2017 Insights

March 2017

Interest rates increased again in March, after going up in December.  Fed chair Janet Yellen indicated that they may increase rates several more times this year.  Rate increases are good for savers who have been suffering with little interest on their savings, although it may take some time before seeing the benefit.  A series of rate increases may be good for those homeowners who are selling, especially early in the upswing of an increasing interest rate cycle, as buyers scurry to lock in rates before they increase again.  Rates are still near historic lows, yet if rates do continue to increase, today’s rates may be the best for the foreseeable future.  Interest rate increases hurt borrowers as the cost of loans increase, especially for homeowners with adjustable rate mortgages and those with credit card debt.  Best bets: pay off credit card debt and lock in a fixed-rate mortgage.

 February 2017

Tempted to borrow from your 401(k) to pay off your bills from Christmas gifts or a winter get-away?  Think twice about that.  You’ll will pay yourself back with after-tax dollars, which, when you take distributions later in life, you’ll pay tax again on those same dollars.  You’ll also be on the hook to pay back the full amount if you leave your job for any reason.  Best to save for extras beforehand, then you can really enjoy your splurges worry-free.

 January 2017

Recently, the Fed increased interest rates for only the 2nd time in over 10 years.  It was a modest ¼ point, and in December the Fed again issued guidance that they will likely raise rates several times next year, which is essentially the same message we received from the Fed in December of 2015.  This time may be different though– consumer sentiment reached a peak in December and small business optimism jumped 38%, to its highest point since 2004.  Hopefully, the economy will see faster growth in the coming year and beyond.