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Here's what the Fed rate hike actually means for you

Sven
in Fund Discussions
For income investors, the yields on saving accounts and CDs are improving with 0.25% rate hike yesterday. Two additional rate hikes are expected for 2018.
While the average interest rate on a savings account is still only 0.09 percent, some top-yielding savings accounts are now as high as 2 percent, up from 1.1 in 2015
https://msn.com/en-us/money/markets/heres-what-the-fed-rate-hike-actually-means-for-you/ar-AAyB7Q1?li=BBmkt5R&ocid=spartanntp

Comments

  • [Deleted User]
    The user and all related content has been deleted.
  • catch22catch22
    edited June 2018
    @Maurice
    Short term bond funds are not going to get one much of anything in total return, as this is where the rate hikes are landing. Higher rate = lower price.....at least for an initial period, until the traders and others sort out what they want to buy to provide for some price stability.
    This chart link is for total return (6 months) for the below listed etf's. You'll note that longer term has suffered, but short term is basically flat. Short term recent remains safe, yes; but my money would return better in money market at Fido at this time.
    http://stockcharts.com/freecharts/perf.php?TLT,LQD,IEF,HYG,AGG,SHY&p=3&O=011000


    June 14, Today returns, after the short end rate hike:
    TLT
    20+ Year Treas Bond Ishares ETF
    +0.83%

    LQD
    Invst Grade Corp Bond Ishares Iboxx $ ETF
    +0.45%

    IEF
    7-10 Year Treas Bond Ishares ETF
    +0.32%

    HYG
    High Yield Corp Bond Ishares Iboxx $ ETF
    +0.29%

    AGG
    US Aggregate Bond Ishares Core ETF
    +0.26%

    SHY
    1-3 Year Treasury Bond Ishares ETF
    +0.04%
  • davidrmorandavidrmoran
    Graph all of their $10k growth ytd to get a vivid sense of performance vs duration. Also how active management proves useful (I compared w/ PONAX, DODIX, FSICX, also TIP). We should all be in HYG since New Year's, or, better, FAGIX.
  • catch22catch22
    @davidrmoran
    Agree about active vs etf for most bond areas. This was a quick and dirty broad view after the short term rate hike. YTD for these choices is only 2 weeks shorter than the 6 month period of the chart.
    Pillow time here.
    Good evening.
    Catch
  • VintageFreakVintageFreak
    Right now what it means to me is my cash in Money Market funds is earning some interest. Nothing else has changed. When it changes, it could have also happen for a variety of reasons.
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