Time to dump CDs? 6 experts share 6 investing moves to make as the Fed prepares to cut rates in September.

businessinsider.com08-01

Investors expect the Federal Reserve to cut rates starting in September, per the CME FedWatch Tool.Rate cuts will make Treasury bills, certificates of deposit, and money market funds less attractive....

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6 experts share 6 investing moves to make as the Fed prepares to cut rates in September.\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-08-01 02:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.businessinsider.com/investing-strategy-fed-rate-cuts-september-cds-money-market-funds-2024-7><strong>businessinsider.com</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Investors expect the Federal Reserve to cut rates starting in September, per the CME FedWatch Tool.Rate cuts will make Treasury bills, certificates of deposit, and money market funds less attractive....</p>\n\n<a href=\"https://www.businessinsider.com/investing-strategy-fed-rate-cuts-september-cds-money-market-funds-2024-7\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4550","symbol_name":"红杉资本持仓","start_time":0,"source_url":"https://www.businessinsider.com/investing-strategy-fed-rate-cuts-september-cds-money-market-funds-2024-7","article_id":"2456169563","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2456169563","pubTimestamp":1722449759,"sourceInfo":{"source_id":"businsider_highlight","name":"Business Insider"},"weMediaInfo":null,"summary":"We asked six financial advisors for their top tips.Investors have recently enjoyed annualized rates above 5% on cash equivalent products like certificates of deposit. But with rates potentially coming down, it's time to take money out of short-term investments like this, according to Daniel Milan, a managing partner at Cornerstone Financial Services in Michigan.Instead, plug some money into longer-duration bonds to lock in higher returns while they're still around, Milan said. In addition to tying down solid returns, longer-duration bonds could also appreciate when rates fall, he said. In an economic downturn, longer-duration, risk-free Treasury bonds also tend to appreciate as heightened investor demand pushes up their price.Investors can buy longer-duration Treasury bonds from TreasuryDirect, on the second-hand market via a brokerage, or through a fund like the US Treasury 10 Year Note ETF .","collect":0,"end_time":0,"defaultTopTitle":"businessinsider.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4550":"红杉资本持仓","IGIB":"iShares 5-10 Year Investment Grade Corporate Bond ETF","VUG":"成长股指数ETF-Vanguard MSCI","XLY":"消费品指数ETF-SPDR可选消费品","SCHD":"Schwab US Dividend Equity ETF","UTEN":"US Treasury 10 Year Note ETF","BK4581":"高盛持仓","IJR":"标普小型股600指数ETF-iShares","VB":"小型股指数ETF-Vanguard MSCI","BK4585":"ETF&股票定投概念","FREL":"Fidelity MSCI Real Estate Index ETF","BK4588":"碎股","FDN":"First Trust Dow Jones Internet I"},"translate_title":"是时候转储CD了？6位专家分享美联储准备9月降息时要采取的6项投资举措。","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"FREL":1,"IGIB":1,"IJR":1,"SCHD":1,"UTEN":1,"VB":1,"VUG":1,"XLY":1,"FDN":0.9},"content_text":"Investors expect the Federal Reserve to cut rates starting in September, per the CME FedWatch Tool.Rate cuts will make Treasury bills, certificates of deposit, and money market funds less attractive.Financial experts suggest moving to longer-duration bonds and rate-sensitive stocks like small-caps.Investors are betting that the Federal Reserve will go on a rate-cutting spree starting in September, according to the CME FedWatch Tool. Market odds show that a year from now, the fed funds rate is most likely to be 1.5% lower than current levels, implying that at least six 25-basis-point rate cuts are coming.Fed rate cuts could impact how we invest our money. Rates on products like Treasury bills, certificates of deposit, and money market funds — where investors have increasingly put their money over the last couple of years — will become less attractive. Certain areas of the stock market that benefit from lower rates could see a boost.But where exactly should you be putting your money in the new falling-rate world? We asked six financial advisors for their top tips.Investors have recently enjoyed annualized rates above 5% on cash equivalent products like certificates of deposit. But with rates potentially coming down, it's time to take money out of short-term investments like this, according to Daniel Milan, a managing partner at Cornerstone Financial Services in Michigan.Instead, plug some money into longer-duration bonds to lock in higher returns while they're still around, Milan said. In addition to tying down solid returns, longer-duration bonds could also appreciate when rates fall, he said. In an economic downturn, longer-duration, risk-free Treasury bonds also tend to appreciate as heightened investor demand pushes up their price.Investors can buy longer-duration Treasury bonds from TreasuryDirect, on the second-hand market via a brokerage, or through a fund like the US Treasury 10 Year Note ETF (UTEN).\n                                Related stories\n                              Ed Mahaffy, a senior portfolio manager at ClientFirst Wealth Management, also likes the idea of moving up in duration. He said he prefers Treasurys and non-callable investment grade corporate bonds at a five-year duration.Still, he said not to overdo it as rates may not come down as much as investors expect.\"Today's rates of approximately 4.15% for five-year Treasuries and 4.85% for high-quality corporate bonds will certainly look more attractive as rates fall,\" Mahaffy said. \"But don't get too carried away by purchasing too many longer-term bonds, as inflation may prove to be stickier than in years past, and consequently, we may not be done with higher rates—and lower bond prices—in the intermediate or longer-term.\"The iShares 5-10 Year Investment Grade Corporate Bond ETF (IGIB) offers exposure to high-quality, lower-risk corporate bonds.In terms of timing, historical data suggest the sooner investors move into longer-duration bonds, the better, said Robert Phipps, a portfolio manager at Per Stirling Capital Management.In a recent report, he cited an Alliance Bernstein analysis that found the Bloomberg Aggregate Bond Index returned an average of 13% over a one-year period for investors who bought the index two months before the first rate cut. For those who bought just as the Fed was cutting or two months after, those returns dropped to 10% and 7.5%, respectively.Certain areas of the stock market should also benefit from Fed rate cuts. The sector already grabbing the most headlines is small-caps, which are more rate-sensitive as they rely on borrowed money to grow. Since July 1, the Vanguard Small-Cap Index Fund (VB) is up more that 7%.Liz Young Thomas, the head of investment strategy at SoFi, believes this trade still has upside.She told Business Insider on Tuesday that since investors still believe rate cuts are a good thing and will help the Fed to achieve a soft landing, lower-rate beneficiaries like small-caps and growth stocks should continue to outperform for the time being.Consumer discretionary stocks should also get a boost, according to Shmuel Shayowitz, president and chief lending officer at Approved Funding.\"Lower rates can increase consumer spending by reducing the cost of borrowing for big-ticket items,\" he said. \"This benefits companies in the retail, automotive, and travel industries.\"Dividend stocks are also a good way to replace income lost from lower short-term rates, said Kristy Kim, the founder and CEO of TomoCredit. Lower mortgage rates also help real-estate investment trusts (REITs) increase their revenue by paying less in interest, she said.But investors should keep their eye on the labor market the more the Fed cuts rates, Young Thomas said. If it weakens enough, more defensive areas of the market would begin to outperform, she said. By her estimation, this deterioration, if it happens, would likely occur by the end of 2024.Investors can gain exposure to these areas of the market through ETFs like the iShares Core S&P Small-Cap ETF (IJR), the Vanguard Growth ETF (VUG), the Consumer Discretionary Select Sector SPDR® Fund (XLY), the Schwab U.S. Dividend Equity ETF (SCHD), and the Fidelity MSCI Real Estate Index ETF (FREL).","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2456169563"}