Meager Income

Pay Off Debt, Retire Comfortably on Meager Income, Win the Lottery, Not Necessarily in that Order

The Fed Keeping Rates Low Until 2013

Posted on | August 9, 2011 | No Comments

I’ve been watching the stock market with much anticipation the last couple of weeks.  I’ve already locked in my $3000 loss for the year for tax purposes.  I sold my positions in HCBK and SPF.  I still like both of these stocks but I think I’ll be able to buy them again in a month (to avoid a wash-sale) for at least the same price I sold them at.

I was actually in front of my television watching CNBC and had my Etrade brokerage account open while the Fed made their announcement.  They will be keeping interest rates low through 2013.  Initially, there  was a move up and then back down.  It was during that time that I was trying to pick up stocks on the cheap.

I’ve probably already said this but I think the move will hurt more people than it will help.  I don’t know anyone that can take advantage of these low rates.  Everyone that can refinance has already done so.  I can’t refinance because I am underwater just like millions of other people who would like to own their home one day but are stuck with a mortgage until then.  The low rates will continue to prop up housing prices because it allows buyers to afford higher prices but also enables them to take on more debt.  Savers will still continue to receive close to nothing on their savings causing some to take on more risk as they reach better returns.  Note to Fed: We don’t need lower interest rates that we can’t take advantage of we need more jobs!

So how can we take advantage of these low rates?  If you are fortunate enough to still have a job, I think one should consider maxing out your 401k and watch for signs of rate increases from the Fed.  If the rates go up it means the stock market has recovered.  Just before rates shoot higher it might make sense to take out a 401k loan to lock in some cheap financing.


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