Each day the topic of interest rates is discussed and discussed by various media outlets like newspapers, radio, and television. These discussions are rarely detailed and explained so that people can comprehend the meaning behind them and how it could impact their lives. Why should the average citizen pay attention to whether, these are rising, falling, or steady? How can they affect us, in our daily day, lives? While there are many areas of our lives where they are important in the present article, we will examine, analyze, and explore five areas that are crucial to the majority of people.
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1.Stock market:Have you heard someone claim that the market for stocks doesn’t matter to them because they don’t invest? However, retirement accounts and mutual funds are crucial if you have them. Also when interest rates are at a low level, as they are currently (many believe, in an historically low way), there are fewer options, and locations where one can invest and/ or, put one’s funds – in. If banks or bonds offer low dividend or interest rates (below the inflation rate) which leaves less options, and in many instances creates an increase in the stock market (in terms of price, etc.).
2.Real estate market:Generally, when the cost, of borrowing, is lower mortgage rates can be extremely attractive and appealing, therefore, the prices of homes increase and the overall, real estate market, is able to increase in value. Of of course, this is contingent on other elements including: Supply and Demand; inventory; and the general economy and job/ employment, conditions! We are currently witnessing an increase in prices that we have not (if ever) seen. But, a large part of the reason is shifts in perceptions and priorities since the terrible pandemic. The monthly mortgage payment costs per thousand dollars is less if rates are lower.
3.Make use of credit cards:Credit card issuers usually provide attractive rates on their cards, especially when rates of interest (costs of borrowing) are low. People who have greater optimism about the future are more likely to borrow more money and utilize credit cards more.
4.Personal:Because it is less expensive to borrow money, when interest rates are lower and people are more likely to borrow personal loans! Obviously, when, rates eventually go – up or at the very least, normalize the situation, they are less appealing.
5.Bonds, and bank rates of interest:For a long time, the typical bank account paid at a fixed rate of interest. This rate was between 4 to 5 percent for many years. In the following, over a shorter period of time rates increased as a result of inflation and other economic factors. The rates today are historically lower, and actually significantly less than the rise in the cost of living. These will change over time but it is extremely risky, speculative, and risky to try to market them – time!
The more one is aware of and comprehends how rates affect them and how it affects many aspects of their lives, more likely they are of being prepared and acting, wisely! Are you willing to commit to attempting to be more educated, and committed/prepared consumer?
Richard has been COO, CEO, Director of Development, Consultant, and has run professional functions. He has also spoken to thousands of people and led personal development seminars. Richard is a financial and real estate professional for over 40 years. Rich has written three books and hundreds of thousands of articles.