On March 3rd, the Federal Reserve announced they would be lowering the short term interest rate by half of one percent. How does this impact you?
The Federal Interest Rate serves as a benchmark for Credit Unions and Banks when they are determining their rates for their mortgages, certificate of deposits and savings accounts. When the rate goes down, as it did on March 3rd, these rates have a tendency of following suit.
The week prior to the rate cut, we saw the Dow Jones, S&P 500 and NASDAQ all shed over 8%!
Sounds like a good time to drain your low interest savings account and put all that cash to work in the market, right? Wrong!
When an individual feels like they are ready to take some cash from the sidelines and get back into the market, we feel there are a few things we should discuss first.
Knowing Your Risk Tolerance
When you were checking your social media or watching the news a few weeks ago, what was one of the top stories? Market Sell-Off! The Largest Point Loss recorded in one day! You saw those headlines and decided to check your investments. If you looked and thought to yourself "this is a great buying opportunity" then maybe you are a more "risky" investor. If you looked at your investments and couldn't sleep that night, then maybe you should take a more conservative approach.
DETERMINING YOUR GOALS
Once your risk tolerance has been discussed, we should figure out what your end goal is for this investment. Is this money going to be a supplement for your retirement income or are we saving for your child's college education? We need to know why you are investing so we can help you create a realistic execution plan.
finalizing THE ROAD MAP
We need to dip our toes back into the market, especially for individuals who have been sitting on the sidelines for quite some time. With market swings of 2%, 3% and even 4% in a day, establishing a systematic approach is one of the better techniques. We can accomplish this through payroll contributions for your employer sponsored plans or an automatic deduction from your checking or savings account.
Let's talk! Send us a message on , or through our website!