How to Plan Your Wealth Around Higher Interest Rates

The days of near-zero interest rates are behind us, and the shift has been swift and significant. For high-net-worth business owners, founders, and entrepreneurs, this new era of higher interest rates creates a completely different playbook for wealth and business management strategy. The decisions you make now will determine whether you capitalize on new opportunities or get caught off guard by changing market dynamics.

Key strategies to consider in this elevated rate environment include:

• Reassessing your debt structure
• Optimizing cash management
• Reviewing investment portfolio allocation
• Accelerating tax-advantaged contributions
• Evaluating real estate strategies
• Restructuring business financing

This isn’t the time to go it alone or rely on generic advice. Schedule a conversation with the team at Avidian Wealth Solutions today to build a personalized strategy that better positions your business and wealth in this higher interest rate environment.

1. Reassess your debt structure

When interest rates are rising, the cost of carrying variable-rate business debt can quickly spiral out of control. Successful entrepreneurs are proactively reviewing their credit facilities, term loans, and lines of credit before rates rise further. This includes discussing conversion options with banks, exploring fixed-rate alternatives, and potentially accelerating paydowns on costly debt. The goal isn’t to eliminate all leverage — debt can remain a wealth-building tool — but to make sure your debt structure aligns with cash flow and growth plans.

The window for restructuring is narrowing as lenders grow more selective and pricing rises. Consider consolidating multiple credit facilities, negotiating flexible covenants, or exploring alternative lenders, including private credit markets. Effective financial risk management goes beyond interest rates — don’t forget to factor in prepayment penalties, cross-default clauses, and consider how debt service affects your ability to seize growth opportunities or navigate downturns.

2. Optimize cash management

The silver lining of higher rates is that cash reserves finally have the potential to earn meaningful returns after years of low yields. High-net-worth business owners can move idle funds from low-yielding checking accounts into money market funds, Treasury bills, and short-term CDs. This isn’t just about emergency funds — it’s creating a more systematic cash flow strategy that aims to maximize returns on working capital, tax escrow accounts, and funds earmarked for investments or acquisitions.

Effective cash management goes beyond chasing the highest yield. Consider laddering CDs or Treasury securities to maintain liquidity while capturing higher rates, and explore sweep accounts that automatically move excess cash into higher-yielding vehicles. For businesses with seasonal or cyclical cash flows, this optimization may help generate six-figure annual returns on previously dormant funds. The best investment for high interest rates for your cash position is often a combination of ultra-short duration strategies offering both liquidity and meaningful yield pickup over traditional bank deposits.

3. Review investment portfolio allocation

When interest rates rise, traditional investment playbooks often need significant revision. The classic 60/40 stock-bond portfolio faces new challenges as both asset classes can move unfavorably together. High-net-worth investors need more nuanced approaches considering duration risk in bonds, sector rotation in equities, and alternatives benefiting from higher rates. Financial services, banks, and insurance companies have historically been shown to thrive in rising-rate environments, while growth stocks and long-duration assets typically struggle.

The stock market roller coaster has taught successful entrepreneurs the value of diversification beyond traditional assets. Your investment manager services should actively explore private credit, floating-rate securities, and real assets providing inflation protection. This isn’t about perfect market timing — it’s building a volatile market strategy that aims to generate returns across economic scenarios. Consider increasing allocations to value strategies, sustainable dividend-paying stocks, and alternatives like private real estate debt or infrastructure projects benefiting from rising rates.

Learn more about why long-term investors shouldn’t panic about market fluctuations

4. Accelerate tax-advantaged contributions

High-earning business owners should maximize tax-advantaged savings before the environment increasing the interest rate potentially triggers policy changes or reduces these strategies’ attractiveness. This means fully funding 401(k) plans, exploring defined benefit pensions for stable cash flow businesses, and considering backdoor Roth conversions while tax rates remain favorable. Higher discount rates make current contributions potentially more valuable than waiting for future opportunities.

Beyond traditional retirement accounts, explore cash balance plans, nonqualified deferred compensation, and life insurance strategies offering tax-advantaged growth and income flexibility. Higher rates and current tax law create unique planning windows that may not persist. Geopolitical risk and fiscal pressures could drive tax policy changes, making today’s opportunities look incredibly attractive in hindsight. Model different scenarios with your team to try to capture maximum benefit from the different strategies available to you.

5. Evaluate real estate strategies

Real estate strategies must evolve dramatically in higher-rate environments. While residential real estate faces affordability headwinds, commercial real estate presents mixed challenges and opportunities. Office and retail properties face structural issues, but industrial, multifamily, and specialty properties with strong cash flows and shorter leases can benefit from rent escalations outpacing insane interest rate increases. Focus on assets with pricing power, essential services, and the ability to pass inflation through to tenants.

The distressed real estate market is creating compelling opportunities for patient capital. Developers and owners who over-leveraged during low-rate periods face refinancing challenges, creating acquisition opportunities for well-capitalized investors. Consider evaluating real estate debt investments, distressed acquisitions, and partnerships with experienced operators needing equity capital. Many Houston family offices and sophisticated investors are increasingly allocating to real estate private equity and debt funds aiming to capitalize on market dislocations while providing attractive risk-adjusted returns.

6. Restructure business financing

Business financing requires immediate attention as credit markets tighten and pricing climbs. Successful entrepreneurs proactively engage banking relationships to secure favorable terms on future growth capital rather than waiting until financing becomes urgent. This includes negotiating accordion features on existing facilities, establishing alternative lender relationships, or exploring private credit markets offering more flexible terms. The goal is to secure capital access before you need it, when your negotiating position is strongest.

Consider strategic financing implications beyond just capital cost. Equipment financing, working capital facilities, and acquisition financing all require different approaches currently. Some owners accelerate capital expenditures to lock in current prices and terms, while others explore sale-leaseback arrangements, freeing capital for higher-return opportunities. Bond investment strategies may benefit larger businesses considering corporate debt issuance or private placements, offering long-term, fixed-rate capital for strategic initiatives.

How a wealth manager can help you navigate fluctuating interest rates

The strategies outlined above represent just the beginning of what’s possible when you have sophisticated wealth management guidance during periods of higher interest rates. A skilled wealth manager doesn’t just react to changing interest rates — they can also: 

• Anticipate shifts
• Model different scenarios
• Position your portfolio and business finances to capitalize on opportunities while managing downside risks
• Coordinate tax-efficient strategies across your business and personal holdings
• Provide ongoing monitoring and adjustments as market conditions evolve

At Avidian Wealth Solutions, we help high-net-worth entrepreneurs and business owners navigate these types of complex financial environments. Our team combines deep industry experience in investment management, tax strategy, and business finance to create comprehensive plans for business owners in Houston, Austin, Sugar Land, and The Woodlands. 

We don’t offer cookie-cutter solutions — every strategy is tailored to your specific business cycle, growth objectives, risk tolerance, and family wealth goals. When interest rate environments shift as dramatically as they have recently, having us as your partner can mean the difference between simply surviving the transition and positioning yourself to thrive in the new landscape. Schedule a conversation with us today to learn more!

More Helpful Articles by Avidian: 

• Why Business Owners Need Tax Contingency Plans
• What is a GRAT vs. an IDGT Trust?
• The Top 10 IRA Mistakes
• What Assets Do Not Get a Step-Up in Basis?
• Using an Intra-Family Loan for Tax-Efficient Wealth Transfer

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