Where to Keep Cash After the Fed Lowers Rates by 50 Basis Points

Yesterday the Fed lowered the Fed Funds rate by 1/2 of a percent. The prime rate followed, going from 8.5% to 8.0%. Rates on everything from credit cards to savings accounts to CDs also went down. And the rates on bonds and mortgages continued to decline.

Given all of this, where are the best places to keep your cash?

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ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

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[onehitpick]

If rates go down to zero again, I'm borrowing a billion bucks.

[bukki]

With the Fed cutting interest rates by 50 bps, what do you think will happen to the stock market? My portfolio has performed exceptionally well this year, but I am concerned about the possibility of a market crash and losing my gains.

[BadPhD]

Lower interest rates suck for the person who has no debts. 😞

[ScarlyJo]

With the rates cut i have a couple of questions....can I safely invest $220k in the markets? What should I do differently?

[Jake-zcfk]

I’m happy to see no one talking about precious metals as an investment.

[Hannaa]

My portfolio for the past 30 years has always been self managed and I own 3 shares of Berkshire Hathaway Class A stock (BRK:A) which I bought in at about $17, 000 during the mid 90s, I’m currently liquidating some of these positions to incorporate new Gen. Stocks, but am I better off re-investing into Gold as it seems stocks are a little too unstable right now.

[patrickjones]

My concern is where we will begin to see the effect of these cuts, is housing going to follow suit? I missed out on my dream home during the pandemic, I am now all eyes and ears for a further decline in mortgage rates.

[captaindanield]

What is not being considered will be t bill buyers - they won't buy them at lower rates. The auctions are going to have to go higher to get enough buyers to cover the amount needed for interest rollover and new deficit spending. Especially considering the large increases in inflation, which will be caused by lower fed funds rates. Target rate will have to be 7% to get enough buyers in the t bill actions to reach the needed amounts amount in sales.

[KungPowEnterFist]

I love the calmness here. 50bps out the gate is a panic cut. The Fed knows something is coming, it is bad, and it is trying to get ahead of that. The market is trying to whistle past the graveyard, and will continue to do so until way too late like they do every single time.

[miker]

Recessions are a necessary part of capitalism . It's important for asset prices to come down instead of interest rates but the fed is never going to let that happen so get ready for inflation to really get going.

[allen]

Housing prices are to high. I blame that on people more concerned about monthly payments than the total price. And the salespeople who push that. When interest rates were high, housing was lower. The banks wouldn’t lose much money on a foreclosure. But they were making more in interest.

[danb]

The Fed has caved to politics. No way is inflation low enough to justify a cut.

[williamrogers]

Lower interest rates may create some refinancing opportunities for buyers with higher rates depending on friction costs. This would benefit mortgage brokers with transaction fees and for some buyers. As an older worker already living in a retirement community with a 2.625% mortgage rate, I don't have any reason to move for financial reasons.

[chastinreppert]

The economy is NOT doing well. The job market is horrible, as are the following sectors: gas, food, retail, utilities, automotive, homes, rentals, and all forms of mandatory insurance consumers are urged or forced to buy.

Inflation is through the roof. People are struggling! Also hurting working consumers, are yearly salaries not keeping up with the drastic increase with all goods and services.

[bobslate]

Maybe if prime wasn't at zero for a decade real estate wouldn't have become so expensive. That was a really dumb move!

[allen]

What happened to people saving money till they could afford to buy something? Higher interest rates is not a bad thing.

[eile]

SPAXX should be still good. it doesn't lower by that much for our cash position. it should be still over 4.5%

[kckuc]

Same as always, this small rate change is not a game changer

[erospawn]

Rates have to fall to ~2.5% before I sell.

[daveschmarder-]

I'm not doing anything different either, Rob. As always a nice presentation!