<br><div><aside class="gnt_em gnt_em__fp gnt_em_vp__tp gnt_em__el" aria-label="Video - Grow your savings with this simple budgeting rule"/><p class="gnt_ar_b_p"><a target="_blank" href="https://www.usatoday.com/money/blueprint/banking/savings/savings-account-rates-today-09-08-23/" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a" rel="noopener">Soaring interest rates</a> have rekindled Americans’ penchant for fixed-income investments like bonds and <a target="_blank" href="https://www.usatoday.com/money/blueprint/investing/best-money-market-mutual-funds/" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a" rel="noopener">money market funds</a>, but experts warn that they should be prepared for the taxes. </p><p class="gnt_ar_b_p"><a target="_blank" href="http://www.usatoday.com/story/money/2023/06/20/how-fed-interest-rate-hikes-slow-inflation/70331608007/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">To battle inflation</a>, the Federal Reserve has raised its benchmark, short-term fed funds rate to target 5.25%-5.50%, from <a target="_blank" href="http://www.usatoday.com/story/money/2020/07/29/fed-interest-rate-officials-keep-key-rate-near-zero-amid-covid-19-spikes/5532101002/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">near zero</a> at the start of 2022 and to the <a target="_blank" href="http://www.usatoday.com/story/money/2023/07/26/fed-interest-rate-hike-live-updates/70463418007/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">highest level in 22 years</a>.</p><p class="gnt_ar_b_p">Higher rates hurt spenders who must pay more to borrow but are a boon to savers who receive a higher return on their money, especially with the economy uncertain and the stock market volatile. Money market fund assets, for example, grew to a record, topping <a target="_blank" href="https://fred.stlouisfed.org/graph/?g=18AzI" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">$5.69 trillion</a> in the first three months of this year, Fed data show. </p><aside aria-label="advertisement" class="gnt_m gnt_x gnt_x__lbl gnt_x__al"/><p class="gnt_ar_b_p">That higher, steady and <a target="_blank" href="https://www.usatoday.com/money/blueprint/investing/best-low-risk-investments/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">nearly riskless</a> income may come with a price though: Come the new year, you may find yourself with a larger tax bill, experts say. </p><p class="gnt_ar_b_p">“On the one hand, it’s great news, you’re getting higher interest, but are you ready for a tax hit in April or sooner, if you have to make quarterly estimated payments?” said Rob Keller, tax partner at tax advisory firm KPMG. </p><p class="gnt_ar_b_p"><strong>Learn more:</strong> <a target="_blank" rel="noopener" data-t-l=":body nav (cd)|e|auto spike click:6|${u}" class="gnt_ar_b_a" href="https://www.usatoday.com/money/blueprint/banking/cds/best-cd-rates/">Best current CD rates</a></p><aside aria-label="advertisement" class="gnt_m gnt_x gnt_x__lbl gnt_x__al"/><h2 class="gnt_ar_b_mt">What are fixed-income investments? </h2><p class="gnt_ar_b_p">Fixed-income assets are those with a regular, fixed payout such as savings accounts, <a target="_blank" href="https://www.usatoday.com/money/blueprint/investing/best-money-market-mutual-funds/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">money market funds</a>, <a target="_blank" href="https://www.usatoday.com/money/blueprint/banking/cds/best-cd-rates/" rel="noopener" data-t-l=":b|e|k|${u}" class="gnt_ar_b_a">certificates of deposits (CDs)</a>, or government and municipal bonds. They are generally low-risk income generators. </p><p class="gnt_ar_b_p">In a balanced portfolio, they’re used to offset stock holdings, which are riskier and mostly generate...</p></div> <style> .wrapper { text-align: center; } </style> <div class="wrapper"> <a class="button" href ="https://www.usatoday.com/story/money/personalfinance/2023/09/10/high-interest-rates-fixed-income-investments-effect/70790845007/">Read more <span>➤</span></a> </div>
