The Federal Reserve held interest rates at a 23-year high while reducing its rate cut estimate from three to one.

Yahoo Finance's Kerry Hannon joins Wealth! to discuss how the Fed's interest rate decision could impact your savings.

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Melanie Riehl

Video Transcript

The Federal Reserve or Julie was there, the Federal Reserve holding interest rates at a 23 year high this week while reducing its estimates of rate cuts this year from 3 to 1, these higher rates are good for short term savers due to higher yields and savings accounts like C DS here with more.

We've got Yahoo Finance's Carrie Hannon.

Hey, Carrie.

Hey, Brad, great to be here.

Yeah, I mean, savers should be dancing that happy dance, you know, the jig, whatever it might be.

This is great news.

I mean, for right now these are some of the highest rates we've seen for savers for the accounts you just mentioned for money markets for, you know, online savings account, high yield ones.

We've got t bills are looking great money markets.

These are areas that you can just switch some cash over into.

And it's a great uh area for peace of mind, particularly for people who are nearing retirement or in retirement because here's what happened, Brad.

A lot of people actually slow down.

Uh, and they don't realize how much they're likely to spend in the early days of their retirement.

And so they don't put enough cash aside.

This is a perfect time to set that cash aside so you can pay yourself have expenses, living expenses for me a year or two, shifted into some of these accounts and these are the kinds of rates we're seeing.

Ok.

There, if you look around, they're over 5% easily.

I saw a one year CD, uh, yesterday for 5.65% and T bills are paying over five or yielding over 5% and they are exempt from state and local tax.

So these are all some really great ways to kind of build a risk buffer.

I like to call it.

So Carrie, is it time to dump all your money into the short term savings like C DS or do you need to stay diversified here?

No, no, no.

Hold on.

You know, you gotta hold your horses on this one.

We all still need equities in our portfolio because I mean, hey, we're talking about living to 100 a lot of folks.

So if you got that kind of longevity for retirees too, I mean, come on, you've got to be thinking of the oomph you can get from the equities and we know that that's an important engine to keep our money growing for us over the long term.

Even if it's 10 years, 20 years.

I mean, the S and P 500 index is up.

I think it's something like 10 point 7%.

Since its inception annually.

So, you know, think about that stocks are an important part of the equation.

One sort of um it's like it's a standard thing that people often say it used to be, take 100 and 10 minus your age and that's how much should be in equities today.

People are saying because of the longevity.

Mm, let's go with 100 and 20 minus your age for how much you should have in equities.

But don't ignore these great rates uh that we're seeing right now for the short term savers Carrie.

Thanks so much.

Appreciate it.