Stock Market Investments With Rising Interest Rates
With Greenspan's latest interest rate increase, experts anticipate a further rise in the interest rate in months to come, but what does this mean for you, as an investor? If your investments are mostly concentrated in stocks and mutual funds, the rising interest rates will generally initiate a period of little to no returns on your investments--higher interest rates typically steer other investors away from the stock market.
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Despite this trend, though, you do have one important investment option remaining in the stock market: put your investments into companies that share a part of their profits with shareholders. These companies have shown through time that their stock prices tend to hold up when interest rates rise, and in addition, their ability to pay out cash reserves to investors indicates financial strength in general, making them a great investment.
Some mutual funds are known to take advantage of the stocks of such companies, and these mutual funds are usually high-yield. One way to spot these funds is to look for the words "equity income" in their names. An investment in these funds might protect you from low returns as the interest rate rises.
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