Council Post: Four Ways To Protect Your Finances From The New Fed Rates

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Gabriella is the founder of Latino Wall Street Movement, which provides financial education to the Latino community.

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For nearly two years, we’ve been living in a mellow financial spring – pushed by exchange rates, among many other reasons. historically low for several months. These low rates prompted people and institutions to contract loans to invest, which generated a healthy stimulus during the 2020 pandemic.

Interest rates at their lowest point made the possibility of borrowing to raise capital through low-risk investments very attractive. Some called it “the era of cheap money”. This is an era that stimulated economic activity and helped grow the portfolios of thousands of independent investors. I experienced this reality with over 3,000 of my students who have learned how to profit from the financial markets with smart investing.

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Although 0.50 point increase Interest rates by the Federal Reserve (Fed) have ended the sweet spring and forced us to face a harsh financial winter. Some of its early symptoms are already happening Felt across financial markets,

This increase is a restrictive measure for an economy that seeks to counteract the growth of inflation in the US, which Registered 8.5% for the month of March, highest growth since 1981,

Now, the prospect of a slowdown in the economy creates fear for anyone who has a salary, money in a bank account or something similar in accounts payable. But, as I always tell my students: the important thing is not to let the fear of crisis cripple us, but to use it to our advantage. Not only to resist, but to succeed, at a time when growing your finances may not be as easy as in 2020 and 2021 – but where it is possible.

In 2020, I Remember Hearing That It Was One of the Best Times to Borrow low interest rates, In fact, my husband and I saw the right opportunity to take advantage of the record low interest rates in time and took action. We applied for a mortgage for our new home in Puerto Rico with a fixed 3% active rate (meaning it’s still locked with the new interest rates). Basically, we took advantage of “cheap” money to invest and diversify our assets.

As I see opportunities to take advantage of market opportunities in 2020 and 2021, I have also devised a strategy and an investment path to make the most of the opportunities that have opened up as a result of measures taken by the Fed.

If you doubt, the market offers endless opportunities to generate profits beyond the economic context, you just need to know where to put your attention. Here are some simple, but powerful lessons that I believe can help me maintain (and even improve) my financial health despite the troubles in the markets.

Take action when you get the opportunity.

One of the biggest mistakes people make with their finances is thinking that opportunities are going to last forever.

Maybe you had the capital to take out a low-rate loan or invest when the market broke past year’s highs, but you didn’t take action at the time, thinking you could at any time. Opportunities are fleeting, and one of the golden lessons I’ve learned over 10 years as an investor is to work on my discipline so that I can take advantage of opportunities that appear to me at the right time.

Procrastination is your number one enemy of growth.

Start with what you have available.

If you haven’t started investing yet, you may be blocked by limiting beliefs like “you don’t have enough capital to be an investor.”

This is a statement I hear quite often from my students who are just starting their investing journey. It is worrying for me to see how many people are depriving themselves of a better quality of life by believing they don’t have “what it is” to take the first step.

Today may be the best time to invest, regardless of market conditions. You can start with very little capital, implementing low-risk strategies, where your money will work to generate passive income.

You can start with as little as $100 or $200 and still grow your capital.

Make low risk investments.

Certainly, high frequency trading can be attractive to many because of the speed of profits. However, when the market is not bullish, I recommend my students to be more conservative and make low-risk investments. covered call One of my favorite strategies is for scenarios like the one we are currently experiencing.

With this strategy, we become a generator of recurring income without the need to sell our shares outright. These option contracts produce a profit, called a premium, in exchange for purchasing a certain number of shares.

Finally, play has a significant emotional component. Each person perceives and reacts differently to different market conditions.

It is important to stay positive.

As the founder of Latino Wall Street, I always remind my students that a recession is often followed by a recovery. There is a tendency to be light after a storm. Therefore, this may be the ideal time to initiate action that may allow you to take advantage of the new transition and position yourself to surf the wave in the markets.

I am actively incorporating these tips into my financial plan for 2022 as a hedge against inflation.

The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation.


Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. am i eligible?


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