm.com/ or follow us on LinkedIn, Instagram or Facebook for advice and support.
[1]https://www.cnbc.com/select/car-insurance-is-on-the-rise-in-2023-heres-how-to-save/
[2]https://www.marketwatch.com/picks/these-8-financial-institutions-are-now-paying-a-guaranteed-5-or-more-on-their-cds-or-high-yield-savings-accounts-a8fd058d