Episode 251

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Published on:

12th Apr 2023

Economics 101: Understanding the Importance of the Fed Funds Rate

Hi there, Wine and Dime listeners! Amy Irvine here, and I want to start a series on economics. I've realized that during some of my presentations, not everyone may be familiar with some of the terms I use. So, over the next six weeks, I'll be discussing various economic topics that may be new to you but are important to understand. This week, let's start with understanding the importance of the Fed Funds Rate.

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Understanding the Importance of the Fed Funds Rate

The Fed Funds Rate has been making headlines over the past year and a half, with projections showing interest rate hikes to slow inflation. Here's what you need to know:

  • What is the Fed Funds Rate? The Fed Funds Rate is the interest rate at which banks lend to each other overnight. It's set by the Federal Reserve to influence economic activity.
  • Why is it important? The Fed Funds Rate affects everything from the yield on your savings account to the price of goods and services.
  • How does it affect you? Changes in the Fed Funds Rate can impact your borrowing costs, your investments, and even your job opportunities.

Other Key Terms to Know

  • Yield Curve: The yield curve is the difference between short-term and long-term interest rates. An inverted yield curve, where short-term rates are higher than long-term rates, can signal an economic slowdown.
  • APR vs. APY: APR (annual percentage rate) is the interest rate you pay on a loan, while APY (annual percentage yield) is the interest rate you earn on an investment. Make sure you know the difference!
  • Basis Points: A fancy term for percentage points. 100 basis points equal 1%.

My Exploration of Scottish Wine

As many of you know, I'm planning a trip to Scotland in 2024, and I've started to get educated about the country. Believe it or not, Scotland has some wineries! While they don't produce a lot of wine, I came across a winery called Chateau Largo during my research. I'm always up for trying new things, so I'm challenging you to find a Scottish wine that you enjoy. If you do, please report back to me!

Where to Learn More

If you want to learn more about the Fed Funds Rate and other economic terms, check out the links below:

That's all for now. Stay tuned for more economic topics in the coming weeks. Cheers!

This episode is brought to you by Rooted Planning Group. Rooted Planning Group is a fee-only financial planning firm that specializes in working with women in their 30s and 40s who want to take control of their finances and plan for the future. Whether you're just starting out or you're looking to make a big change, Rooted Planning Group can help.

Visit www.rootedpg.com to learn more.

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About the Podcast

Money Roots
Money Roots with Amy Irvine
Welcome to "Money Roots," the podcast where personal finance becomes personal. Join host Amy Irvine, CEO of Rooted Planning Group, as she demystifies the world of finance and makes it approachable for everyone, from beginners to financial experts.

In each episode, Amy and her guests dig deep into the financial soil, planting the seeds of financial knowledge and helping you nurture your financial future. Whether you're looking to build a solid budget, invest wisely, or plan for retirement, "Money Roots" has you covered.

Get ready to explore practical advice, inspiring stories, and expert insights that will empower you to take control of your financial destiny. It's time to grow your money roots and thrive financially!

Subscribe to "Money Roots" now and join Amy on this exciting journey to financial empowerment. Let's put down some roots and flourish together.

About your host

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Amy Irvine

Uncorking Amy Irvine!!

If any of you have ever met Amy, you know she is passionate about
three things. Family, Finances, and WINE! This comes through in all
that she does and all that she is. When asked to describe herself she first and foremost states, “I am a wife, a daughter, and hopefully a good friend, who happens to also be a financial planner.” Amy holds a Master’s Degree in financial planning and is a Certified Financial Planner TM , Enrolled Agent, Certified College Financial Consultant, and a Financial Wellness Coach with over 25 years of financial planning and industry experience. She is the Founder and owner of Rooted Planning Group, (Formerly known as Irvine Wealth Planning Strategies LLC), which started in 2016 and has grown to include 6 other planners and 2 part-time staff members. Amy is definitely “doing it her way” and has been recognized by her financial planning colleagues as being a “disrupter,” a title she holds close to her heart and is proud of.

Uniquely, at the age of 44, she decided to not only start her only company, but to act on what she defined as her perfect life and she splits her time between Parrish, Florida and Jasper, New York.
On her website it states, “I love what I do, but I also very much enjoy warmth, good
conversation, wine tastings, and volunteering. New York is extraordinary in the summer and fall, but so is Florida in the winter.”
In 2018, she decided it was time to take the stigma out of finances by combining her passion for finances and wine. She started a podcast called “Wine and Dime,” which highlights a different wine and financial topic each week, and she released her book combining those same two passions, titled, “Uncork Your Finances.”
Many of you may know her as one of the co-founders of the Southern Tier Women’s Financial Conference – a day of collaboration and financial education, which will be hosting it’s sixth year!
To round out her volunteering passion, she often provides financial education to the
community through the financial management program of Cornell Cooperative Extension of Steuben County, she serves on the board of Faith-in-Action of Steuben County, volunteers for various Fund For Women of the Southern Tier events, works with the finance committee of the Arts Council of the Southern Finger Lakes, and serves on the board for the Corning Painted Post Historical Society (also known as Heritage Village).
In her downtime, you’re likely to find her with a glass of red wine from one of the many Keuka or Seneca Lake wineries that she highlights in her Wine and Dime Podcast.