An Interest Rate Increase Is Long Overdue
The highly anticipated rise will be good for savers and investors.

Federal Reserve Chairwoman Janet Yellen is at it again—hinting that the time might finally be right to raise interest rates.
Here's hoping it finally happens this year.
What should you do if it does? If you are risk-averse, you can take advantage of the higher yields from bank products such as certificates of deposit, money-market accounts and savings accounts. For those who have exposure to the markets, evaluate your current stock and bond market exposure and make necessary adjustments.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The last time the Fed increased rates was December 2015, and an expectation was set at that time—based on the strength of the economy and the labor market—that we would see three to four increases in 2016. So we waited and watched and... nothing.
If the Fed comes through in December, it will be welcome news. As former FDIC Chair Sheila Bair said recently, "We've been keeping interest rates far too low for far too long." The increase needs to be slow and gradual, she told FOX Business Network, "but they need to get on with it."
I agree. The Fed has been roundly criticized by economists and politicians for propping up the U.S. economy, distorting the market and creating a bubble that's doomed to burst. And Yellen has earned a reputation as an interest-rate tease, bouncing back and forth between optimism and pessimism—and taking the American public with her. (The job market is doing well. Yay! But, hold on, there could be significant repercussions from the Brexit. Ohhh!)
Meanwhile, if you're looking for a way to save and invest, you're being punished. If you put your hard-earned dollars in a money-market account or certificate of deposit (you know, the way your risk-averse but savvy-about-saving parents and grandparents did?), you're actually losing money. And you have been for years. Because if you're making 1% interest, and inflation is 1.5% to 2% (those are the Fed's figures, by the way), you're simply not keeping up.
This is especially unfair to older workers who want to move from stocks and bonds to something more conservative as they prepare to retire and to elderly Americans on a fixed income, who rely on interest income to cover their living expenses.
Raise the interest rate, and they'll likely loosen their purse strings, which benefits the economy. And younger investors might learn to keep some money outside of the volatile market—in savings—and use that, instead of credit, to pay for high-ticket items. Imagine that.
We're ready. The Fed's year of waffling sends a message that, when it comes to the economy, at least, things aren't so bad—bumpy, perhaps, but not bottoming out. And a higher interest rate gives the market somewhere to go if things really do go south.
If you remember back to the terrorist attacks in 2001, the interest rates were up around 4% or 5%, which gave the Federal Reserve some wiggle room to reduce rates and bring some calm to the financial markets. When you're at 0%, what are you going to do? There isn't any room left.
Yellen continues to say the Fed's decision on rates will depend on economic data and not a preset timetable. Let's just hope when the increase finally comes, it isn't too little too late.
Christopher A. Murray is a professional financial adviser, insurance professional and president of the Maryland-based Murray Financial Group. He is a Certified Fund Specialist and Board Certified in Mutual Funds.
Kim Franke-Folstad contributed to this article.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Christopher A. Murray is a professional financial adviser, insurance professional and president of the Maryland-based Murray Financial Group. He is a Certified Fund Specialist, Board Certified in Mutual Funds and a Certified Senior Consultant. Murray has produced and hosted the weekly "Your Financial Editor" radio show for 17 years and provides daily business and financial market updates. He is an active member of the National Press Club and has contributed to several publications, including "The Wall Street Journal."
-
Rally Fades on Mixed AI Revolution News: Stock Market Today
All three main U.S. equity indexes opened higher but closed lower as a seven-session winning streak for the S&P 500 came to an end.
-
Stretch Your Holiday Shopping Budget Further with These Under-$50 Gifts That Don't Feel Cheap
Amazon October Prime Day is the perfect chance to nab some under-$50 gifts that feel more expensive than they are (because normally they would be).
-
The Spendthrift Trap: Here's One Way to Protect Your Legacy From an Irresponsible Heir
A spendthrift clause in an estate plan can protect an inheritance from a financially irresponsible child's debts and poor decisions.
-
Adapting to AI's Evolving Landscape: A Survival Guide for Businesses
Like it or not, AI is here to stay, and opting out could be disastrous for your organization. Instead, focus on what you can control and be flexible, as AI is still evolving.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's Executives
Feeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have Millions
Private market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It Helps
Saving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard About
Timing is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional Strain
Early conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.