Interest rates are one of the biggest influences on the stock market as a whole.

Let’s learn why 🧑‍💻

Interest rates affect companies' cost of borrowing money, which in turn affects companies' profits, as well as what they decide to invest in 😲

When interest rates rise, stock prices tend to fall.

Companies need to pay more to borrow money, and often borrow less money to invest in stuff that drives returns 🤯

And conversely, lower interest rates can benefit stocks.

Companies can basically borrow money for free, and invest in more stuff that drives their profits up! 🙂

Think of interest rates like a see-saw.

When one end rises (rates), the other end goes down (stock prices), and vice versa! 🛝

Significantly rising interest rates can worry investors.

Investors may sell their stocks, which will further lower stock prices, like a domino effect 🎲

Companies with a lot of debt are more negatively affected by higher interest rates, whereas companies with low debt are less affected ✅

Now that you understand the role that interest rates play in the stock market, try to pay attention to how they affect your own investments! 🥳