As we dive into the New Year, economic uncertainty and the impact of rising interest rates are making some investors nervous. Before you get too concerned, let’s discuss the key takeaways from the interest-rate hike and why a long-term investment philosophy is beneficial — especially during times of volatility.
Here are the facts:
-The Federal Reserve recently raised its benchmark federal funds rate to a range of 2.25% to 2.5%.
-Many banks, in turn, began raising their prime lending rate to 5.5%.
-Rates for individuals or businesses seeking loans will have to increase.
While interest rates have gone up, and two more increases are predicted for 2019, let’s step back and look at a macro view of the situation:
-Unemployment remains at record lows.
-Wages are increasing.
-The economy is strong.
-While prices are rising, inflation is not
From our perspective, qualms about the interest rate hike are somewhat misplaced. Despite rising concern and increased media coverage, the U.S. economy remains strong and investors can reasonably expect that companies with little debt, significant cash reserves and excess cash flow will grow their profits in the coming 18-36 months. The current uncertainty underscores why we believe a sound investment philosophy is a wise path to financial security over the long-term. In times of volatility like this, we believe in the companies we choose for investment because of their proven growth records, earnings growth and exceptional financial strength. Long-term investing success is measured not by day-to-day or even by month-to-month fluctuations in the market, but by growth earnings over the years.
If you have any concerns, please know we’re here to provide insight and answer your questions fully. We encourage you to call your J.L. Bainbridge financial advisor directly to discuss your investments.
The information being provided today is for educational purposes only and shall not be considered specific individual investment advice or recommendation. The information being provided is believed to be accurate at the time of distribution. However, over time may become materially inaccurate or may not apply to your specific circumstances. Please refer to our ADV for detailed information about our services and disclosures. You may request a copy of our ADV by contacting 941-365-3435. In addition, please refer to https://www.adviserinfo.sec.gov/IAPD for additional information on the firm and the Investment Adviser Representatives.