📉 When Interest Rates Fall: Smart Moves for High Earners Before the Next Cut

☕ Good morning SenseMakers!

Last week, the Federal Reserve cut rates by another 25 basis points, bringing the federal funds target range to 3.75-4.00 percent. But here's the kicker: Chair Powell made it clear that a December cut isn't guaranteed. Markets immediately recalibrated, and the probability of another near-term move dropped.

This creates a window-a brief opportunity to position your financial life before the next decision, not after it.

Here's what most people miss: interest rate changes don't happen in a vacuum. When the Fed eases, mortgage rates shift, cash yields compress, corporate borrowing costs recalibrate, and equity valuations can expand. The question isn't whether to react. It's whether you're positioned to benefit when the next move happens.

Today, we're walking through the playbook for high earners who want to get ahead of the curve. Whether you're refinancing a mortgage, reallocating cash, or timing equity compensation decisions, the smart moves happen now—before the headlines catch up.

🗓 The Shift You Need to Know

Let's start with the timeline. The Fed began cutting rates on September 18, 2024, with a 50-basis-point drop to 4.75-5.00 percent. Then came 25-basis-point cuts in November and December 2024, followed by another in September 2025, and now the October 29 cut to 3.75-4.00 percent.

Why is the Fed easing? Inflation has moderated, and the committee is working to keep the economy from overcooling. But this isn't a straight-line descent. Powell's recent comments signal that the path forward will be data-dependent and potentially uneven.

There's also a technical shift: on December 1, the Fed will stop shrinking its balance sheet and begin reinvesting maturing securities. This doesn't directly affect your mortgage rate, but it does ease some pressure in money markets and adds liquidity to the system.

The bottom line? We're in an easing cycle, but it's gradual, not a race to zero.

🔮 What the Path Looks Like from Here

The Fed's own projections tell the story. In the September 2025 Summary of Economic Projections, the median committee member sees the fed funds rate at 3.6 percent by year-end 2025, 3.4 percent in 2026, 3.1 percent in 2027, and settling at 3.0 percent over the long run.

Translation: more cuts are coming, but not aggressively. This is measured easing, not panic mode.

After Powell's October press conference, market odds for a December cut cooled. That uncertainty is actually useful. It means you're not chasing a foregone conclusion—you're positioning for a range of outcomes.

Expect the path to zigzag. Data surprises, geopolitical shifts, or changes in inflation expectations can all influence the timing. The point isn't to predict every move. It's to build a strategy flexible enough to win in multiple scenarios.

🎥 Watch: Navigating the Fed's Rate Path

In this video, I break down what the Fed's recent moves mean for your money and the three biggest opportunities high earners should be acting on right now—before the next decision drops.

🏡 Mortgages and Borrowing: Lock In Savings Now

Mortgage rates have already responded. As of October 30, the average 30-year fixed rate fell to 6.17 percent-the lowest level in over a year. The 15-year sits at 5.41 percent.

Here's the thing: mortgage rates don't follow the Fed's policy rate tick for tick. They track the 10-year Treasury yield, which moves based on expectations. That means rates can shift before the Fed even acts, and they can rise again if sentiment changes.

Take Julia, a VP of Sales carrying a 7.25 percent mortgage from 2022. She's been waiting for "the perfect moment" to refinance. But perfect doesn't exist. With rates at 6.17 percent, her break-even on closing costs is roughly 18 months. If she waits for rates to drop another 50 basis points, she might miss the window entirely if bond yields reverse.

Your three-step playbook:

1. Request a rate lock discussion from two lenders. Get a no-cost refi estimate and ask for a break-even timeline that includes points and closing costs. Compare apples to apples.
   

2. If you're buying, don't wait for rates to drop further. Use today's rates as your baseline and lock when you're comfortable. You can always refinance later if conditions improve.
   

3. Check your variable-rate exposure. The prime rate now sits at 7.00 percent after the October cut, which affects HELOCs, business lines of credit, and some personal loans. If you're carrying variable debt, consider terming out part of it before cash yields compress further.

The goal isn't perfection. It's progress. And right now, progress means locking in meaningful savings while the window is open.

💰 Cash and Bonds: Don't Let Your Liquidity Atrophy

Here's an uncomfortable truth: as the Fed eases, the yield on your cash will fall. Money market funds and high-yield savings accounts historically track the policy rate, which means the 4–5 percent you're earning today is heading toward 3 percent or lower.

That's not a crisis. It's a transition. And the smart play is to shift part of your cash into short- and intermediate-term bonds before yields compress further.

Consider Marcus, a tech executive sitting on $800K in a money market fund. He's been enjoying the liquidity and the yield, but he doesn't need same-day access to all of it. By building a bond ladder with 3- to 5-year maturities, he locks in current yields and positions for price appreciation if rates continue falling.

Here's how to think about it:

• Map your liquidity needs. Keep 6-12 months of expenses in true cash. Everything else is fair game for a bond strategy.
  

• Start with short and intermediate exposure. Think 3-5 year Treasuries or high-quality corporate bonds. As the Fed's path becomes clearer, you can extend into the 7-10 year range if it aligns with your goals.
  

• Use this moment to upgrade credit quality. Spreads on investment-grade and high-yield corporate bonds remain moderate compared to past stress periods. Falling yields give you a chance to realize gains on lower-quality positions and rotate into safer credits without sacrificing much income.

The Fed's own projections show more easing ahead. If your bond allocation stayed ultra-short for safety, now is the time to extend duration toward your target-before the move, not after.

🎯 Moves for Executives and Business Owners

If you're a corporate executive or business owner, this rate environment creates specific opportunities that most people overlook.

For executives:

Falling rates often expand valuation multiples, which can increase the value of your unvested equity. Now is the time to refresh your equity compensation game plan.

Take Sarah, a CFO with RSUs vesting in Q1 2026. She's been sitting on a 10b5-1 plan from two years ago that no longer reflects her goals or the current rate environment. By updating her plan now, she can coordinate tax withholding choices, lock in charitable gifting strategies for appreciated shares, and time sales around potential valuation upticks.

Action items:

• Review your 10b5-1 plan and update it if needed.

• Revisit tax withholding elections on upcoming vests.

• If you use a securities-backed line of credit, request new pricing grids and consider terming out part of the exposure before rates fall further.

For business owners:

This is debt-stack-review season. If you're running a business with floating-rate term loans or revolving credit lines, the time to refinance or hedge is now, not after the next cut.

Consider Michael, who runs a $15M revenue SaaS company with a floating-rate term loan tied to prime. As the Fed eases, his borrowing costs will fall—but so will his ability to lock in attractive fixed rates. By working with his banker to price a swap or collar, he can lock in predictable interest expense and protect margins if the easing cycle stalls or reverses.

Action items:

• Schedule a full debt review with your banker before year-end.

• Explore refinancing floating-rate debt and locking a portion with a swap or collar.

• If you're planning to issue fixed debt in the next 6-12 months, consider treasury locks or blend-and-extend strategies to reduce interest expense and timing risk.

• Bring updated financials, backlog, and sensitivity tables to your Q4 bank meeting to smooth approvals.

The beauty of an easing cycle is that it expands your strategic options. The trap is waiting too long to act on them.

🧠 Making Sense of Falling Interest Rates

Interest rate cycles don't just affect your portfolio. They affect your ability to design the life you want.

Lower mortgage rates mean you might finally pull the trigger on that vacation home or upsize without stretching your budget. Cheaper borrowing costs mean your business can invest in growth without bleeding cash flow. And reallocating cash into bonds means your liquidity works harder for longer, giving you more resources to deploy toward the goals that actually matter.

This isn't about squeezing every basis point out of the market. It's about positioning your financial resources so they support your version of a rich life-whether that's early retirement, funding your kids' education without stress, or building a business that scales on your terms.

The Fed's path is gradual, but your moves don't have to be. The window between now and the December 9-10 meeting is short. Use it to refinance, reallocate, and reposition. Because when the next cut comes, you want to feel the tailwind, not scramble to catch up.

As always, I hope this helps you to Prioritize Your Version of a Rich Life.

Until next week!

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

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