Rising Interest Rates, the Stock Market, and Your Portfolio

Rising Rates, the Stock Market, and Your Portfolio

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Interest rates can positively or negatively affect the U.S. economy, the stock markets, and your portfolio. With The Fed increasing the target range for the Federal Funds Rate to help contain soaring inflation, there is no way of knowing how the market will react over time. Rising interest rates, high inflation, and a bear market create market volatility.

When these conditions occur, diversification is essential so that if specific strategies decline, others offset the decline and accumulate in value. Diversifying by including strategies from various industries, countries, or risk ratings may help make market conditions much more tolerable to some investors. During a bear market, trading strategies often shift toward safety. Here are some strategies to consider:


Real estate investment trusts (REITs) consist of real estate assets that typically produce income at different times. REITs must distribute 90% of their taxable income as dividends to investors. REITs develop and improve their properties to produce returns, sell them, and reinvest in other properties, aiming to produce positive returns for investors.

Indexed Annuities

An annuity is a contract with an insurance company to provide an income stream during retirement. Indexed annuity returns are based on an index like the S&P 500. If the value of the index goes up, you receive a return based on that value. If the value of the index goes down, you receive a guaranteed minimum interest rate. Here are other things to know about indexed annuities:

  • Your principal is protected during a down market, and you won’t lose your initial investment or accumulation.
  • Accumulates on a tax-deferred basis.
  • The return is based on an index, which increases the annuity’s value over time.
  • Provides a guaranteed lifetime income and protection against longevity risk since you receive annuity payments for life.

Dividend-paying Stocks

Dividend-paying stocks may pay higher dividends than interest-rate sensitive strategies or depository products. The combination of price growth potential and income may outperform inflation over time. Dividend-paying stocks come with risks, so it’s essential to determine if they are an appropriate strategy for your portfolio.

Short-term debt

Shorter-term bonds such as Treasuries have an inverse correlation to the stock market and tend to rise in price as stock prices fall.


Treasury inflation-protected securities (TIPS) are indexed to inflation and twice a year payout at a fixed rate. TIPS come in three maturities: five-year, ten-year, and 30-year.

Precious Metals

Precious metals purchased directly or through exchange-traded funds may produce positive returns during prolonged bear markets because they hold their value and offer a hedge against inflation.

Speak to your financial professional

Your financial professional can help you determine if these strategies are appropriate for your situation or if now is the suitable time to diversify your portfolio as you work towards your goals. Talk to us today!

© 2024 Trajan® Wealth LLC. Nothing in this blog is intended as investment advice, nor is it an offer to buy or sell any security. Please consult your financial advisor for questions about your personal financial situation. All investments involve risk, including the potential for loss. Trajan Wealth clients and employees may have a position in any of the securities mentioned. Portfolio holdings and other data are subject to change at any time and without notice. Additionally, the above links provided as a convenience and for informational purposes only; they do not constitute an endorsement or an approval by Trajan Wealth, L.L.C., of any of the products, services or opinions of the corporation or organization or individual. Trajan Wealth, L.L.C., bears no responsibility for the accuracy, legality or content of the external site or for that of subsequent links. These materials are for informational and educational purposes and are not designed, nor intended, to apply to any person’s individual circumstances. It does not take into account the specific investment objectives, tax and financial condition, or particular needs of any specific person. Please consult with your legal and/or tax advisor before making any tax-related decisions.