The Best Way to Take Advantage of Low to Negative Interest Rates

For the first time in history, the world's third-largest country just cut interest rates below zero.

The country isn't important. What's important is the trend – and it's a trend we need to take advantage of.  As unbelievable as it sounds, it's a trend that is likely coming to the United States in the near future.

Below, I'll show you exactly what you can do to make this unprecedented act work in your favor…

"Almost a quarter of the world's gross domestic product (GDP) now comes from countries with negative rates," According to an article in The Economist magazine this week.

In Sweden, for example, when you put your money in the bank, you don't EARN interest anymore. Instead, you have to PAY more than 1% a year just to keep your money in the bank.

Can you believe it? THAT is what negative interest rates look like.

When you think about it, the immediate results of negative interest rates are pretty obvious…

"Savers" get clobbered. Retirees lose money on their savings. It's terrible.

People borrow money.  Hey, it's 'Free.'  Why not get some.

The cheap and easy money causes asset prices to go up.  And why wouldn't they?  What do people do with free money?  They buy stuff.

Yes, our Federal Reserve recently RAISED interest rates, which caused the recent selloff in stock prices. But the Fed is likely done raising interest rates this year.)

So… what should you do to take advantage of it?

Just about all of us should start right at home…

Right now, the current national interest rate on a 15-year mortgage refinancing is 2.84%, according to www.BankRate.com.

U.S. housing is cheap (relative to the rest of the world, and relative to its own history).

House prices had their worst crash in generations, and now they're recovering. This is the safest moment.

Meanwhile, mortgage rates are not far from record lows. You must take advantage of this.

If you haven't done so already, refinance your house. And if you don't currently own a house, go buy one… Seriously.

30-year mortgage rates in the U.S. are in the 3.8% range. And 15-year mortgages are in the 3.1% range. These rates are not far from all-time record lows.

Don't get 'TAKEN' by ultra-low interest rates. Instead, consider taking advantage of them, starting right at home.

Call me if I can help in any way.

On Your Team,

Ken
951-760-3833
KenAHall@gmail.com

Stocks and House Prices Go UP When the Fed STARTS Raising Rates!

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You won't believe me... but it's true...

 

Stock prices and house prices actually do extremely well when the Fed STARTS raising interest rates...

 

I know, I know. I get it. It shouldn't happen.

 

Rising interest rates should be a "negative" for stocks, as corporate borrowing costs go up and profit margins go down.

 

But it turns out, these things don't hurt stock prices... Based on history, stocks go up.

 

Let me explain...

 

Since 1950, stocks have performed incredibly well when the Fed has started raising interest rates (called "tightening"). And stocks have actually under-performed when the Fed has started cutting interest rates (called "easing"). Take a look:

In December, the Federal Reserve raised interest rates for the first time since 2006.

 

The rate hike is minor... It's almost irrelevant. What's happening is, the Federal Reserve is trying to get interest rates more "back to normal" as opposed to "tightening."

 

In the case of Fed rate hikes, the first rate hike does NOT tend to end bull markets. That might be because people are optimistic, and the first interest rate hike is a sign that things are getting back to normal.

 

Over the last 30 years, stocks have moved higher in the two years after a rate-hiking cycle began.

 

The Federal Reserve just hiked rates. Based on history, stocks could go higher over the next two years.

 

It's not all roses... Stocks tend to fall for a couple of months after the first time the Fed starts hiking rates. Then stocks enter a strong move higher.

 

We can't know for sure what will happen this time... There is no guarantee of a small downward move followed by a big upward move. But history is the best guide we have. And that's what it tells us.

 

The story is similar with U.S. house prices...

 

It's easy to make the case that house prices SHOULD go down when interest rates start to go up, as you would think that mortgage rates would go up.

 

But history tells a different story about house prices after the Fed starts raising interest rates...

 

Going back to the late 1960s, house prices perform incredibly well when the Fed starts raising interest rates. Take a look:

Most folks simply assume that the Fed raising interest rates is a bad thing for stock prices and for house prices.

 

Don't fall for this myth. It's simply not true.

 

The Fed is hiking rates for the first time since 2006 right now... But the start of a rate-hiking cycle is not a bad thing, based on history.

And besides that, with the recent stock market correction and signs of economic weakening, my guess is the Fed will NOT be raising rates any further for at least the next twelve months.

 

U.S. stocks and house prices can still go much higher from here...

 

On Your Team,

Ken

951-760-3833

KenAHall@gmail.com

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