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What Rising Interest Rates Mean for You

    Posted by on October 28, 2022
    3 min read

As you casually browse online for a new home, you could see an advertisement showing a 7% interest rate for a 30-year home mortgage.  You think to yourself, ‘How can that be?  I just checked last year, and mortgage rates were closer to 3%!” 

Well, you’re not alone.  The Federal Reserve is battling the highest inflation in 40 years by aggressively hiking interest rates.  Higher interest rates make it more expensive to borrow, and this impacts the housing market as well. We know that buying a house has gotten more expensive, but how else can rising rates impact your life in the real world?

Higher interest rates on variable debt, like credit cards

  • Certain debt forms such as credit cards do not lend you funds at a fixed rate.
  • Instead, interest rates are variable. Higher interest rates may cause your payments to increase and you could end up paying more in interest costs.

We recommend paying off credit cards and other high-interest, variable-rate debt in today’s rising interest rate environment.

Higher savings rates

Your idle cash can now earn more interest in a high-yield savings account or money-market mutual fund. Although this is positive, in times of high inflation you may still be losing purchasing power if the rate of inflation is higher than the interest rate you are earning.

The Impact on Stocks & Bonds

Your investment portfolio may serve as your nest egg and vehicle for wealth preservation and accumulation. It’s very important to recognize the impacts of higher rates on your investments.

  • Bonds typically serve to provide income and stability in your portfolio
    • Bond prices are generally hurt in the short-term because rising rates make newer bonds with higher yields more attractive
  • These losses are temporary and bond prices will gradually move back to even between now and maturity in the absence of a default.  This happens whether you hold the bonds directly or in a mutual fund.
    • The ability to invest at higher yields helps bonds over the long-term
  • Stocks are typically the capital appreciation vehicle of your portfolio
    • High growth or unprofitable companies tend to be most negatively impacted by rising rates as cash flows that are far into the future become less valuable with better yielding options available now.  Highly indebted companies will typically face higher debt payments and may suffer more than other companies.

Ideas For Your Portfolio


Stocks have been volatile this year, but some areas may be primed to outperform in an inflationary and rising rate environment:

  • Value Stocks: Companies that are undervalued relative to the broader market in addition to having higher fixed costs relative to variable costs subject to inflation. Their exposure to commodity producers and cyclical industries such as financials is usually beneficial.
  • Real Estate: Provides an inflationary hedge as landlords of underlying properties can raise rents on tenants. The underlying income generation may keep pace or exceed the rate of inflation.
  • Quality Companies Paying Dividends: Profitable companies providing consistent and growing income streams may provide stability and reduce risk during volatile markets.


Bonds have been pummeled this year, but the highest yields in 15 years may make them an attractive proposition.  Yields of over 5% are available on highly-rated bonds, and investors finally have options for income generation and respectable risk-adjusted returns in the coming years.

Protecting against rising interest rates is prudent, but we may be approaching a peak in rates. Capturing higher yields and taking on slightly more interest rate risk without significantly increasing credit risk makes sense right now.

Private Alternatives

Private investments may be able to help reduce risk, enhance returns, generate higher yields, and offer additional tax advantages that may not be possible to achieve solely in public investments. Floating-rate loans and private real estate investments can be particularly advantageous in the current environment.

Please contact me or your RegentAtlantic Wealth Advisor for more information on how you can optimize your financial strategy in the current environment.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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