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Should You Adjust Your Investment Strategy Following Fed Rate Hike? – GOBankingRates

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Attempting to ease the worst inflation in 40 years, the Federal Reserve raised its benchmark rate on June 15, its first three-quarter-point increase since 1994. It also raised concerns of investors wondering if they should sell off depreciating stocks and make wholesale changes to their portfolios.

See: Experts Share Where To Focus Investments During High Inflation
Discover: How Bear Market Can Benefit Investing Newbies

For certain, the economic picture of 2022 has been a lousy one, filled with sky-high inflation and consumer prices not seen in decades. However, many experts agree that selling off investments during times of economic crises is usually a losing proposition. Unless you are particularly adept at predicting the future, herding in turbulent times will likely leave you selling your assets when they are at absolute rock bottom.

Speaking to Money, Rob Williams, managing director of financial planning, retirement income and wealth management at Charles Schwab, said that the Fed’s fight shows a belief in the economy to right itself over time and that investors who hold a good asset mix and a willingness to ride out the tough times are usually in the best position to move forward in more certain times.

“The Federal Reserve is showing that they have more confidence in the continued growth of the U.S. economy,” Williams says. “The real bottom line is we don’t think people should make major changes to their portfolio if they’re invested for the long term and they have a diversified portfolio.”

Diversifying your assets makes sense, but so does the way you trade, according to Barry Gilbert, asset allocation strategist at LPL Financial.

Aside from waiting for stocks values to rebound and, hopefully, enter a bull territory, there are minor tweaks an investor should be making to provide a bit of financial stability to their lives. Paying down any large variable rate debts or large credit card debt is one. Another is changing where you are saving your money.

Speaking to Money, Gilbert said, “That doesn’t mean suddenly go underweight whatever your stock allocation is or anything like that,” adding, “but if you’ve been more aggressive than you usually are, we might start the process of dialing it back down towards your baseline again.”

Related: 6 Alternative Investments To Consider for Diversification in 2022

According to CNBC, the Fed rates don’t directly affect savings rates. With major bank rates being so insignificant now, it would be worth your while to shop around for a savings account that will earn you more.

For those who have previously shied away from opening online savings accounts, now is the perfect time to look into them, as they can often offer customers a much higher rate then their brick-and-mortar counterparts.

Chester Spatt, professor of finance at Carnegie Mellon University’s Tepper School of Business, also recommended looking into U.S. government bonds as an opportunity to boost your savings in a turbulent economy.

Despite the caveats of a buying limit and not being able to take any money from them for at least one year, bonds are protected from inflation, are relatively risk-free and government-backed and provide an impressive yield — paying a 9.62% annual rate through October 2022, the highest yield since being introduced in 1998, according to CNBC.

Survive and Prosper in Bear Market: Experts Share Rock-Solid Investment Strategies
Find: What Impact Did the Fed’s Interest Rate Hike Have on the Crypto Market?

The next Federal Reserve policy meeting is on July 27 and it is expected to be followed by another 0.75% point hike announcement as Powell and the Fed attempt to finally ease the inflation rate without putting the U.S. economy into a recession.

Whether it works remains uncertain. There is no guarantee that things won’t get worse before improving. On a personal finance level, the best thing is often the simplest, or, as Williams said, “Sometimes long-term success is about discipline and small steps and not overreacting.”

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About the Author

David Nadelle is a freelance editor and writer based in Ottawa, Canada. After working in the energy industry for 18 years, he decided to change careers in 2016 and concentrate full-time on all aspects of writing. He recently completed a technical communication diploma and holds previous university degrees in journalism, sociology and criminology. David has covered a wide variety of financial and lifestyle topics for numerous publications and has experience copywriting for the retail industry.

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Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 100 points, U.S. stock markets mixed

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TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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S&P/TSX up more than 200 points, U.S. markets also higher

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TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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