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Every time the Federal Reserve meets, headlines fill with talk of rate cuts or hikes. While it may sound like background noise, those decisions quietly shape everything from your savings account to your dental practice loan. For dentists who are both business owners and investors, understanding what these rate movements mean can help you make smarter financial choices.
In the latest episode of The Dental Boardroom Podcast, PracticeCFO founder Wes Read sat down with Chief Investment Officer Brandon Hobson and Investment Committee member Paul Lipcius to unpack what is happening with the Fed, the bond market, and how these shifts trickle down into the real-world finances of dental professionals.
Here is what you need to know about how Fed rate cuts impact your money, both inside and outside your practice.
The Federal Funds Rate is the interest rate at which banks lend to each other overnight. It indirectly influences nearly every other rate in the economy, from home mortgages to business loans and even the yield on your savings account.
When the Fed cuts rates, it is typically trying to stimulate growth. Lower borrowing costs encourage spending and investment. Businesses expand, consumers borrow more, and the economy gets a boost.
But this effect does not play out evenly across every sector. In reality, a Fed rate cut creates both winners and losers depending on where your money sits.
For dental practice owners, the Fed’s decisions can ripple through several key areas of business.
When the Fed cuts rates, lenders often follow by reducing the rates they offer on loans. However, that reduction is usually most visible on shorter-term financing. Longer-term loans, such as practice acquisitions or real estate, depend more on movements in the 10-year Treasury yield and overall bond market sentiment.
If you are considering refinancing an existing practice loan, a mild rate cut could make a difference, but it is not always immediate. Monitoring the broader bond market matters just as much as tracking Fed announcements.
In short, rate cuts may open a window for refinancing, but only if market conditions align.
Lower rates can make new equipment purchases or practice expansions more affordable. A drop in interest by even half a percent could save thousands over the life of a financing agreement.
That said, it is wise not to rush major purchases just because rates fall. Align your spending with practice needs, not market trends. The best time to expand is when your cash flow comfortably supports it, regardless of Fed activity.
If your practice carries variable-rate debt, rate cuts can reduce interest expenses and free up monthly cash flow. But if your practice reserves or savings are earning interest, those returns may drop.
Balancing debt and liquidity becomes more important in these periods. Your advisor can help model the impact of changing rates on your practice’s financial projections.
Rate cuts affect more than your business. They also influence how your personal wealth grows.
One of the first places dentists feel the impact is in their bank accounts. When the Fed lowers rates, savings accounts and certificates of deposit typically yield less. The 4 to 5 percent returns you might have earned in a high-yield account could drop closer to 3 percent or less.
This makes holding large cash reserves less appealing over time. While emergency funds are essential, excess cash could be working harder elsewhere, such as in diversified portfolios or tax-advantaged accounts.
Bond prices and interest rates move in opposite directions. When rates drop, existing bonds with higher yields become more valuable, which can lift the bond portion of your portfolio.
However, lower rates also mean new bonds will offer smaller future yields. This trade-off is why a balanced bond strategy matters. Short-term, high-quality bonds can provide stability, while longer-term positions can capture potential appreciation if rates continue to fall.
Dentists investing through 401(k)s or IRAs may see market volatility during rate shifts. When borrowing becomes cheaper, stock prices can rise as businesses and consumers spend more. However, if the market has already priced in those expectations, returns can flatten or reverse quickly.
Staying diversified across bonds, domestic and international stocks, and real estate is key. A well-designed investment policy ensures you do not overreact to short-term interest rate moves.
One key point from PracticeCFO’s market discussion is that the bond market often predicts where the economy is headed before the stock market does.
When long-term Treasury yields rise while short-term rates fall, a phenomenon called a “steepening yield curve,” it typically signals optimism about future economic growth. Conversely, when long-term yields drop below short-term yields, known as an “inverted yield curve,” it can indicate recession concerns.
Right now, the yield curve is steepening, suggesting that investors expect the economy to remain resilient even with modest rate cuts. For dentists, that means the near-term environment may remain stable for both practice growth and portfolio performance.
Still, the team at PracticeCFO emphasized that markets are giving mixed signals. Inflation pressures, international tariffs, and policy uncertainty can all complicate the picture. The best approach is to stay informed, stay diversified, and avoid trying to time the market.
You cannot control the Fed, but you can control how you respond. Here are practical ways to position yourself during a rate-cutting cycle.
At PracticeCFO, the goal is not to chase rate trends. It is to build a resilient strategy that weathers them. Whether rates rise or fall, the fundamentals remain the same: live below your means, save consistently, invest with purpose, and keep your future self in mind.
Fed rate cuts may sound distant from your daily practice, but their effects reach right into your bank accounts, loans, and investment portfolios. Lower rates can ease borrowing but also reduce returns on savings. They can lift stock prices temporarily, but increase the risk of overvaluation.
For dentists balancing practice growth with personal wealth, understanding these shifts and planning around them is essential.
The key takeaway from PracticeCFO’s investment team is simple: Do not react emotionally. Let data and discipline drive your financial decisions.
Ready to hear more about what today’s markets mean for your financial future?
Listen to this episode of The Dental Boardroom Podcast
Join Wes Read, Brandon Hobson, and Paul Lipcius for their quarterly investment update and learn how to keep your money working intelligently through every rate cut and market cycle.
Wes knows what's best for dental practices. He's been doing this for a long time and he sees lots of practices. He can tell me how our practice is doing, and what we can do to increase our productivity. With past CPA's, there were no ideas. It was all coming from me, saying "I think I can do better, but I don't know how." I come in to meet with Wes and he says "You CAN do better, and I know how."
PracticeCFO is in hundreds of dental offices around the country. They know what numbers should look like. They know what percentages of payroll, rent and supplies should be, and they will hold you accountable to those numbers, which will really help you stick to your plan and your path of growth and savings. That is invaluable
Whenever something comes up, whether it's building or practice related and we weren't sure where the numbers would go, PracticeCFO has been instrumental in helping us figure that out. I can't say enough of how important that is - that it goes beyond that initial partnership. They make sure this business marriage works.
When I go home from work, I don't spend a whole lot of time stressing about what my books look like, or how much I owe in taxes. By using PracticeCFO, the burden of keeping track of a lot of the big financial numbers and metrics are taken off my plate.
PracticeCFO helped me develop a plan for the future. I have colleagues that work with other accountants that don't have a plan - they just look at the numbers of the practice and that's it. There's no plan for 10, 20 years from now. But with PracticeCFO, you get that. PracticeCFO makes you feel like you're they're only client.
(In reference to his practice sale) What could've been super stressful, wasn't! When picking John and Wes, it was from word of mouth recommendations and other people's experiences from the past that really did it for me. And it turns out that those recommendations were right on the line.
Wes knows the business side of dentistry. His comprehensive plan will organize your personal and professional finances so you can focus on taking care of patients. Massive ROI.
I can’t say enough good things about everyone at PracticeCFO. Everyone on the team is professional, organized, knowledgeable, helpful and kind. They also respond to emails and phone calls immediately and are always happy to help. They have helped me navigate year-to-year as a business owner. PracticeCFO gives me peace of mind that my business is in good hands.
I love Practice CFO! They have helped me obtain a practice and maintain a practice. They are incredible people who are on top of everything and make owning and running the business portion of a practice easy. They couldn’t be better for my business and my sanity. They have every detail of the business and taxes taken care of where all I have to do is show up and follow their easy steps to success!
Practice CFO has the best tools I’ve seen for personal tax and financial planning in addition to top-tier corporate tax and accounting services. I have been very pleased with the level of quality service. They manage my monthly bookkeeping and accounts payable. It is a great system and saves me a ton of time, and it allows us to have monthly financial statements within a week of month end.
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