What happens if the Fed Funds Rate increases? With rising interest rates, will the stock market correct? Will dividend-paying stocks drop in value? Today's video answers this very question from a passive income and dividend investing standpoint. In response to a recent subscriber question, today's video covers: * What is the Fed Funds Rate? What is the Federal Reserve? * Right now, interest rates are at historical lows. * Low interest rates make dividend stocks very attractive because few alternatives exist for income investors. (Meaning: The prices of dividend stocks are on the higher side right now.) * In my humble opinion, interest rates will continue to stay low for a while. As they increase, I expect the Fed to take baby steps. * As interest rates increase, due to the trickle down effect, investment opportunities outside dividend stocks will exist for income-minded investors. This could cause dividend stocks to stay flat, if not correct. * There are two sub-sets of dividend stocks. (1) Those that are very tied to interest rates (REITs and utilities come to mind), and (2) those that are dividend growth stocks (consumer non-cyclicals come to mind). With rising interest rates on the horizon, it may make sense to think through purchases of these two baskets of stocks differently. * Dollar cost averaging is always a favorite strategy of mine, as I have been building my dividend growth portfolio through many economic cycles (and will continue to do so through many more). * I model at 7% right now because our market is in late stages. A correction could be coming at some point in the not so distant future. * If investors leave dividend stocks (due to higher interest rates), I view that is a good thing. While my ego may take a small hit (portfolio value down), I will happily accumulate world-class stocks at higher starting dividend yields. Today's question came from my Facebook Fan Page. Want to follow me on social media outside YouTube? You can find me here: Blog: http://www.ppcian.com/ Facebook: https://www.facebook.com/ppcian Twitter: https://twitter.com/ianlopuch Instagram: https://www.instagram.com/ianlopuch/ Want to learn more about REITs (or real estate investment trusts)? Check out this video: https://www.youtube.com/watch?v=Z4igBCbEAGo Disclosure: I am long Kimberly-Clark (KMB). I own this stock in my portfolio. Disclaimer: I'm not a licensed investment advisor, and today's video is just for entertainment and fun. This video is NOT investment advice. Please talk to your licensed investment advisor before making any financial decisions. All content on my YouTube channel is (c) Copyright IJL Productions LLC.