The Fed Cuts Both Ways

Low interest rates are great for borrowers. Savers must get creative to earn a decent return. Here's how

The fed bellied up to the bar last week and ordered a double. Greenspan & Co.'s decision to drop short-term interest rates by half a percentage point surprised Wall Street--which had expected a quarter-point cut--and brought rates to their lowest level in 41 years. That might help spur the economy by making it cheaper for businesses to borrow, but there's a downside. With inflation running at 1.8%, your bank savings or money-market fund yielding barely 1% is becoming a money loser. If you want safety with reasonable income, you'll have to get more creative.

The rate cut "doesn't create wealth," says...

Want the full story?

Subscribe Now

Subscribe
Subscribe

Get TIME the way you want it

  • One Week Digital Pass — $4.99
  • Monthly Pay-As-You-Go DIGITAL ACCESS$2.99
  • One Year ALL ACCESSJust $30!   Best Deal!
    Print Magazine + Digital Edition + Subscriber-only Content on TIME.com

Learn more about the benefits of being a TIME subscriber

If you are already a subscriber sign up — registration is free!