U.S Fed is prepared to raise its lending rates but faces uncertainty.

Due to the strengthening of the U.S dollar and because of U.S’s trade war with the world American Federal Reserve is all prepared to raise its lending rate to the Big wall street banks. Usually when there are import tarris levied by a nation, currency of that nation depreciates but the U.S dollar is worthwhile even with the import tarrif presence is because its strong IT (Information technology exports), education services, arms and amunitions exports. USA is currently undergoing a prosperity phase because of very low unemployment, strong currency,

Why does ? the Fed want to increase the lending rates.

To stop the tarrif war maybe. Because if there is no economic growth then the market ought to get open up. See, when the lending rates of the central bank rise. Corporate banks sell the loan at a high price. ie at a higher interest rate. To maintain their profit margins. So it proves as a barrier for upcoming businesses. The one who wishes to start up needs to buy the loan at a higher rate. Thus the market opens up once again.

The uncertainties faced by the Fed.

1. Fiscal policy of the U.S.

If the taxation in the U.S is high then it would be difficult for the Fed to hike its lending rate.

2. Political uncertainty.

If the U.S is at war with the North Korea, it would be very difficult for the U.S Fed to raise its lending rates.


Rising interest rates where to invest ?.

RBI (Reserve Bank Of India) the monetary authority Of India has decided to hike its lending rates, which means borrowing from the public and the private sector banks accross the nation would be very expensive. Higher interest rates would mean lower manufacturing activity. It may serve as a breeding ground for the next trade cycle ie. recession. Unemployment may rise. Purchasing power of the people may fall as they may prefer savings over spending. Real estate prices may collapse. These effects may be seen in the long run. In a mixed and a protected economy like India, this is not awesome. As of now in such a situation people should invest in tax saving (S.I.P) ex. ETF (exchange traded funds) from trusted companies like SBI Mutual funds. Also people may consider investing in the IPO’s (Initial Public Offer) to boost up the industrial activity. It is advised that investment into the bullion be avoided to protect the valuable foreign exchange of the country.

Why you shouldn’t under-insure your home.

Your home is your greatest asset after your life. Under-insuring your home means devaluing it to save few bucks of premium. In case of any extreme emergency you have an option of loan against property that is a mortgage. Another thing is under insuring is a sign of dishonesty to the Supreme Authority (Government). Here in such a case of under insurance you wish to enjoy the privileges of the economically backward classes. It is a malpractice and hence should be prohibited. Another thing is if you under insure your home you may not get the right price incase you wish to sell your home.