Is the Fed at War with Savers?

That’s the thesis of “The War on Savers,” a February/March article in AARP Magazine by journalist Carla Fried. 

In 2008, to cope with the financial crisis, the Fed dropped the fed funds rate to almost  zero and has since stated that it intends to keep rates that low until 2013 or beyond. 

The result?  “That means for five years running you won’t earn anything meaningful on safe bank deposits such as CDs, and what you do earn won’t keep pace with inflation,” says author Fried. 

Fried mentions several strategies to fight back, including turning to your credit union or online bank for higher yields, moving money to bond funds, and incorporating dividend-paying stocks into your portfolio to fight off future inflation.

Not surprisingly, in our practice, one of the most common questions we field from clients is how to earn a decent income in today’s environment, without courting too much risk. The right strategy for you will depend on how much income you need or want, and what kind of investments you’re willing to consider for your portfolio.  But our experience is that if you are willing to keep an open mind, there is no shortage of income-producing opportunities in today’s market, both in stocks and in bonds.

 

About Mari Adam

Mari Adam, Certified Financial Planner™ and President of Adam Financial Associates Inc, has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!
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