Tag Archive for: financial planning

Trump Gains Leverage as Fed Governor Adriana Kugler Resigns, Opening a Seat for New Nominee

Fed Governor Adriana Kugler Resigns, Opening Door for Trump to Influence Interest Rate Policy

August 1, 2025 — U.S. monetary policy faces change as Fed Governor Adriana Kugler announced her resignation on Friday. Her exit opens a seat on the Fed’s Board of Governors and on the Federal Open Market Committee (FOMC), which sets the nation’s interest rates.

Key Details of Kugler’s Departure

  • Resignation Announcement: Kugler, 55, sent a letter to President Donald Trump stating she will return to Georgetown University as a professor this fall.
  • Term and Tenure: Her term was to end in January 2026. She was chosen in September 2023 by a Biden administration, filling the seat left by Lael Brainard.
  • Role on FOMC: As a Governor, Kugler held a voting seat on the FOMC. She took part in votes to decide monetary policy, such as changing interest rates.

Implications for Federal Reserve Policy

Kugler’s exit leaves a gap that President Trump may fill with a nominee who backs lower interest rates. Trump showed his support for this change and hinted he would pick someone who shares his views on monetary policy.

  • Trump’s Influence: Two Trump appointees, Christopher Waller and Michelle Bowman, recently opposed the decision to keep the Fed’s benchmark rate. They called for a rate cut. Kugler did not vote on this matter.
  • Allegations on Resignation: Trump said—with no proof—that Kugler left because she clashed with Fed Chair Jerome Powell over interest rate plans.
  • Kugler’s Policy Views: Known for her hawkish stance, Kugler favored holding rates steady until clear signals of inflation changes appeared, amid the effects of tariffs.

Comments from Federal Reserve Chair Powell

Fed Chair Jerome Powell thanked Kugler for her service. He noted her long experience and useful academic views during her term. Powell’s term ends in May 2026, though he might stay on the board afterward.

Wider Context and Future Outlook

  • The open seat gives President Trump more say over the Fed during a time when economic worries about inflation and growth are strong.
  • Trump said he prefers nominees who support cuts in interest rates. He also mentioned the idea of a "shadow chair" who could speak up on the board until Powell leaves.
  • Markets will watch closely because the Fed’s decisions about rates affect borrowing, investment, and the stability of the economy.

Adriana Kugler’s resignation marks an important moment for U.S. economic policy. It gives the Trump administration a chance to guide the future of interest rate policy during a challenging economic period.

Stocks vs. Bonds: Building Your Investment Portfolio

Introduction

Investing can feel overwhelming, especially for beginners trying to decide between stocks and bonds. Both offer unique opportunities to grow wealth, but they come with different risks and rewards. This blog provides a beginner-friendly comparison of stocks and bonds, explaining their roles in a portfolio and how to balance them based on your financial goals. Whether you’re saving for retirement or aiming for short-term gains, understanding these investment options is key to building a solid financial future.

What Are Stocks?

Stocks represent ownership in a company. When you buy a stock, you become a shareholder, owning a small piece of that business. Stocks are traded on exchanges like the NYSE or NASDAQ, and their prices fluctuate based on company performance, market conditions, and investor sentiment. For example, if you buy shares of a tech company like Apple and its value rises due to strong earnings, your investment grows. However, stocks are volatile—prices can drop suddenly due to market downturns or company-specific issues, making them riskier but with potential for high returns.

What Are Bonds?

Bonds are loans you make to a borrower, typically a government or corporation, in exchange for interest payments over a set period. When you buy a bond, you’re essentially lending money, and the issuer promises to repay the principal at maturity while paying you interest along the way. For instance, a U.S. Treasury bond might pay 3% interest annually and return your initial investment after 10 years. Bonds are generally less risky than stocks because they provide steady income and are often backed by reliable issuers, but they offer lower returns and can be affected by interest rate changes.

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Comparing Risks and Returns

Stocks typically offer higher returns but come with greater risk. Historically, the S&P 500, a stock market index, has averaged annual returns of about 10% before inflation, but it can experience sharp declines, like the 20% drop during the 2020 pandemic. Bonds, on the other hand, are more stable—U.S. Treasury bonds are considered safe because they’re backed by the government—but their returns are lower, often 2-5% annually. Corporate bonds may offer higher yields but carry more risk if the issuer defaults. Your risk tolerance and investment timeline will determine the right mix for you.

Building a Balanced Portfolio

Balancing stocks and bonds in your portfolio depends on your goals, age, and risk tolerance. A common rule of thumb is the “110 minus your age” strategy: subtract your age from 110 to find the percentage of your portfolio that should be in stocks, with the rest in bonds. For example, a 30-year-old might allocate 80% to stocks and 20% to bonds, while a 60-year-old might shift to 50% stocks and 50% bonds to reduce risk as retirement nears. Diversifying within each asset class—such as investing in a mix of tech and healthcare stocks or government and corporate bonds—further minimizes risk while optimizing returns.

Conclusion

Stocks and bonds each play a vital role in a well-rounded investment portfolio, offering a balance of growth and stability. By understanding their differences and aligning them with your financial goals, you can create a strategy that works for you. For more tips on building your portfolio, check out our videos at The Money Grower.