What the Fed's Rate Hike Really Means for You

It shouldn't have been a surprise...

Earlier this week, the Federal Reserve announced it's hiking the short-term "fed funds" rate to a range of 1.5% to 1.75%. The fed funds rate represents the lending interest rates between banks.

Remember, the Fed signals every step it takes for months before it makes a move. Wall Street should have seen this coming.

Yet, still, investors found reason to freak out...

The S&P 500 Index closed lower the day the hike was announced, and then dropped another 3% on Thursday. The Dow pulled more than 700 points.

Rising rates are typically seen as a challenge for stock prices to overcome. But history shows stocks can and usually perform just fine as interest rates rise, especially when rates rise from low levels. (Remember, the anomaly here is that interest rates have been so low, for so long.)

And most folks expect we'll probably see at least two more rate hikes this year.

So forget the headlines about "interest rate hikes" and "Fed tantrums." Inflation and interest-rate fears can cause big down days for stocks... but in general, the stronger economy will push stocks higher. That's the way more important news. In fact, the central bank raised its GDP forecast for 2018 from 2.5% in December to 2.7% now... and increased 2019 expectations from 2.1% to 2.4%.

That's a strong, growing economy.

Far too often, Wall Street is focused on the "punch bowl" of super-low interest rates getting taken away... so it treats good news in the economy as if it's bad. It's not...

If you're worried about the Federal Reserve hiking rates, you're focusing on the wrong thing. To tell you about what you should be focusing on, listen in next Wednesday, March 28...

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Q: Do credit card companies generally recognize a durable power of attorney so long as the original credit card owner is still alive? – C.S.

A: The short answer is, most likely. But what the company would need as proof might vary. Some credit-card companies might be fine with a photocopy of the power of attorney. Others might require a certified copy... one that's been notarized. If you want to be sure, call the issuer and ask what procedures you'd need to follow.

Q: Have you ever written about kefir? I have heard that it has many positive qualities and is somewhat similar to yogurt. – J.K.

A: For readers who don't know, kefir is a type of fermented milk. A 2015 Iranian study used kefir as a probiotic food for diabetics. After eight weeks, participants also saw improvements in their blood-sugar levels.

The key is eating foods – like kefir – packed with probiotics. Probiotics are beneficial bacteria found in certain foods... I've previously recommended not only yogurt, but also kimchi and sauerkraut. Once you eat them, the bacteria move into your intestines, keeping your immune system functioning well and food digesting properly.

Like with yogurt, watch out for added sugars in kefir. If you don't like it plain, sweeten it on your own with fresh fruit.

Q: I recall an issue of yours regarding cash and how/where to hold cash. I think it was in your Income Intelligence (pardon, I don't recall which because I subscribe to all three of your publications and this bulletin), but think the information is valuable. – C.R.

A: Great memory! We published "The Cash Issue" for Income Intelligence subscribers back in 2014.

As a saver and investor, you likely have tens, and maybe hundreds, of thousands of dollars in cash. You need to keep it safe and liquid, and earn a yield to fight inflation.

In that issue, we answered the No. 1 cash management question, detailed the upside and downside of cash, and listed all the places you can park your money.

Even now, nearly four years later, this is one of the most important issues we've ever written.

Subscribers can read "The Cash Issue" right here. And if you want to learn about joining Income Intelligence, click here.

Internet safety is more important now that ever. With so many people on social media websites like Facebook, Twitter and Instagram, managing your online privacy is paramount to protecting yourself from hackers and others with bad intentions. In this week's video update, research writer Amanda Cuocci tells you trust no one and gives you five tips to stay safe online. Click here to watch.

Q: What about people that have osteoporosis? Don't they benefit from taking calcium supplements?

I take them but they are from vegetable source not from seashells which are the ones that cause problems. – M.R.

A: We've warned about calcium supplements for years, but a study late last year from JAMA summed it up for us. Out of 50,000 people involved in randomized trials, the participants taking calcium supplements did not see any lower risk of fracture from osteoporosis.

It is true that we can absorb certain forms of calcium better than others. However, we couldn't find any reliable studies demonstrating benefits of one type over another. What we found instead were the benefits of adding calcium to your diet naturally instead of with pills. That's why we recommend foods high in calcium like dark leafy greens and fish.

You also need vitamin D for bone health, so getting enough sunshine is crucial to your health.

And don't forget, light weight-bearing exercise is one of the absolute best ways to strengthen bones and prevent fractures. So don't forget to add exercise to your routine as well.

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What We're Reading...

Here's to our health, wealth, and a great retirement,

Dr. David Eifrig and the Health & Wealth Bulletin Research Team
March 23, 2018