Financial/retirement expert Thomas J. Drongoski: How will higher rates affect you?

As you know, interest rates have risen considerably over the past couple of years.

How does this affect you as a consumer and as an investor?

From a consumer’s standpoint, you’ll likely pay more in interest on new or refinanced mortgages, along with car loans and credit cards. Paying these loans and debts at higher rates can affect your cash flow, so you may have to make some choices about your overall budgeting and spending plans.

As an investor, higher rates can mean different things. Some stocks do better than others in a high-interest-rate environment, but when considering any stock or stock-based investment, you’ll want to look at its merits and fundamentals.

If you own bonds, their value might go down when interest rates rise. That’s because investors won’t pay full price for your bonds when they can get newer ones issued at higher rates. However, you, too, can invest in new bonds that pay these higher rates, providing you with bigger interest payments.

In any case, it’s useful to be aware of what’s happening with interest rates. The more you know about the factors affecting your investments, the better off you’ll be.

This content was provided by Edward Jones for use by Thomas J. Drongoski, your Edward Jones financial advisor at 973-948-9700.