Finance Experts Are Strongly Encouraging Consumers To Save As Much As They Can This Holiday Season — Here's Why
Portfolio Pulse from Bibhu Pattnaik
Finance experts are advising consumers to save during the holiday season due to high inflation and interest rates. Savings accounts, CDs, and bonds are offering returns up to 5%, making spending less attractive. High credit card rates, which can approach 30%, also discourage spending. The Wall Street Journal suggests reviewing past expenses and setting spending limits with family to avoid overspending. Visa Inc. (V), Mastercard Inc. (MA), SPDR S&P Retail ETF (XRT), and Vanguard Consumer Discretionary ETF (VCR) are stocks and ETFs to watch as they are impacted by consumer spending and credit usage.
November 12, 2023 | 10:04 pm
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NEGATIVE IMPACT
Mastercard could experience a decrease in transaction processing due to the recommended increase in savings, potentially affecting its short-term earnings.
Similar to Visa, Mastercard's business model is dependent on consumer spending. A shift towards saving could result in lower usage of Mastercard's network, potentially impacting its financial performance in the near term.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Visa may see a short-term impact due to experts encouraging savings over spending, which could lead to reduced transaction volumes.
Visa's revenue is closely tied to consumer spending. If consumers heed expert advice and save more, Visa could see a decrease in transaction volumes, potentially impacting its short-term revenue.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Vanguard Consumer Discretionary ETF might face a short-term downturn if consumers prioritize saving, leading to lower discretionary spending.
Vanguard Consumer Discretionary ETF, which includes companies from the consumer discretionary sector, may be impacted if consumers decide to save more and spend less on non-essential items during the holidays.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
SPDR S&P Retail ETF may see a negative impact if consumers follow expert advice to save, leading to reduced retail spending.
The SPDR S&P Retail ETF, which tracks the retail sector, could be negatively affected if consumers decide to save rather than spend during the holiday season, traditionally a peak period for retail sales.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80