These financial changes will impact you in 2016

Every year brings changes that can impact the ways financial markets perform — and your ability to save and grow your money. So it pays to understand how these developments will impact you now and how they'll affect your financial goals.

Here are three changes that will likely have a direct impact on your finances in 2016.

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1. Higher interest rates. The Federal Reserve raised short-term interest rates from 0.25 percent to 0.50 percent, the first such move since the financial crisis began in 2008. The Fed increases interest rates when it sees the U.S. economy improving.

While it's impossible to know the Fed's direction from here, much of its decision will depend on the health of the U.S. economy.

According to The New York Times, indicators such as unemployment figures and inflation rates assist in the Fed's opinions. Global market volatility also impacts U.S. markets, so the Fed will maintain or move rates up or down accordingly.

So how does this impact you? A rise in interest rates can be a short-term knock for stocks and bonds. Higher rates can make cash a more attractive investment option relative to bonds and stocks, and the higher interest rates at which companies are forced to borrow can flow to their bottom lines, reducing profits.

"This year, anticipate higher health-care costs, higher interest rates and more transparency and advice concerning recommended investments in retirement accounts."

The biggest impact of higher rates is on borrowers with adjustable-rate debt. A general rule of thumb when the Fed raises rates is that yields on savings and investments will improve, while the cost of debt and the finance charges tied to variable-rate credit cards will increase. So, when possible, prioritize paying off high-interest debt.

2. More expensive health insurance. For those seeking coverage at under the Affordable Care Act, the cost of a benchmark plan will rise by 7.5 percent this year, according to a recent report by the Centers for Medicare & Medicaid Services.

Also according to the report, there is a wide spectrum of changes to premiums on the site, which is used by 37 states without their own sites for people to purchase coverage. For instance, premiums are expected to increase by 36 percent in Oklahoma yet decline by 13 percent in Indiana.

How does this impact your life? For employer-sponsored health care, costs to employees are expected to rise by a more modest 4.2 percent, according to a survey by health-care consulting firm Mercer.

But the smaller anticipated increase is based on an assumption that employees will be moved into plans with higher deductibles.

With premiums generally rising, especially for those not covered by an employer plan, it may make sense to open a health savings account as long as you meet eligibility guidelines, which are outlined on the HSA page at An HSA offers tax breaks on contributions, much as a 401(k) or other retirement plan, as long as withdrawals are used for medical expenses.

3. New rule for unconflicted investment advice. The U.S. Department of Labor is close to finalizing its "fiduciary rule," which many would consider a positive development for anyone with a 401(k) or individual retirement account.

According to a Reuters report, the rule would reshape the retirement advice business because it would require banks, brokers, mutual fund companies and insurance agents to provide impartial advice in their client's best interest, regardless of the fees and commissions earned on investments.

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As an investor, you can anticipate more transparency and advice when it comes to any recommended investments, particularly those associated with higher fees and risk levels.

The rule was also designed to prevent instances of client steering — when brokers and/or advisors direct clients to invest into the firm's own, more expensive investment products over other choices, without providing the required conflict-of-interest disclosures.

This year, anticipate higher health-care costs, higher interest rates and more transparency and advice concerning recommended investments in retirement accounts. Those who stay informed about how the changes can impact their personal financial circumstances will be better prepared in their short-term savings and long-term investments.

— By Jon Stein, special to Stein is founder and CEO of Betterment.