DuPont Wealth Management
  • Home
  • About
  • Services
    • Fraud Protection
    • Blue Ocean Consulting
    • Circle of Wealth University
    • Estate Plan Navigator
  • How We Do Our Work
  • Resources
    • Blog
  • Book
  • Free Gift
  • Contact
  • Retirement Architecture
  • Retirement Tax Savings
  • For Retirees Only
  • Redwood Tax Specialists

Blog

What Do Zero-Percent Interest Rates Mean for You?

4/27/2020

0 Comments

 
Picture
The coronavirus pandemic has launched the country, and the world, into uncharted territory. In much of the world, society is essentially shut down. Schools and large events are closed. People are staying in their homes. Businesses have effectively closed across the country.
 
The economy has felt the impact of the pandemic. Stocks have declined significantly, and unemployment has surged. On March 3, the Federal Reserve took action by cutting the fed funds rate to 0%. The Fed expects to maintain this rate until “it is confident that the economy has weathered recent events.”1
 
Given the unpredictability of the current pandemic, it’s hard to say how long rates might be at zero or how the economy may change in the future. However, changes to the fed’s benchmark rate often have ripple effects throughout the economy. Below are some things you may want to consider as we navigate a zero-rate environment for the near future:
 
Debt

Many common types of debt are tied to the prime rate. For instance, if you have a credit card with a variable interest rate, it could fall soon. If so, this may be a good time to get that balance paid off. You also may see lower rates on things like car loans and mortgages. This could be a good time to rate shop, especially if you have good credit. Even if you don’t want to transfer a credit card balance or refinance a home, the prospect of doing so could be enough to convince your lender to reduce your rate.
 
Student loan rates could also be impacted. Rates for new federal student loans are adjusted every year. The rate for 2019-20 is already set, but the rate for next year could drop significantly if rates stay low for some time. Private student loan rates could be fixed or variable. It depends on the terms of your loan agreement.

Savings 

Savers have unfortunately been used to low-interest rates for some time. Interest rates on savings accounts had started to climb, but after the Fed’s cut, the average FDIC rate is now down to 0.09%. While CDs may offer higher rates, they also come with less liquidity.
 
It’s always advisable to have liquid savings available to cover emergencies and unexpected costs. However, it may be difficult to find interest-bearing accounts for those savings at this time. We can help you explore all your options and develop a liquidity strategy that’s right for your needs and goals.
​
Investments 

There’s a misconception that a Federal Reserve rate cut always leads to gains in the stock market. One need looks no further than the most recent cut to see that it’s not true. When the Fed cut rates on March 3, the Dow Jones Industrial Average fell nearly 800 points.2
 
These are unprecedented times and it’s impossible to predict when the pandemic will end or how it will fully impact investors. While interest rates are a factor, there are many others to consider. Your retirement income strategy should be based on your unique needs and goals.
 
Now could be the right time to review your strategy and make adjustments. A change in allocation could be appropriate. You also may want to take advantage of financial vehicles that limit your exposure to risk. A financial professional can help you find the right strategy for your needs.
 
Ready to review your retirement income strategy? Let’s talk about it. Contact us today at DuPont Wealth Management. We can set up a virtual consultation, so you don’t have to leave the comfort and safety of your home. Let’s connect today and start the conversation. 
Picture
1https://www.usatoday.com/story/money/2020/03/03/coronavirus-dow-jones-stocks-react-after-fed-cuts-interest-rates/4938447002/
2https://www.usatoday.com/story/money/2020/03/03/coronavirus-dow-jones-stocks-react-after-fed-cuts-interest-rates/4938447002/

Fee-based financial planning and investment advisory services are offered by DuPont Wealth Management a Registered Investment Advisor in the State of Indiana. Insurance products and services are offered through DuPont & Associates, Inc. DuPont Wealth Management and DuPont & Associates, Inc. are affiliated companies.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 19959 - 2020/3/31
0 Comments



Leave a Reply.

    Archives

    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    May 2020
    April 2020
    March 2020
    February 2020

    Categories

    All
    2020
    COVID
    Economic Update
    Election
    Financial Planning
    Fourth Quarter
    Market Update
    Volatility

    RSS Feed

DuPont Wealth Management

523 S Buffalo St
Warsaw, IN 46580
Ph. (800) 234-4452
Em. [email protected]
​
Picture
Picture
Picture
As seen in:
Picture
Picture
Picture
Picture
Picture
HOME
ABOUT
SERVICES
FRAUD PROTECTION
BLUE OCEAN CONSULTING
CIRCLE OF WEALTH UNIVERSITY
HOW WE DO OUR WORK
RESOURCES
BOOK
​CONTACT​
Fee-based financial planning and investment advisory services are offered by DuPont Wealth Management a Registered Investment Advisor in the State of Indiana. Insurance products and services are offered through DuPont & Associates, Inc. DuPont Wealth Management and DuPont & Associates, Inc. are affiliated companies. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Indiana or where otherwise legally permitted.

Licensed Insurance Professional. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investing involves risk, including the loss of principal. No Investment strategy can guarantee a profit or protect against loss in a period of declining values. Any references to protection or lifetime income refer to fixed insurance products, never securities or investment products. Insurance and annuity products are backed by the financial strength and claims-paying ability of the issuing insurance company. 19464 - 2019/11/5

The information is not intended to be investment, legal or tax advice. The agent can provide information, but not advice related to social security benefits. The agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. For more information, contact the Social Security Administration office, or visit www.ssa.gov.

  • Home
  • About
  • Services
    • Fraud Protection
    • Blue Ocean Consulting
    • Circle of Wealth University
    • Estate Plan Navigator
  • How We Do Our Work
  • Resources
    • Blog
  • Book
  • Free Gift
  • Contact
  • Retirement Architecture
  • Retirement Tax Savings
  • For Retirees Only
  • Redwood Tax Specialists