By Jeff Benjamin, ETF.com featuring Brian Spinelli, CFP®, AIF®, Co-Chief Investment Officer
From investing in dividend-paying stocks to holding more cash, advisors are offering clients ways to deal with high interest rates.
In the wake of the Federal Reserve’s closely watched “hawkish pause,” announced Wednesday, which leaves interest rates in the 5.25% range for now, financial advisors are rolling up their sleeves with creative strategies for guiding clients through a less-certain economic cycle.
“The wake-up call is that the Fed doesn’t seem to see a reason to cut rates, so making a bet on cuts is a gutsy move right now,” said Brian Spinelli, co-chief investment officer at Halbert Hargrove.
“The stock market is still seeing potential for another rate hike this year,” he added. “The investment strategy at this point is recognizing this is why you diversify.”
Michael Silberberg, head of investor relations at Alt-Tab Capital, is interpreting the Fed’s messaging to be that rates are at or near their peak.
“It is hard for us to take [Wednesday’s] announcement with too much optimism,” he said. “With 99% of forecasts predicting no change at the FOMC (Federal Open Market Committee) meeting, it was clear that we would see a stabilization of interest rate policy moving forward; however, it came as a surprise that the report emphasized slower rate cuts moving forward than previously projected.”
According to Silberberg, the Fed’s acknowledgement that inflation is trending lower could be interpreted by some as bullish for risky assets.