The 5 Best Places To Invest Your Cash When Interest Rates Fall
The Fed’s long-awaited interest rate The cut finally came in September, when the central bank cut its benchmark overnight lending rate by a quarter point.
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This pointed out Fed’s first interest rate cut 2025 – but it probably won’t be the last. At least two more cuts are expected before the end of the year, according to economists polled by Reuters. The consensus is that these cuts will also be 25 basis points each.
When interest rates drop, it’s important to adjust your financial strategy to provide the best possible return.
“As interest rates fall, many savers are wondering where they can get the highest return on their cash. But higher return doesn’t necessarily mean more risk,” said Rob Williams, head of wealth management research at Charles Schwab. “It is important for investors looking to generate more income from their portfolios to do so in a way that suits their unique risk appetite and target asset allocation, especially at a time when the economy is still finding its footing.”
Here they are The five best places to invest your money when interest rates fall According to Williams.
Even after the Fed’s rate cut in September, best CD rates “It’s still very competitive with many yields above 4%,” Williams said. “Lockin’ in today’s yields guarantees higher yields in the future even if the Fed continues to cut rates.”
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Williams says banks are ‘likely’ to cut interest rates high-yield savings accountsbut he noted that most returns are still above 4%.
“[They] “It is still well above average and remains one of the most attractive options for savers who want to park their cash,” he said.
High-grade corporate bonds (AAA-BBB) currently offer yields of around 4.5% to 5.5%, depending on credit score and maturity length, Williams said.
“This allows investors with long investment horizons to lock in strong fixed income returns for five to 10 years with relatively low default risk, regardless of future Fed rate cuts,” he added.
“Some munis pay a tax-equivalent return of 4.5% to 7.5%, giving them a great opportunity to earn high returns while maximizing tax benefits,” Williams said. “Munis are particularly attractive to high-income earners or those living in high-tax states, generally supported by strong state and local government funding.”
