Especially in today's day and age, where wage growth is vastly outpaced by inflation, Americans need, and frankly deserve, easy ways to make some extra money. The cost of basic necessities and living has gotten to the point where people can barely afford groceries and are worried about sending their future kids to college, or even having enough to ever retire.
But when the Federal Reserve began hiking up interest rates a couple years ago, people found a quick way to make money. As the rates went higher, that made retruns on certificates of deposit (CD's), money-market funds, and other cash investments spit out higher returns. Sometimes those returns were int he neighborhood of five percent.
As we progress through 2024, the Fed is now looking to start dropping interest rates, with the first cuts forecasted sometime this summer. While that is good on the general scale of things, it means the easy money is now gone. Money expert Derrick Kinney says this is the trickle-down effect of rate cuts.
"This is forward-looking...this impacts peoples checking or savings accounts...and we are likely going to see people not able to make the easy money...they will have to take some risk now," he says.
There is always risk to making money in this world, whether you like it or not. That is what made this era of easy returns such a lovely thing.
The aforementioned CD's already show the change is happening. A year ago, it was easy to lock in a five percent rate for 12 months, or longer. Now, all the offers are short term, with the rates down almost a full percent.
But even if the money is easy, not all Americans get to cash in on it, thanks to Biden's wacky economy.
"People are worried about being underpaid, and not getting a raise...most who want to be in the middle class feel like that...and they are struggling because of economic forces clearly out of their control right now," he says.
Mentioned above too are fears of not being able to retire, which has become a very real thought for many Americans. Around 4 in 10 workers believe they will not be able to keep their accounts up with inflation.
We all want a little way to make extra money, but with the easiest method set to go by the wayside, what can you do? Kinney says there is one very smart route you can take.
"Ladder CD's...you might by a 3, 6, 9, and 12-month term...and the longer term has a slightly higher interest rate," he says. "That way money comes due every quarter...so you are making your money work harder for you."
Photo: primeimages / E+ / Getty Images