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High rates may not stay ! may 28 2023

 

 

 

High rates may not stay for long!

Capture them now!
I can lock them in !  Call me (530) 559-1214

Be happy for longer! 

 

With interest rates higher than they have been in literally decades, retail investors and pros alike are once again forgetting history, donning their dunce hats and repeating the same assumptions they did the last time rates moved with some conviction.

When offered longer term investment strategies which lock in the current high interest rates, most all those who have money to invest are turning down locked-in rate investments in lieu of short term products like 3 month CD’s and T-bills currently paying north of 5% APR.

On the surface, having the opportunity to sock money away on a 3 month term yet get over 5% APR sounds like a good deal, and it is, but it’s not the best deal.

The shortsightedness on behalf of investors that continue to scoop up 3 month T-Bills and CD’s is solely based on the interest rate and the length of the tie up. After all, 5% APR on a 3 month investment certainly sounds lucrative, but keep in mind the 5% is for 12 months, not 3 months, so you would have to buy them every 3 months, and that’s IF the interest rates doesn’t change.

And therein lies the problem.


To begin with, I am constantly bringing new investments to consumers that lately have been meant to minimize risk yet provide a decent return. The “minimize risk” part is because it is in my opinion the market may have stopped its hemorrhaging for now but I highly doubt our inflation problem will go away anytime soon and a recession looms.

Looking back on interest rates the last 2 or 3 decades illustrates a country that has a debt problem. Mainly the fact that consumer, government and business debt is continually increasing at an alarming rate.

If debt continually increases, interest rates would and will have to continually decrease to service that debt. And true to form, a three or five year moving average of interest rates in the United States show a persistent downward trend. Recent memory for many think of bank savings rates as near zero and its only recently have we seen rates as high as 5% or more.

There is a reason the Federal Reserve (FEDS), who set interest rates, have not been able maintain higher interest rates for a prolonged period of time and it’s because of our gigantic debt levels.

Every time the FEDS have increased rates in the last few decades they tend to break something and have to reduce rates again. Think back to the dot.com, Y2k and 9/11 events that resulted in the FEDS lowering rates to ground level in response. That resulted in the adjustable rate/ refinance craze which eventually resulted in financial Armageddon. That in turn caused the FEDS to drop rates to near zero once more.

Now the FEDS are back in the up mode and, if history is any indication, they will eventually break something, and be forced to drop rates again.

Investors, however, still resist to lock in the current high rates with longer commitments.  

They still opt to instead buy short duration CD’s and T-Bills thinking the 5%, three month term is an incredible offering and will continue.


What they fail to realize and therefore are missing a once in a blue moon opportunity to secure high rates for years to come, is that 3 month CD’s and T-bills are just that: 3 months.

If the FEDS drop rates again, down will go the rate on the 3 month products, and you are right back to earning nothing.

Yes, a 3 month CD offering an APR of 5% looks good on the surface, but historically, they may not stay there for long.

One might consider the longer term offerings that lock in those healthy returns and guarantee them and your principal.

Although 5 year CD’s and T-bills might be actually paying lower rates, there exists annuities, laddered portfolios and other investment vehicles that will lock in rates for many years to come.

Unlike the refinance craze where many homeowners assumed when their mortgage rates adjusted they could just refinance, many investors are thinking the same thing when it comes to predicting where rates might go, versus where rates can go.

The bottom line is high interest rates might not stick around very long. Thinking they will is shortsighted and could be costly.

Better to look at history and use some common sense, and consider longer term and guaranteed solutions. In other words, get while the gettin’s good, and get those high rates locked up! Have questions? Feel free to send me an email.

 

“Watching the markets so you don’t have to”

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(As mentioned please use the below disclaimer exactly) THANKS   (Regulations)

This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249. His insurance agency is BAP INC. that can be contacted at (530)559-1214. Marc was voted best financial advisor in the county 2021. Email: news@moneymanagementradio.com

 


 

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Marc Cuniberti, award winning host of Money Matters and Money Management Radio, welcomes you to his updated website. Money Matters articles grace the pages of many newspapers and financial media. On this website, you can download any of his radio shows by subscribing on any website page. Sign up for his newsletter or learn about his opinions about the economic world around you by clicking around the site. Of course, the radio shows are the main reason the site is here, so look through the SHOW TITLES page to hear a variety of topics,one or more are certain to peek your interest and perhaps find a show(s) that apply to your particular interest or question. 

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There are many financial products in the market, and choosing the ones that best meet an individual client’s needs can be complicated.  Informed decisions about the products in any portfolio are best made after an assessment of individual needs.  Speak with Marc directly. It is that easy. 

 

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Insurance can protect you and your family from undue hardship. Some life insurance policies also provide tax-advantaged savings that you can draw on to achieve goals like buying a house or retiring comfortably. I have access to a variety of insurance products that can help meet your security planning needs. No matter your personal situation—if you’re single or in a family; a professional or a seasonal employee; an executive or small business owner—we will work together to design a customized plan.

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A Word about Life insurance:

In the event of death, life insurance may offer surviving family members financial security. As a tax-free lump sum payment, it can pay for final expenses and debts, as well as provide income for the deceased’s dependents.

 

The advantages of life insurance include:

  • An instant estate for your loved ones at a time when funds are most needed
  • Death benefits that are almost always non-taxable for named beneficiaries
  • Avoid probate costs if you name a beneficiary other than your estate
  • Potentially offer your loved ones creditor protection through some life insurance plans
  • Build tax-advantaged capital for retirement purposes or provide liquid savings through some permanent life insurance plans

 

Long-term Care, Disability and Critical Illness insurance, Lifetime income strategies and Medicare:

Help protect one of your most valuable assets – your income – from unexpected events through long-term care, disability and critical illness insurance.

Income is important for both current financial obligations (e.g. grocery bills and mortgage payments) and for future financial security (e.g. planning for your children’s education or for retirement). Just think what might happen if you suddenly lost your income stream through a long-term illness or disability.

Long-term care and disability insurance products help protect your ability to earn an income, which can be affected if you are afflicted by a disability or other condition.

Questions about Medicare? 

I can help navigage the programs.

I can also help you choose the long-term care and disability insurance products that provide advantages like:

  • May assist in transfer of assets. 
  • Help loved ones 
  • Assist with paying fixed expenses for your business if you become disabled
  • Support the buy-out of a disabled partner’s share of a business.

 

Critical illness insurance and Medicare Policies

Suffering a critical illness is distressing for both you and your family. Help ease the burden through insurance that will reduce financial stresses and can complement disability and life insurance protection needs. By helping pay for the additional expenses often associated with a critical illness or condition, insurance offers you, your family, and if applicable, your business, added financial security—so you can focus on recovery.

The advantages of critical illness insurance can include:

  • Coverage for up to 22 critical illnesses or conditions
  • An initial lump-sum benefit you can use however you wish—from making mortgage payments to seeking medical treatment outside Canada
  • Home-care costs during illness and recovery periods
  • Even if you’re not disabled from working, you may receive payment
  • The ability to provide a return of premium benefit (optional)
  • Individuals who cannot obtain disability insurance in some cases still qualify for critical illness coverage (e.g. a non-income earning spouse)
  • Medicare Policies and information. Let me walk you through the best options for your situation

Contact me today to determine whether critical illness insurance fits into your financial security plan.

 

There are also new “hybrid” plans available that combine the benefits of life insurance or annuities with long term care coverage and at a cost that may be more affordable than you think. Contact me today so we can assess your needs and develop the best strategies for your specific situation to give you the peace of mind you require and protect your family and loved ones.

 

Mark (Marc) Cuniberti- California Department of Insurance License # OL34249

 

Take a minute to contact Marc directly to schedule a no obligation phone call or meeting:

 

Email: mcuniberti@vantageauburn.com

(530)559-1214

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This website expresses the opinions of Marc Cuniberti. Past performance does not guarantee results.

Insurance Solutions offered by Marc Cuniberti and not affliated with Vantage Financial Group.