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Hi Taylor:
Lots of variables to track in our current economy, but I'm wondering
what you think about ways to invest while interest rates are rising.
Rate hikes seem like the only sure thing right now, so how does the
modern investor factor that in? - John
Hi John: Solid, timely question. You should never take a break
from putting your money to work, so it's all about adjusting to meet
the situation. Rising rates hurt in some ways and help in others,
meaning you've got opportunities no matter what's going on. Here are
a couple of options that should be on your radar. |
1. Quality
stocks. It's not like you should be buying bad stocks when
rates are down, but certain shares will fare better than others
as the fed does its thing. For example, an overleveraged company
with a great product struggles more with rate hikes than a company
with big cash reserves. That might not be something you think
about on a typical stock trading day, but it's worth considering
if you're trying to stay ahead of interest. I always tell people
to invest in companies they love, and that approach holds true
no matter what APRs are doing. At this moment, when you're looking
over all the businesses you support, keep an eye out for which
ones have more cash in the bank.
2. Banks.
Who's going to make the most money off of higher interest rates?
The companies charging interest, of course! While borrowing takes
a bit of a dive when rates go up, it doesn't stop altogether and
the increase in interest revenue usually looks good on paper for
the lenders. Aside from the big banks you know about, this could
be the moment when we see one of the smaller, alternative lending
companies surge after such a long stretch of lower rates. Lots
and lots of banks out there for you to choose from as an investor.
3. Real estate. It's a bummer when you have to accept a high
mortgage rate, but that doesn't diminish the overall value of
the property. Home sales are slowing as we speak, so prices won't
be rising as they had been for the foreseeable future. Don't get
caught up thinking you need to buy a house or a rental property
when interest rates are low to make it a worthy investment. Real
estate can be worth owning, as long as you can afford the property
you invest in.
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Investing is
what I do, so rising rates don't scare me or make me nervous about
the days ahead. It's simply time to adjust your strategy and make
good decisions. Good luck!
© Taylor Kovar
July 13, 2022
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| Legal Disclaimer:
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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