Affluent investors rated their concern about how raised interest rates will negatively impact investing at 55.27 on a scale of 100.
While a substantial majority of Affluent investors (64 percent) support the Federal Reserve raising interest rates, there is also concern about the consequences of this action on several financial factors that impact their daily lives, according to a new Investor Pulse survey conducted by Spectrem Group for Millionaire Corner.
An interest rate is the additional percentage of a loan that a borrower is charged until the payment is completed, generally an annual percentage of the outstanding loan. In 2008, in response to the economic collapse, the Federal Reserve lowered its policy rate to near zero. It has remained there for the past seven-and-a-half years.
Affluent investors rated their concern about how raised interest rates will negatively impact investing at 55.27 on a scale of 100. Net worth is not as significant factor as are age and political affiliation among those most concerned about investing when the Fed raises interest rates. Baby Boomers ages 51-60 rate this concern 59.27 on a scale of 100. Surveyed Affluent investors who identify themselves as Republicans expressed more concern than Democrats (58.28 vs. 55.26)
The second greatest area of concern over the eventual raising of interest rates by the Fed is real estate (52.06 on a scale of 100). Among the investors surveyed, those still working or who are semi-retired expressed higher concern that their retired counterparts (54.49 vs. 49.84).
Affluent investors are considerably less concerned about how raised interest rates will impact their savings (37.06 on a scale of 100). In this area, raised interest rates will be, not a boon, perhaps, but at least a boost to savers. The average interest rate for savings accounts in the United States is at 0.9 percent, according to Bankrate.com. American savers have been earning just pennies in interest for almost a decade.
Investing and real estate are areas of greater concern in relation to a rise in interest rates, which could happen as early as this month. The costs of borrowing will rise on new mortgages or on refinancing. Many experts and analysts caution that the stock market will be impacted negatively, particularly in the short term. Investors with fixed-rate assets such as bond could see their value drop, because they’re return on investment is tied to the previous and lower interest rate.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.