Many things can affect the performance of your financial portfolio over time; the economy, in particular, can have a big impact on your holdings even if you aren’t making many changes to them. It’s best to have a financial professional review your finances at least once a year, to make sure you’re on the right track and making adjustments that will encourage growth and stability when the economy is volatile.
Most investors hold a mix of stocks and bonds in their financial portfolio. Now that interest rates are trending upward, it will impact various facets of the economy; you’ll be able to earn more interest income on your savings accounts, but mortgages and other loans will cost more. Stock prices may decrease, as companies find it more expensive to secure debt to expand and grow their businesses. Inflation, which reduces the value of our currency, will be kept in check as interest rates rise.
If you’re interested in owning bonds, rising rates may create some money-making opportunities for you; bond issuers will pay more competitive interest rates so people will purchase their bonds.
While interest rate fluctuations are cyclical, the relationship between rates, inflation, and bond and stock prices are fairly complex, and can be affected by additional variables. Your bonds and other investments should be tailored to fit your individual financial goals, and should take your other investments into account so your portfolio is diversified to reduce your overall risk.
“During complex investment markets, it’s truly beneficial for most investors to consider professional money management,” said Mark Weber, Vice President of Home State Bank’s Trust and Wealth Management Group. “At Home State, it’s value added, since HSB is a fiduciary. That means we put our clients’ interests before any others’, including our own. This is critical when considering investment choices.”
Mark Weber, Vice President, Trust and Wealth Management Group
Home State Bank, N.A.