Benefits of Higher Interest Rates for Short Term Investors

Financial Commute

On this episode of The Financial Commute, Chris Galeski invites Wealth Advisor Bryce Snell to discuss how the current high-interest-rate environment may give investors certain opportunities they couldn’t have had in the past 15 years due to zero-interest-rate policy.

Currently, the money market offers a 3% rate, and a six-month Treasury Bill is close to 4.5%, so there is a decently high return on a relatively short-term investment. Bryce encourages listeners to consider the risk associated with the length of an investment, otherwise known as duration risk, because there are situations where shorter investments may be appropriate. Bryce discusses a great example where a one-year Treasury with a 4% return rate may be less risky than a two-year CD because you can sell without being locked into a bank’s terms, which can make your money inaccessible for a long period of time.

For those curious about shorter-term investment options, Bryce encourages investors to consider some of the options discussed in this episode because a return in 6 to 12 months might be a better option than letting money sit in the bank and getting nothing in return.
Disclosure: Information presented herein is for discussion and illustrative purposes only. The views and opinions expressed by the speakers are as of the date of the recording and are subject to change. These views are not intended as a recommendation to buy or sell any securities, and should not be relied on as financial, tax or legal advice. You should consult with your attorney, finance professional or accountant before implementing any transactions and/or strategies concerning your finances.