Making the Most of Low Interest Rates
The pandemic has altered every area of our lives. And, as we have discussed many times over the past few months, the financial markets have not been left untouched. On the bright side, there is one way that this may work in your favor. At present, interest rates are low- like really low. In July, the Washington Post stated that the 30-year fixed mortgage rate sank to a record low for the third time in four weeks. But what does this mean for you and your money? What should you do with these lower rates?
Low rates provide an excellent opportunity to save money when paying down debt. For loans like your mortgage, business loans and private student loans, we recommend taking a look at what rates other lenders are offering. Websites such as Nerdwallet have tools that make it easy to compare refinancing rates.
Refinancing a loan can provide a number of benefits such as taking advantage of lower interest rates and renegotiating the terms of the loan. Be sure to take a look at transaction costs and do not extend the term- lower interest rates won’t help you if you take twice as long to pay your loan off. Shortening the term and paying less on interest, however? We like the sound of that!
Look Into High Yield Savings Accounts
Many people do not like seeing low interest rates in their savings account and, we often get questions about what to do with their emergency fund so that it can earn as much as possible. Well, you may hate hearing this, but your emergency fund is not supposed to make you money. Its sole purpose to to remain liquid in case of…you know…an emergency. This is why once you have paid off debt and built your emergency fund up to the total of three to six months of your living expenses, investing is so important! There is one exception to this rule though – high yield savings accounts.
A high yield savings account is a federally insured account that offers a higher annual percentage yield (APY) than you could find in a regular savings account. Currently, a typical high-yield account earns around 1% APY whereas the national savings average is 0.06% APY. By putting some of your emergency fund into a high yield savings account, you can earn a little bit extra while maintaining the liquidity you need. Bankrate has a great list of high yield savings accounts and compares their fees so that you can find the one that works best for you.
Talk to Your Advisor
Your debts are paid. Your emergency fund is stocked. Now, what? Well, when it comes to making your money work for you, the best thing you can do is have a trusted financial team on your side. Contact our advisors today for a no-cost, no-obligation look at your plan. No matter where interest rates are, we can help create a plan that fits your needs.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
To discuss any of the topics covered, and how they might affect your finances, don’t hesitate to <a href=”https://kennedyfg.com//schedule-a-meeting/”>schedule a meeting</a> with us!
Securities offered through LPL Financial,Member FINRA/SIPC. Investment advice offered through HighPoint Advisor Group, a registered investment advisor.
HighPoint Advisor Group and Kennedy Financial Group are separate entities from LPL Financial.
Stuart Ritter and T. Rowe Price are not affiliated with LPL Financial,
HighPoint Advisor Group or Kennedy Financial Group. Steven Fronrath is solely an Investment Advisor Representative of HighPoint Advisor Group, and not affiliated with LPL Financial.
Dave Ramsey and SmartVestor are not affiliated with LPL Financial.
Any economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that any strategies promoted will be successful.