Interest Rates

In just two days, the U.S. stock market dropped about 8.5%, with the Dow Jones Industrial Average shedding about 1,800 points. Certainly, days like that can shake investors’ confidence in their investment strategies and cause concern.

After years of keeping the benchmark federal funds rate at historic lows, the Federal Reserve has been raising it gradually. Near-zero rates were an emergency measure, and gradual increases reflect greater confidence in the U.S. economy.

Remember your mid-twenties when retirement seemed like a lifetime away, and living paycheck to paycheck was not only the norm, but your reality. ‘If only I knew then what I know now’ can be heard echoing throughout offices in banks around the country.

The media and the financial markets breathlessly await and fret over the actions taken by global central banks, as these actions affect the money supply and interest rates.