THE FED JUST HIKED RATES | Major Changes Explained

The YouTube Creator Academy:

THE FEDERAL RESERVE JUST RAISED RATES

Savings Accounts:
Now that the Federal Reserve is beginning to raise rates, savings accounts will ONCE AGAIN start to pay you a respectable amount of interest. For example, Synchrony Bank just raised their CD Rates to 1%…Nationwide is gearing up to offer 2.5% to their customers…and, many more are expected to follow.

The Stock Market:
Recent data just found that “the S&P 500 has ONLY HAD TWO losing years since 1990 when the Fed was raising interest rates: a 9% decline in 2000 and a 4% drop in 2018.” and….even though it seems like a direct correlation that high interest rates are automatically BAD….it’s not so clear cut.

Since the 1960’s…even throughout rate increases and decreases…the stock market has continued to trend upwards. If we then taken an even closer look since 2017…we can see that, throughout several rate hikes…the market defied the odds…and kept going up!

The Financial Samurai also found that The SP500 has, on average, gained 20% in a rising interest rate period since 1971 - which, can often span over several years. He also says, in order for that to be true…the Federal Reserve must raise rates SLOWLY, and effectively communicate their intentions to the market so investors don’t panic…which, so far, in 2022…they’ve done that.

Home Real Estate Prices:
If we look back historically, we can see that, since 1945 - housing prices continued climbing, right alongside interest rates. After that, rates dropped…and home prices continued to climb even further. It was also found that, OVERALL…a change in interest rates hasn’t substantially affected housing values on a large scale…meaning that…MOST LIKELY - there are other factors that have an EVEN BIGGER impact on prices.

Robert Shiller himself, king of the Shiller Price Index…was quoted as saying: "There is not a tight fit at all between the two: high mortgage rates do not translate automatically into low home prices."

All of that is to say that - even though higher interest rates DIRECTLY impact home affordability - other factors, like local market conditions, demand, inventory, inflation, tax deductions, population changes, new construction, and the overall health of the economy play just as big of a factor…so, rising rates ALONE won’t do enough to cause prices to decline.

The Cost Of Debt:
Revolving balances have what’s known as a “variable interest rate,” meaning - their interest payment, in some part, correlated to the prime rate, which is influenced by the federal reserve. When that interest rate goes UP - credit cards charge MORE as a result…and, one report warns that your interest rate may begin to go up as soon as now.

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[GrahamStephan]

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[samuelreyes]

I wonder what's the best opportunities to invest now are, there are opinions but a little later I find out these opinions don't matter as a totally different turn of events play out with the stocks they discussed therein

[JackDuffley]

"Not to worry, we're still flying half an economy." - Obi-Wan Jeromey

[Destroyaj]

s/o to financial samurai. Great blog over there

[randomaccountimade]

👁👄👁 hearing about inflation while my wage stays the same.

[JonathanSorunke]

Graham always turning the news around FAST and explaining it in a way we all can understand! Thanks!

[SnoopEastwood]

I hope home values go down so us normal folk have a chance to buy property

[DannySully]

"It's better to buy a wonderful company at a fair price than a fair company at a wonderful price."

- Warren Buffett

[finnstafford]

Not to be the negative guy but it seems like all of these changed to counter inflation are helping the rich and even moderately wealthy while hurting the poor I am unable to buy a house because the extreme price increases plus now higher rates, but to someone with greater wealth its just an inconvenience or a rent increases on their properties it seems like all the cost increases are trickling down to the lower class

[ThomasShelby-xzfk]

Rate hikes from 2015 to 2018 didn’t stop the bull run of the stock market . The sky isn’t falling.

[jamabojuice]

I came home from work and saw the news of the FED hiking the price. I immediately went on youtube hoping Graham had a video explaining this, lo and behold he uploaded 15 min ago.

[haroldcarelse]

Pretty interesting, thanks aboutcreativity for pointing me in this direction.

[forestertesche]

The smash the like button logo on the background of the computer had me dying! Great video as always man.

[rht.]

How Indian banks and stocks will be impacted due to this ...?

[scottderose]

Banks are no longer required to have any reserves as of March 2020. They are only constrained by their balance sheet which can be easily manipulated using subsidiary banks located outside the U.S and are not regulated by F.D.I.C

[kyleh]

Still wouldn’t buy a house right now. Nope. Nothing but tulips out there at the moment. People are selling homes that they spent the last decade tearing up because they know someone is desperate enough to buy it at the top of the market. Sellers can keep their stains, water damage, infested walls, and failed DIYs. I’d wait and come back with a higher down payment when the playing field is even.

[maxwarner]

ofc they did expect a couple more coming later this year

[JJV]

Its good. The FED should raise rates when inflation rises - yes it causes the economy to readjust, but NOT doing so will have long term consequences that are worse.

[iVETAnsolini]

I just locked in a 2.3% rate last month on a mortgage

[CarlosMzL]

Love your vids bro, and as a subscriber since 2019 I think you should maybe dramatize lees every thumbnail, I understand its necessary but man I feel like if every video its the end of the world. Trying to give a constructive feedback here. thanks for your content as always.