5 Areas Where Interest Rates Matter!

 Although, we hear, a lot of opinions, about, interest rates, and their trends, and impacts, very few people seem to understand, the significance, and importance/ relevance, of these rates, in several areas of our lives! After, many decades of involvement, in political campaigns, leadership, leadership training/ planning, real estate, financial sales and consulting, , I strongly believed, one benefits, by understanding, more about these, and how they affect, many things, in our lives! Whether, related to personal, organizational, and/ or, public finance/ spending, home ownership and related costs, credit - related issues, business matters, stock and bond pricing, , interest rates, truly, significantly, matter! With, that in mind, this article will attempt to, briefly, consider, examine, review, and discuss, 5 of these areas, and how the cost - of - money, makes a significant difference.

1. Bond prices and interest rates: The price of a bond, generally, is inversely - related to interest rates! When these rates go down, prices, rise, and when they go up, the inverse occurs! Bonds have, what is known, as, a par - value, which is the price, paid, at the end of the term. Markets usually set these at 100, which represents $1,000 per bond, at maturity. However, during the period, the pricing can rise or fall, which impacts, liquidity - related issues!

2. Mortgage rates: For the last few years, we have been witnessing and experiencing, record - low, mortgage interest rates, which have helped the overall, real estate/ housing market, especially, in terms of, pricing increases! In most areas of this country, we are seeing, home prices, at their highest levels, ever, by a significant, dramatic amount! When this rate, is low, a home buyer is able to buy, more - house - for - his - bucks, because, his monthly payments, are so low! Consider, however, what might be the potential ramifications, and impacts, when these rates, will, inevitably, rise?

3. Consumer credit: Low costs of borrowing, help the automobile industry, in terms of consumer financing, ! Although, not as much as other vehicles, rates on credit card debt, are lower, and there are often, shorter - term, promotions, offering deals! However, since, most of these are variable, and based, on some index,  what happens, when there is an increase, in this?

4. Business borrowing: Another area affected, is business cost of borrowing! Presently, they have had access, to relatively, cheap - money, which helps in reducing the costs of borrowing, overall operations, purchasing inventory, etc. But, what happens, when this, ticks - up?

5. Impacts on stock market prices: For some time, because bonds have paid so little, in terms of dividends, , many have considered, the stock market, the only game, in - town! In addition, many corporations, have seemed, better - off, than they probably are, and we have witnessed, a higher, ratio of prices to profits, than in the past! How long will this last? How high can it go?

Many factors impact these issues, especially: actual and/ or, perceived inflation; consumer confidence; politics/ government actions/ the Federal Reserve, etc. The more you know, and understand, hopefully, the better - prepared, you will be!

Richard has owned businesses, been a COO, CEO, Director of Development, consultant, professionally run events, consulted to thousands of leaders, financial consulting, conducted personal development seminars, for 4 decades, and a RE Licensed Salesperson, for 15+ years. Rich has written three books and thousands of articles. Website:  and LIKE the Facebook group for RICH IDEAS: 

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