Investors Evaluate Options as Interest Rates Rise

YOUNGSTOWN, Ohio – Interest rates at levels not seen in years are spurring investors to move their money into short-term instruments and savings products, area financial planners and bankers report.

In its continuing effort to stem inflation, on Nov. 2 the Federal Reserve raised rates a fourth consecutive time by 0.75%, putting the benchmark lending rate of the central bank to a target range of 3.75% to 4%.

To learn how local investors are reacting, The Business Journal reached out to representatives of Consumers National Bank, Elsass Financial Group, Middlefield Bank, Premier Bank, Farmers National Bank, Huntington National Bank and the accounting firm of Schroedel, Scullin & Bestic. 


For a long time, savings rates were very low. Now savings rates are becoming a bit more attractive. Or you can actually make some money on short-term investments,” says Josh Toot, Mahoning Valley market president for Premier Bank. “A lot of people are electing to stay liquid in money markets, just in case something does jump or an opportunity arises. All in all, that’s a little bit different than what we’d been seeing.”

Toot sees strong interest in short-term investments.

“Anything from 12 to 16 months is attractive,” he says. “Anything beyond that, I think it’s the unknown that people aren’t really excited about.”

Investors also are seeing some success in the laddered bond market, which offers “a little bit more risk [but] still is somewhat safe [with an] attractive yield for short term,” Toot says. Money markets also see a lot of interest because the money remains liquid, he adds.

“It’s worth your time to invest in short-term CDs,” Toot says. “Long term, just because of where the interest rates are, it doesn’t make a whole lot of sense. At least were not seeing a lot of interest in that.

“Everybody is saying it’s going to be a tough winter, and then you’ll see some easing in 2023. Toward the end of 2023, it’s going to come back to some sense of normalcy” he predicts. 

Even with interest rates increasing, loan activity remains busy, he also says. “Our consumer pipeline is busy. Our commercial pipeline is full,” Toot says. “We still have people out there buying real estate, acquiring businesses.”  


Rising interest rates give depositors and investors more options, says Tom Hart, program manager for MB Investment Services at Middlefield Bank.

“A lot of what I do is educate customers as to what’s available to them. Customers don’t know what they don’t know,” Hart says. “I’m not saying every product is going to be right for that customer. But, I can at least educate them on what’s available – so they can make an educated decision.” 

Many customers don’t want to take the step of sitting down and talking to an investment adviser, for fear someone will force them into a product they aren’t comfortable with, according to Hart.

Before the interest rate increases, fixed accounts offered such low interest rates that they were “not even considered an option,” as he puts it, because investors needed that money to earn more than nominal interest. “If you needed the money to grow for future needs or if you needed to generate income, you had to look at other avenues,” he says.

Now, customers uncomfortable with the stock market can get a “decent return” because of the increase in rates.

“Cash isn’t sitting on the sidelines,“ Hart says. “They’re now putting it back into play.”

Most customers moving their money from the sidelines are electing to move it into short-term instruments, a year to 18 months, because they don’t want to lock it up. “Every situation is different,” Hart says. “Every customer has a different timeframe, a different goal for that money.”


While higher rates hinder borrowing, they also provide higher rates for deposit accounts, “whether they would be in fixed annuities or actually buying Treasuries themselves with higher yields,” Dan Cvercko says. Cvercko is senior vice president of wealth management at Farmers National Bank in Canfield.

“It does create other opportunities for people to put money in to gain more interest. But from a financial planning aspect, it definitely makes people look at things a lot closer,” Cvercko says. “You’re not willing to spend as much at a higher interest rate as you are at a lower one.”

Local banks are going to have to raise rates on CDs. At the same time they must continue to have loans on the books to be able to justify raising those rates,” Cvercko says.

There is also growing interest in brokered CDs sold nationwide. A local customer might end up buying a CD from another part of the country that might have more lending opportunities. 

“People with a longer time frame might want to look at the stock market right now because there’s a lot of attractive opportunities,” Cvercko says. “If your timeframe isn’t as long, you may want to look toward more of the fixed income instruments such as Treasury notes or fixed annuities.”

If there is concern over market considerations, an investor might want to look at an indexed annuity, he says. 

Whenever the economy enters into recession or a correction, customers say it‘s different this time. But “the truth of the matter is that the cycle is the same,” Cvercko says. 

“It is still a market cycle we’re going through, although the catalyst is different,” he says, “In this case, right now it happens to be inflation, which was self-induced. But at the same time, be patient with it. Understand that it is a cycle. Markets do rebound and they do some back.”


The “rapid rise in interest rates has been one of the primary reasons why investment markets, both stocks and bonds, have been in turmoil and have had some significant declines, especially on the bond side,” Kevin Chiu says. Chiu is vice president and a certified financial planner at Elsass Financial Group Inc., Canfield.

“Most people when they talk about the financial markets focus on the stock market. But the bond market, which is even bigger than the stock market, has been really impacted,” Chiu says.

CDs have “paid hardly anything,” as he describes it, for the past 15 years. FDIC insured CDs that offer 4% or more, however, are available. “Since rising interest rates have disrupted other parts of a portfolio, for those people who have some excess cash, when appropriate, we have been buying CDs for them,” Chiu says.

Investors who can avoid making “a drastic decision,” as he calls it, about their accounts should, Chiu says.

During his career, he has seen the dot-com meltdown, the 9/11 terrorist attacks, the Great Recession and other financial crises. As bad as those situations were, people’s portfolios rebounded and “they were able to move on,” he says.


We’re seeing money move that was just sitting in some very low rate accounts,” Ralph Lober says. Lober is the president and CEO of Consumers National Bank in Minerva. For nearly three years, banks had “a whole bunch of extra liquidity” so there was no incentive to move rates. Now customers are seeing interest rates that provide five times the return they were just nine months ago, he says.

There also is a shift back to time deposits, which are returning to normal after several years.

“The longer you tied up your money, you got paid a better yield,” Lober says. “From 2020 to 2021, even up to March of this year, it didn’t matter how long you gave a bank your money – you were still getting almost zero. So you can imagine [that] when they see a nice rate, they’re jumping at it,” he says.

Banks also have run through some of their liquidity and are competing for the same depositors so rates are beginning to move faster, according to Lober.

What instruments customers use depend on what they think is going to happen, he says. If they think short-term rates will continue to rise over the next 18 months, they should stay “a little bit shorter.” If they think short-term rates are “getting toward the top,” he says, they should go longer.

“I can’t tell you where they should be investing. But that’s what they should be thinking about when they’re deciding on that longer-term or shorter-term CD,” Lober says, “You don’t necessary just go for the highest rate. It’s what do you think is going to happen. [He pauses briefly.] Do you think rates are going to be higher or lower when that CD matures? And then you should make your decision from that.”

Some investors are panicking and either stopping putting money into their 401(k) accounts or taking money out of the stock market, Lober says. Putting more money into their accounts when the market is down allows them to buy more shares at a lower price. Those shares will do better when their prices go back up.

“If you stop putting money in your 401(k) when the price goes down, when it goes up, you’re not getting a benefit. If you pull money out of your 401(k) when it’s down, you’re locking in the loss,” he says. “As long as you don’t cash it in, it’s a paper loss. As soon as you cash it in, you lock it in and you make it a real loss.”


Because inflation has been “pretty conservative” for some time, “one of the things that we’re doing now is to dig a little bit deeper with clients to see what their thoughts are on what inflation is going to look like and what numbers they need to get to be comfortable,” Dan Griffith says. Griffith is senior vice president and wealth strategy director for Columbus-based Huntington National Bank. 

With interest rates low for so long, safe money instruments such as certificates of deposits and bonds “were just not creating enough income for people to really be involved,” Griffith says. Now as rates have risen, customers – especially older people who “really need a fixed income” – are more comfortable returning to “safe investments and a little further away” from the stock market. 

“Even though [CD rates] are going up, they’re still not close to what the year-over-year inflationary numbers are. What we need to see is higher rates and lower inflation,” Griffith says, which he expects to see next year. “Once those two come together, I think people on fixed incomes are going to be much more interested in doing things like CDs and bonds.”


Most clients at Schroedel, Scullin & Bestic LLC in Canfield “have more of a long-term horizon,” Sam Fries, a certified financial planner who heads its managed wealth department says. Their portfolios are structured accordingly, he says.

Even at the current rates, CDs aren’t keeping up with inflation but rates are “closer than they typically are,” Fries says.

Still, investors would rather earn whatever CDs pay short term “than put it into the market and watch it drop by another 5%,” Fries says. 

Schroedel, Scullin & Bestic coaches its clients to not overreact to what is happening in the short term, Fries says.

There have been several occasions when the stock market has suffered steep drops – the 2008-2009 financial crisis for one – but it has always recovered, Fries points out. “It may have taken a little bit longer … but it has always recovered and will over the long term,” he says.

“The biggest mistake people make right now it’s trying to time the market. It’s a bad time to do that,” Fries says. “Right now, if they were to sell and convert everything to cash,
they’d be selling it at a low point.” They often wait too long to get back into the market and have “already missed a good portion of their recovery,” he says.

“We’re advising clients, for the most part, as long as they have a long-term horizon, to ride it out,” he says. “It’s hard to do that right now and watch things go down. But long term, that’s the best plan for most people.”

It’s difficult for investors to a look at their accounts and see values decline because of market volatility, Fries says. The most successful investors, though, are those who “stay the course,” focusing on whether they can meet their goals rather than worry about whether they are getting the best return on a given day, he says. 

“The biggest thing is just to stay disciplined and think about what your goals are – if you’re investing for the long term versus the short term,”
Fries says. “Most of our clients, they’re planning for retirement. So depending on their age and the short-term drop [in the markets], the long term won’t have any effect on them.”