Most investors believed that the Federal Reserve was leaning towards a rate hike, creating a stir in the market and the economy. Though we know that the Fed raising rates can impact the market and the economy, the results can be positive or negative to your bottom line.
The rate increase may initially affect everything from the interest banks pay to the rates consumers pay using their credit cards. This will cause a bit of a slowdown in the market. Nevertheless, it will be beneficial for the country’s economy, particularly in stabilizing US inflation, creating job opportunities, improving employment rates, and opening new opportunities to investors.
The Reason behind This Rate Hike
The Dow Jones and NASDAQ maybe down, but this perhaps may be due to the common perception that Federal rate hikes will hurt the market. This is what has been called the “rate hike huff”—a bit of a dip in the market. This is because of the common misconception that rate hikes from the Federal government will only cause negative consequences in the economy.
Some economists and even the media go into a frenzy every time the market drops. This can amplify the stir, as people try to find the reason behind the decline.
AOG Wealth Management and our team of financial advisors in Northern Virginia believe with any economic bump, it is important to look at both the positive and negative effects. It is important to look if an economic change presents opportunities for investors. For example, with a raise in rates, the Fed will be paying banks 50 basis points on excess reserves instead of 25. That means 7 billion dollars more per year in earnings to banks, which could be an opportunity to invest in if appropriate for your portfolio.
So if you are wondering the impact or opportunities presented by an economic event such as the Fed rate hike, talk to AOG Wealth Management, a leading NOVA wealth management firm. Since our founding 15 years ago, we have continuously served the people of Northern Virginia, DC and Maryland in their journey to achieving their financial goals. We offer rigorous, on-site diligence on all prospective investments, and then we provide advice on utilizing only the highest rated investment options.
To learn more about our company, credentials and services, feel free to contact us today. We’ll provide you with a complimentary financial consultation.