Feeling Anxious About High Rates?

August 14, 2023 Charles Schwab
Despite the uncertainty, higher interest rates have a silver lining.

The past 18 months have been anxiety-inducing for many investors. The Federal Reserve's aggressive strategy to tame a four-decade high in inflation quickly pushed interest rates to levels not seen in more than 15 years.

As uncertain as these times may feel, I'm encouraged by two truths. First, the Fed's efforts are working. Since reaching a near-term peak of 9.1% in June 2022, inflation has fallen by nearly two-thirds, to 3.1% in June 2023. Second, bonds and cash investments are offering meaningful income after more than a decade of rock-bottom yields.

Of course, there may be bumps along the way as the full economic impact of the Fed's actions becomes clear. My best advice is to stick with time-tested strategies: Diversify your holdings, rebalance regularly, and don't take on more risk than is right for you.

If you're unsure about how inflation and higher interest rates could affect your situation, don't hesitate to reach out to your Schwab financial consultant. We may not know exactly where interest rates will land, but we're here to help you navigate the road ahead.

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Charles R. Schwab

Founder & Co-Chairman

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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. 

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. 

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk including loss of principal. 

Diversification and rebalancing strategies do not ensure a profit and do not protect against losses in declining markets. Rebalancing may cause investors to incur transaction costs and, when a nonretirement account is rebalanced, taxable events may be created that may affect your tax liability.