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Show May 201 Garfield County Insider HOW INTEREST RATE CHANGES MAY AFFECT YOUR INVESTMENTS This article was written by For many Americans living through the economic recession of the past several years, dealing with the affects of interest rates has become as inevitable as death and taxes. The rise and fall of interest rates is one of the biggest factors influencing the economy, financial markets and our daily lives. That's why it is important to have a basic understanding of how interest rate changes could affect not only your wallet but also your investment portfolio. Simply put, interest rates help control the flow of money in the economy. Typically the Federal Reserve lowers interest rates to jump-start the economy. Lower interest rates mean consumers may be willing to spend more money and incur more debt. This stimulates the economy in a variety of ways, including increased revenues from products sold to the consumers and taxes generated from those sales. Investors, on the other hand, have a different perspective. Bond Investors: As interest rates fall, the prices of previously issued bonds tend to rise. The new issues are offered at lower, less appealing rates. That makes bonds with higher interest rates much more desirable and that much more in demand. On the other hand, those who plan to hold their bonds to maturity aren't really affected by falling Wells Fargo Advisors and provided courtesy off Brody Orton in Draper, UT at 801-619-7900. rates, with the exception of less money and businesses understand the effects interreinvestment risk. put growth and expan- est rates may have on your One way issuers may sion on hold. Consumers portfolio. Stocks offer long-term take advantage of falling may begin to cut back on rates, is by calling their out- spending because they re- growth potential, but may standing bonds and issuing alize don't have as much fluctuate more and provide new bonds at lower rates. disposable income as they less current income than This can hurt those whose once did. This reverses the other investments. Bonds bonds have been called be- effects that lower interest offer a fixed rate of return cause they can't reinvest at rates had on the economy and investment principal if the rate they were previ- and, again, investors are af- held to maturity. In addition to market and interest rate ously receiving. To offset fected differently. Bond investors: When risk, bonds are also subject that risk, it's important to make sure you don't have interest rates shoot up, the to default risk, the risk that too many callable bonds in demand for bonds with companies or individuals your portfolio. Your fixed- lower interest rates typi- will be unable to make the income investments should cally falls, which decreases required payments on their be diversified to withstand their value. That's because debt obligations. This article was written rising and falling rates. new bond issues are offered by Wells Fargo Advisors Stock Investors: Falling at higher rates. interest rates tend to have a Stock investors: Depend- and provided courtesy of J. positive impact on the stock ing on the current market Brody Orton in Draper, UT market, especially stocks environment, rising inter- at 801-619-7900. Disclosures: Investments of growth companies. The est rates can have a posicompanies that tend to bor- tive or negative impact on in securities and insurance row money to finance ex- the stock market. In some products are: NOT FDICpansions also tend to ben- cases, rising rates can send INSURED/NOT BANKefit from declining rates. jitters through the market, GUARANTEED/MAY Paying lower interest rates resulting in falling stock LOSE VALUEWells Fargo decreases the cost of their prices. In other cases, the Advisors, LLC, Member debt, which may positively stock market will respond SIPC, is a registered broker-dealer and a separate affect their bottom line. The favorably. In addition, rising inter- non-bank affiliate of Wells stock prices of those companies may rise as a result, est rates may affect certain Fargo & Company. ©2010 driving the market in such industry groups more than Wells Fargo Advisors, LLC. a way that prices of other others. For instance, be- All rights reserved. stocks may follow suit. cause growth companies When the Federal Re- borrow money in order to We'll MATCH or serve decides to raise inter- expand, rising interest rates BEAT any other est rates, its goal is usually increase the cost of their legitimate quote. to slow down an overheat- debt, which in turn decreasing economy. Interest rates es profit (or increases loss). $30 off Brake Jobs tend to affect the economy As a result, the prices of on Tues, Wed and slowly — it can take as long their stocks may fall. as 12 to 18 months for the If you're interested in Thursday. effects of the change to per- learning more about what 389 N. Main meate the entire economy. changing interest rates Panguitch Utah Slowly, the cost of borrow- mean for you, a Financial 435-676-8300 ing increases, banks lend Advisor can help you better HELP WANTED Team Coach: Duties include working directly with students 13 - 17 years old. Must be a positive role model, interacting with students during evening and weekend recreational activities. All shifts available. Qualifications: Must be 21 years old, have a high school diploma, current driver's license and able to pass a background check. Wage DOE. Interested individuals may send cover letter and resume to Heather Moulton at 435-676-8482 or fax 435-676-8488 hmoulton@silveradoboysranch.corn REAL ESTATE real estate auctions Utah Homes Sell Saturday May 22nd OTHER AREA AUCTIONS Nominal Opening Bids Start at $10,000 CEDAR CITY, UT • 5944 W 1000 S 1 BR 1 BA 1,728+/- sf. Built in 1995. Approx 19ac lot. Sells: Barn, Sat May 22nd 220 S 100th g, Panguitch Nominal Opening Bid: $10,000 PANGUITCH, UT • 220 S 100th E 1BR 1BA 2,696+1- sf. Built in 1907. Open House: 1-4pm Sun May 16th and 2 hours before sale. Sells: 10:15am, Sat May 22nd williamsauction.com 1% UT RE LIC 5487525-PB BARBARA WITHERS IN MI. 00STARSIDE REALTY; BUYER'S PREMIUM MAY APPLY. KANAB, UT • 119 S Putter Ln 3BR 2BA 2,109+/- sf. Built in 2007. Sells: 2:45pm, Sat May 22nd Open Houses: 1-4pm Sat May 15th and 2 hours before sale. WILLIAMS & WILLIAMS worldwide real estate auction 800.801.8003 MISC. ITEMS FOR SALE: MACHINE QUILTING FRAME Nearly New. Asking $1600. Use with any domestic sewing machine with throat up to 16 inches. Contact Shauna at 435-231-1601. viOYAAt 30+ Years of Experience ASE Certified Suspension & Alignment Specialist for 20 years HOME EQUITY CREDIT LINE* .0* --44T olo fit IT'S LIKE GETTING A REFERRAL PAYMENT FOR REFERRING YOURSELF. 4.7 111* 414111 p "‘ • Gold Checking Online Bill Pay Ulti Savings Give us your loan. We'll give you a $50 Gift Card." A compelling story needs a great beginning. And Zions Bank can help you get started with a compelling offer. For a limited time, close any personal home loan*** at Zions Bank and receive a $50 Visa Gift Card. It's just our way of saying thanks for closing a loan with us. To learn more about our personal, car and mortgage loans—as well as home refinances and credit lines, simply drop by your local Zions Bank branch or visit zionsbank.com , or call 1-800-789-BANK. Ask about our home refinance loans with no closing costs. VISIT OUR PANGUITCH BRANCH TODAY, OR CALL SCOTT CAMPBELL AT 435-676-8855. ZIONS BANK WE HAVEN'T FORGOTTEN WHO KEEPS US IN BUSINESS! zionsbank.com ® All loans are subject to approval. Restrictions apply.Ask branch for details. C M K *Rates are variable and subject to change monthly and are based on the Prime Rate. If line is closed within the first three years, a $350 Early Closure Fee will be applied. Property value determined by lender. Rates subject to change without notice. **Receive a $50Visa Gift Card at loan closing. One Gift Card per loan closed. Minimum commitment amount is $25,000. Contact bank for loan types eligible for the offer. Offer expires July 2, 2010. ***Offer does not apply to all personal home loans.Terms, conditions and restrictions apply. Contact branch for details. C M |