What higher for longer interest rates mean for your investments

Investors haven't had much to complain about over the past few years. From 2023 through 2025, the S&P 500 provided a real return — that is, return net of inflation — of more than 20% per year, on average, according to data from investment firm Allspring . In fact, you could have earned better than 10% per year investing in stocks in developed and emerging international markets, as well as in a portfolio split 60/40 (or 40/60) between U.S. stocks and bonds.

Looking forward, however, investors may be anticipating at least one source of potential agita: higher interest rates .

Wall Street expects the Federal Reserve to raise its benchmark rate this week, following Chairman Kevin Warsh's recent speech in Jackson Hole, Wyoming, in which he expressed concern about persistent inflation .