5 Strategies For Maximizing Wealth In A Lower Interest Rate Environment

Earlier this year, the Federal Reserve decided to hold federal funds interest rates in the 3.50%-3.75% range after seeing rate cuts in 2025. As we’re seeing a transition out of a higher-interest-rate environment into a more moderate one, Her Agenda spoke to a Certified Financial Planner to find out the best ways to keep building wealth.

Sara Wright, CFP® Professional with Domain Money, says that the best piece of financial advice she ever received is that it’s not about the size of your paycheck—it’s about how much you save after the essentials are covered. For Sara, this is important for women to remember, no matter what financial environment we’re in.

“This stuck with me because it highlights the one thing we truly control: what we do with our extra dollars. It’s easy to let lifestyle creep happen as income rises, but wealth is built by being deliberate with spending and prioritizing saving and investing. No matter how much you earn, being intentional with your money ultimately drives financial security and long-term success,” she stated.

Sara also emphasizes the importance of having foundational knowledge before making decisions, “When we talk about maximizing wealth, it starts with understanding the basics: how different accounts work (like 401Ks, IRA, pre-tax versus Roth, and taxable accounts), and the difference between stocks and bonds,” she says. “It’s also important to understand the power of compounding, diversification, and how risk tolerance changes depending on goals and time horizon.”

Having personal understanding is just as important. In order to maximize wealth, she says we must first know how much we’re earning versus how much we’re spending.

“Wealth is built on what you consistently save and invest,” says Sara. “Having clear goals and a sense of why you’re building wealth helps to guide these financial decisions.”

Here are four other tips for maximizing wealth, even if interest rates dip lower in time.

“We shouldn’t let short-term fluctuations drive our long-term investment strategy,” says Sarah. “It’s important to create an investment strategy that’s based on goals, time horizon, and risk tolerance.” 

Regardless of whether rates are high or low, Sara says we should always be thinking about how long we have before needing the money we’re investing. If we won’t need the fund for five or more years, she says they can be invested in the market as they’ll have time to weather the changes of the market. From there, she says the balance between stocks and bonds is chosen based on risk tolerance and time horizon.

Finding this harmony is essential: goal-based decisions help us maintain confidence even when the outside environment changes.  

Sara adds, “Bonds, stocks, cash, and loans all respond to moving interest rates. The most effective strategy is staying diversified, investing consistently, aligning investment strategy with goals, and keeping strong financial habits.”

“For those with extra cash flow, now is a great time to invest more into your investment accounts each month,” she says. “Declining rates typically stimulate the economy, so we could see an increase in stock prices.”

If you don’t have extra cash flow, that’s okay, too. Rather than focusing on investing more, you might first focus on adding to your income stream, whether it’s through negotiating your salary or adding an extra income stream. Once that increased cash flow is established and you have more to save, you can focus on investing it, too.

While High Yield Savings Accounts won’t be at their highest rates when federal interest rates are lower, that doesn’t mean that they should be neglected or discounted as a means to build wealth.

“Even when rates are lower, I still recommend keeping an emergency fund in a high-yield savings account,” says Sara. “Although the rates on these are affected by interest rates, they’ll still be higher than a traditional savings account.”

Lower interest rate environments are not without opportunities: in fact, they can be a great time to refinance.

If you’re someone with a higher-rate mortgage or expensive consumer debt, Sara says you might want to consider using lower interest rate environments as a chance to refinance and consolidate.

Of course, these choices shouldn’t be taken lightly.

“Refinancing comes with upfront costs, so those costs should be compared against the long-term interest savings,” she says. Decisions like this should be thought over with a financial advisor.