The Federal Reserve announced another 25 basis points interest rate cut at its last meeting in 2024, and said it would cut interest rates two more times in 2025.
Andrew Kadjeski, head of brokerage and investments at Vanguard, joins wealth Chat with Alexandra Canal about how consumers should think about their cash holdings and savings as interest rates fall.
“Whenever there is a change in Fed rates, as happened earlier this week, we always encourage investors to take a step back [and] Look at where they’re putting their cash savings,” Kajewski said, adding, “Does this account really meet their needs, specifically helping them meet their savings goals?
Kajewski said that when investors weigh how much cash they should hold versus investing in stocks, “it’s all about finding the right balance because you certainly need to make sure you have enough cash on hand… and at the same time , you want to make sure you’re not holding too much cash.
He explained that Vanguard recommends building an emergency savings fund, noting, “You have to really think about: What are your goals? What are you saving money for? So you can start putting that money to work. , whether short-term or short-term.
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This article was written by Naomi Buchanan.
