If the Fed Raises Interest Rates in October, History Says Investors Should Make This 1 Move
Replacing some of your debt-driven stocks with fixed-income plays is a prudent strategy.
Overview
On Sept. 16, the Federal Reserve raised its benchmark rate by 25 basis points to 3.75%-4.00%. That marked the Fed's first rate hike in three years and prompted issuers of CDs, bonds, and other fixed-income investments to raise yields to stay competitive. Those higher yields also pulled investors away from stocks and other riskier investments.
The Fed will make its next interest rate decision after its Federal Open Market Committee (FOMC) meeting on Oct. 28. That decision will largely hinge on the next Consumer Price Index (CPI) report on Oct. 14. If the U.S. inflation rate remains far above the Fed's target rate of 2% -- as it did at the end of August (3.4%) -- another rate hike could be on the table. If that happens, you can shield your portfolio from the near-term volatility with one simple move.
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Originally published at www.fool.com.