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- Interest Rates DOWN, Markets UP! What just happened!? 😱
Interest Rates DOWN, Markets UP! What just happened!? 😱
PLUS: Woordfees pumping, just like stocks
MoneyMoves
October 04, 2024
Interest Rates Just Got Cut—And the Market is Loving It! But Why? Let’s break it down.
What are Interest Rates?
Interest rates are essentially the price of money.
When you take out a loan, the interest rate is what you pay the bank for borrowing that cash.
On the flip side, when you save, the interest rate is what the bank pays you for holding onto your money (and lending it to someone else).
Think of it like renting money—whether you're borrowing or saving, there's always a price tag attached.
Want a quick breakdown? We’ve got you covered in our latest 10-minute YouTube video!
Why Were Interest Rates so High the Last Few Years?
Apart from being the cost of borrowing money or the reward for saving it, interest rates have a special purpose: They’re used as a tool to control inflation. Over the past few years, inflation was soaring, and in response, central banks had to raise interest rates to cool things down.
The goal? To rein in rising prices by slowing down borrowing and spending. And guess what? It worked! Inflation is now back under control, which has opened the door for interest rates to come down again.
Rates down, markets up! How does this work?
A cut in interest rates is like a green light for the markets. Here’s why:
Lower Interest on Debt: Companies and consumers have more money every month to spend or invest, which boosts the markets.
More Borrowing: When interest rates drop, companies and consumers are more likely to take out loans, whether it’s to expand a business or buy a home. This drives even more activity in the markets.
Savings Become Less Attractive: With interest rates lower, savings accounts offer less return, pushing people to put their money into investments like stocks, which lifts market values.
Join us at Woordfees!
We’re thrilled to announce that we have a discourse program at this year’s Stellenbosch Woordfees! If you're in the area, we’d love for you to come say hello and chat about all things finance.
Episodes coming your way 🎬
So, what are we covering? Well, depends on who’s asking (literally!). Our aim is simple: Ask your questions, and we’ll cover them as best we can: to inform, educate, and entertain.
Season1 Topics |
|---|
1. What is a TFSA and how can I use it to my advantage? |
2. Can you explain the different types of investments? |
3. I hear people are making money with Arbitrage. What is it? |
4. Debt: Is it good or bad? |
5. Life insurance - should I get it and why? |
6. How to approach the new 2-pot retirement system |
7. How big of a deal is compound interest? |
8. Interest rates down, stock market up! |
9. Should I go the DIY route or use a financial advisor? |
Who are we?😎
 The Knowledge Chest | Paul holds an Honours degree in Financial Analysis from Stellenbosch University. With a career spanning investing, accounting, and education, Paul is committed to becoming the best financial planner in South Africa. Despite his many accolades, Paul insists that his greatest achievement is that he is dating a yoga teacher. |
 The Anchor | Ingrid holds a BA Honours in Journalism from Stellenbosch University. She is a self-diagnosed workaholic, excelling in various roles such as marketing, publicity, social media, and strategic partnerships. Ingrid's commitment to promoting wellness and balance extends beyond her professional endeavours, as she is also an avid yoga teacher. |
 The Magic Maker | Alwin holds a BCom in Business Management from Stellenbosch University. Alwin has a unique ability to make things happen - if you need something done, he’s your man! Alwin currently works in the alumni office at the university, connecting past and present Maties and ensuring a brighter future for the youth. |
Our Offering🎖️
We have extended our value offering to four key pillars:
Investments
Insurance
Arbitrage
MoneyMoves
If you’re looking for someone to chat about your finances, feel free to reach out. We’re here to help.
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