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Rate of Interest 101


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2023 Jan 24, 8:54am   149 views  5 comments

by gabbar   ➕follow (1)   💰tip ($0.10 in tips)  

So, the rate of interest is going up, possibly above 5%. How this will impact the economy will be more visible in second part of 2023. How does a rising rate of interest impact businesses? Do businesses get their loans at a variable rate or fixed rate? Are companies with a lot of debt likely to be in trouble? Just trying to learn. For an individual like me, its an opportunity to put my savings in a 5 year CD at 4.25% at Ally Bank.

Comments 1 - 5 of 5   

1   NDrLoR   2023 Jan 24, 8:59am  

gabbar says

For an individual like me, its an opportunity to put my savings in a 5 year CD at 4.25%
Which was par for the course from time immemorial until about 15 years when someone decided money should be free to certain classes of people.
2   clambo   2023 Jan 24, 9:36am  

Gabbar, if you buy a CD you are lending your capital to the bank for them to use and you get peanuts in return.

If you desire income, there are many things available.

If you desire the money to grow there are many things to buy.

Guys are buying REITs, dividend stock funds, and even covered call stock funds (an interesting idea).

SCHD is popular, I just bought some JEPI.
You can buy a high yield municipal bond fund at Vanguard and owe no federal tax on the interest.
Or Vanguard has high yield stock funds, Wellesley Income Fund, Equity Income Fund, and other stuff.
3   RayAmerica   2023 Jan 24, 2:07pm  

The Federal Government funds much of its deficit spending by selling Government Treasuries. How do you think the dramatic increases in the rates of interest that the government will be forced to pay (in order to sell their T-Bills) will effect our already exploding, out of control national debt?
4   Al_Sharpton_for_President   2023 Jan 24, 2:19pm  

Rising rates creates a risk-off environment, witnessed by layoffs in the crap app, aka tech industry, as well as in biotech.
5   B.A.C.A.H.   2023 Jan 24, 2:24pm  

gabbar says

So, the rate of interest is going up, possibly above 5%

Which rate?

The rate on my deposit at a retail bank? Ha ha ha

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