The Federal Reserve announced an additional 25 basis point cut at its final meeting of 2024 and signaled it will deliver two more rate cuts in 2025. Lower rates impact consumers’ mortgages, loans, credit cards, savings accounts, and more. Vanguard head of brokerage and investments Andrew Kadjeski joins Wealth with Alexandra Canal to talk about how consumers should be thinking about their cash holdings and savings as rates come down. “Whenever there’s a change in the Fed rate, like occurred earlier this week, we always encourage investors to take a step back [and] look at where they are holding their cash savings,” Kadjeski says, adding, “Is it in an account that really meets their needs, particularly to help them reach their savings goals?” As investors weigh how much they should hold in cash versus invest in equities, Kadjeski says, “It’s all about finding the right balance because you certainly need to make sure that you have enough cash on hand … at the same time, you want to make sure you’re not holding too much cash.” He explains that Vanguard recommends building an emergency savings fund and notes, “You want to be really thoughtful of: What is your goal? What are you saving for? So that you can start putting that money to work, either in a short-term savings account or into a longer-term investment account.” To watch more expert insights and analysis on the latest market action, check out more Wealth here.
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