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Interest rates: What the rich want

By Judy Martel · Bankrate.com
Wednesday, September 16, 2015
Posted: 7 am ET

If the Federal Reserve announces tomorrow that it is raising interest rates, the rich will celebrate -- albeit with a cautious eye on their investments, according to a recent survey of investors.

Since December 2008, rates have been hovering near 0 as part of an effort to boost the economy suffering the effects of a financial collapse and the worst recession since the Great Depression.

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How high can they go?

The survey, by Spectrem Group, found that overall, 64% of affluent investors favor a hike in rates, but age is also a factor. Among respondents age 61 and over, 69% support higher rates, versus 43% of those age 40 and younger.

This is perhaps not surprising, as wealthy older investors typically carry less debt and have saved more. As such, they will be positively impacted by a better rate on safer retirement investments, such as bank accounts and CDs, and less affected by higher rates on loans.

Some 44% of respondents would like to see a rate increase of a quarter percentage point, while 24% would favor half of a percentage point. The numbers are close, but respondents with a net worth of at least $5 million are slightly more in favor of the higher amount than their less wealthy counterparts.

6% of investors with $1 million or more and 8% of those with a net worth between $500,000 and $1 million favor a whopping 2 percentage point rate hike.

Biggest impact of higher rates

While they might see a boost to savings, investors worry about how a rate hike will affect other areas of their finances. Respondents with more than $1 million were most concerned about the effect on their investments, followed by real estate. Those with $500,000 to $1 million were most concerned about real estate, followed by investments.

What will happen to your finances if the Fed raises rates? Here are 6 things you should know.

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1 Comment
moonmac
September 17, 2015 at 7:01 am

If the Fed raises rates 25 basis points the DOW will drop 1,000 today!