03/09/2023
Rates Keep Rising!
Hello Everyone, Just a quick note to tell you that we are seeing 18 month CD rates at 5.4% today. That’s the highest I’ve seen in years and years. Subtract your advisory fee rate from that and that’s what we can net for you.
For example, a 5.4% gross interest rate, less .85% if you are over $500k under management, and your net would be 4.55% on the CD. These rates are changing regularly, but that’s what I’m seeing right now.
The plan for many middle-aged working clients and even retired clients was to get some big gains in stocks over the next several years, and then convert more of it to CDs when rates rose. We are getting the higher rates now, but the stock market is dragging it’s feet. It is being stubborn due to the risks of more inflation and potential recession. Uncertainty remains high and so stocks are remaining low. One answer to this is more time. We need more time for stocks to recover. However, if rates keep rising, then CDs and fixed rate bonds could become attractive enough to start moving in that direction prematurely. Here’s what I mean by that: if we own investments that we expect to get 6% on let’s say, but we know they are somewhat volatile, then it may make sense to sell that investment and lock in a fixed 5% with less risk if we can.
Things are changing rapidly, and I will do the best I can to keep you current. Feel free to send me back an email note with any questions you might have.
Best regards,
Mike