As Fed raises rates by a quarter point, here’s where financial advisers are telling their clients to invest — and store — their money

The Federal Reserve boosted its influential interest rate yet again Wednesday, even as more signs indicate that inflation is cooling.

It hiked the benchmark’s key rate by a quarter of a basis point, bringing it to the 4.5%–4.75% range. One basis point is equal to one hundredth of a percentage point.

The Fed’s central bankers have said the rate needs to get above 5% to bring inflation back to 2%. Inflation, as measured by the consumer price index, hit 6.5% in December 2022, the lowest reading since December 2021.

The Fed announcement on Wednesday pointed at the need for “ongoing increases.” Stocks were trading in positive territory on Wednesday afternoon, shortly after the Fed’s announcement.

Advisers are increasingly focused on how to store cash in productive ways that take some super-safe yields, said Andres Garcia-Amaya, founder and CEO of Zoe Financial, a platform linking financial advisers with potential clients.

Discussions with clients include strategies for high-yield savings accounts, CD ladders and Treasury debt. One recurring theme in the last six months is how much to pour into bonds.

Discussions with clients include strategies for high-yield savings accounts, CD ladders and Treasury debt. One recurring theme in the last six months is how much to pour into bonds, he noted.

The Dow Jones Industrial Average
the S&P 500

and the Nasdaq Composite

posted their worst performance last year since 2008, against a backdrop of inflation, rising rates and recession worries.

So far in 2023, things are looking up. The Dow Jones Industrial Average is up approximately 3% year-to-date, while the S&P 500 has gained 6%, and the tech-heavy Nasdaq Composite climbed more than 10%.

So is the average portfolio poised for a rebound or another year of declines? Trying to time investment moves are always perilous, said Leanna Devinney, vice president branch leader at Fidelity Investments.

“Market volatility is to be expected. Understanding your specific goals, risk tolerance, and financial picture, and how your investments align can help you stay fully invested through different market events,” she said.

Here is what some advisers are advising their clients to do with their money:


Bonds are one part of a portfolio’s defense. The “bond side of your portfolio may be deploying an airbag for protection if something were to go wrong,” said Ulin, CEO of Ulin & Co. Wealth Management in Boca Raton, Fla.

When interest rates raise, bond prices fall. So the quick sequence of Fed interest-rate hikes last year and all the other market woes made it tough for bonds. Last year marked “the worst year for bond investors basically within any of our lifetimes,” Tom Essaye, president of Sevens Report Research, wrote in a research note in December.

With a new year, however, there is new hope for bonds to give some consistent downside protection. Higher rates mean higher interest payments, Vanguard has noted in its forecast for 2023. It’s projected U.S. bond returns 4.1%–5.1% annually.

With a new year, however, there is new hope for bonds to give investors some consistent downside protection. Higher interest rates mean higher interest payments.

Goldman Sachs

analysts said that during January there was a $9.1 billion flow into funds for less-risky investment grade bonds, or about 2.4% of their assets under management to start the year.

Ulin has beefed up bond exposure for clients. In early 2022, he reduced clients’ bonds to 1 year to avoid duration risk — that is, the risk that bonds with farther away maturities lose their value while interest rates rise.

Now, Ulin thinks the Fed is “close to the one-yard line” in the goal on sufficiently high rates, so he’s “not overly concerned about duration risk on bonds or interest rates greatly going up in 2023.”

He has already repositioned his clients balanced model portfolios “into more short- to intermediate-term municipal, U.S Treasury and investment-grade corporate bond ETFs, and funds that were discounted from the bond bear market and now providing suitable yields.”


As interest rates rise, so do annual percentage yields on savings accounts, certificates of deposit, and other safe places to store cash.

The APY for an online savings account now averages 3.31%, according to, which tracks rates. A year ago, the average was less than 0.5%. The yield for a one-year CD from an online bank is averaging 4.36%, up from 0.5% a year ago.

Thomas Scanlon, a Manchester, Conn.-based financial adviser with Raymond James, has already trimmed clients’ equity exposure and built-up cash exposure.

Specifically, Scanlon sees very short-term 30- to 120-day CDs as a “viable tool” for the next six months or so.

It’s a conservative move, he notes, but Scanlon said this strategy is producing some return when there are so many open questions about interest rates, debt ceiling negotiations and the economy’s future.

“For the last 15 years, pure savers were penalized,” Scanlon said, noting when the Fed’s benchmark rate was persistently low in order to generate economic growth, particularly during the Great Recession.

“The benchmark fed funds rate is at 2007 levels and it may not be coming back down nearly as soon as investors seem to think,” said Greg McBride, chief financial analyst at

“The combination of rising rates and easing inflation is a winner for savers. The top-yielding, nationally available online savings accounts are earning over 4% — and still rising — a rate that looks better every time inflation ticks lower,” he said.