First Things First 🎄
Holly and jolly are in the air. Or maybe I stink?
Either way, the end of the year is approaching. And with that, I hope you take some time to relax.
In that spirit, this will be the last Cense Personal Finance Newsletter until the start of January.
Thank you so much for taking time to read my emails, and I look forward to getting back to it in 2025.
See you next year!
Live: Interest Rates = Job Breaks?
The good, the bad, and the unknown: The Central Bank of the United States (often referred to as the Fed) will decide this week to lower interest rates by 0.25% or not. All banking eyes will be looking at this meeting this Wednesday the 18th. 👀
Gif by bublywater on Giphy
But why should your eyes look anywhere but the Nice List (or... the Naughty List ;)?
1. Student Loans:
Federal Loans: Interest rates on these loans are fixed, so current loans won't change. New federal loans may have a lower interest rate though.
Private Loans: If you have a variable interest rate, your interest could decrease, lowering monthly payments. It is worth checking if you should refinance
2. Getting Hired:
Lower rates make it more affordable for businesses to borrow money, and therefore expand and hire.
A lowering of the interest rate may create more job opportunities for you!
3. Inflation (Again? Yes.):
Lower interest rates often lead to more spending, which drives up inflation.
With recent data showing a slight uptick in inflation, a lowering of interest rates could result in notable price raises in goods you regularly buy.
Learn: Interest Rates and Investing
One of the biggest benefits of investing is beating inflation. What does that mean?
Inflation decreases the amount of stuff you can buy with the same amount of money over time.
For example, I could buy a lot more candy with $10 twenty years ago than I can today (a tragedy really).
Investing helps your money grow at a rate that beats inflation, increasing your money's "real value". So more sugar consumption may be enabled.
If a lowering of interest rates leads to larger inflation, then your investments' "real value" may be lower.
Essentially what this means is that your money will have to work harder to deliver you the same amount of spending power on the long term if inflation is higher. Which is a bummer, because I would like you to have more candy.
By understanding how interest rates and inflation interact, you can make smarter investment choices to ensure your money grows effectively over time.
How might you ask?
Launch!
This week, get some extra money on me. Or more realistically, on someone else.
Move money in savings to a High Yield Savings Account (HYSA)
An HYSA will give you a significantly higher percent back on your resting money then an average savings account will.
This will maximize the amount of growth your idle money gets, even if it is not invested.
Good HYSA options include Vanguards' Cash Plus Account, and Wealthfront's Cash Account.
Start investing!
If you are not already investing, I'll let it slide. But you should start today!
I'm not asking you to invest a large sum of money every day or week, you can invest with as little as a dollar.
Consider opening a standard brokerage account with Fidelity, and buying $1 worth of any stock or ETF. Just so you learn how to invest.
If you know what is coming, even bad times can be turned into sleigh rides.
Good luck with finals if you still have them. You got this!
And have a very merry end of the year!
—Ben Brosnahan
