the rising interest rates have rekindled the Americans tendency for fixed income investments like bonds and money market funds, but professionals warn that they should be prepared for the outrageous taxes.
to fight the inflation, The federal reserve has raised it's standard, short termFed funds rate to target 5.25%-5.50% fromClose to zero at the start for 2022 and to the highest level in the last 22 years.
higher rates hurt people who must pay more to borrow but it is a help to saver's who get an higher return on their money, especially with the economy not sure and the stock market volatile.
money market fund assets, For example, Rose to a record, Topping $5.69 trillion in the first three months of this year, Fed data show.
That bigger, steady and close to no risk income may come with a price though:
When the new year comes, You may find you're self with a bigger tax bill, professionals say.
“On the one hand, it’s great news, you’re getting higher interest, but are you ready for a tax hit in April or sooner, if you have to make quarterly estimated payments?” remarked Rob Keller, a tax partner at the tax advisory firm KPMG.